When it comes to choosing your Medicare coverage you have a lot of options. But these options are often what make Medicare so confusing. When you understand the different parts of Medicare and how they work, it becomes much easier to decipher which coverage is right for you.
No matter what type of Medicare plan you choose, it will not cover everything, and you will have to pay for part of your coverage. It’s important to understand these out of pocket costs as they can vary widely. This will help you avoid any unexpected and unwanted surprises.
Original Medicare
Medicare Parts A and B are also known as Original Medicare. 2024 Parts A & B premiums and deductibles are set by the Centers for Medicare and Medicaid Services (CMS) and change every year.
Part A
What it covers: Helps cover the cost of inpatient hospital stays, skilled nursing facilities and Hospice care.
Premium: Most Medicare beneficiaries qualify for premium free Part A if they or their spouse worked at least 10 years. Those who worked fewer than 10 years will pay either $278 or $505 per month depending on their work history.
Annual Deductible: $1,632 for each inpatient hospital admission. This covers your share of costs for the first 60 days of an inpatient hospital stay. You could pay this deductible more than once during the year.
Coinsurance:
- Days 1-60: $0 after you pay your Part A deductible
- Days 61-90: $408 per day
- Days 91-150*: $816 per day (*known as “lifetime reserve days” because Medicare will only pay for these extra days once in your lifetime).
Part B
What it covers: Helps cover doctor visits and outpatient care such as lab services, x- rays, diagnostic testing, durable medical equipment, and preventive care.
Premium: The standard premium is $174.70 per month but those with higher incomes may pay more.
Annual Deductible: $240.
Coinsurance: After the deductible is paid there is a 20% coinsurance for most services
Original Medicare does not include prescription drug coverage. It does not include dental, vision or hearing benefits. There is no annual cap on expenses.
Original Medicare leaves beneficiaries with significant gaps in coverage as well as the possibility of significant out of pocket expenses. For these reasons, most people decide on one of two paths:
- Adding a Medicare Supplement plan and Part D drug plan to fill the coverage gaps
- Enrolling in a Medicare Advantage plan
Medicare Supplement Plans
Medicare Supplement Plans, also known as Medigap, help cover some of the costs not covered by Parts A and B. There are nine standardized plans sold through private insurers. Monthly premiums vary based on the plan selected, the insurance carrier, the applicant’s zip code, age, gender and history of tobacco use. The more coverage the plan offers, the higher the premium. Not all plans are available in all areas.
The best time to apply for a Medigap plan is during the six month initial enrollment period when turning 65. Those applying outside of this time frame will have to answer some health questions. Certain chronic health conditions can result in denial of coverage or higher premiums.
Medicare Advantage Plans
Also known as Part C, these plans are sold by private insurers and cover everything that is covered by Parts A and B. Most Advantage plans also include Part D drug coverage. Advantage plans have an annual out of pocket maximum that caps the amount you have to spend in a year. You must have Parts A and B to enroll in an Advantage plan. You cannot have an Advantage plan and a Supplement Plan at the same time.
Each Advantage plan has its own unique provider network and drug formulary. Some services or medications may require prior authorization. Many plans offer additional benefits such as dental, vision, hearing, gym benefits and more. Some plans offer out of network benefits at a higher out of pocket cost. Those with an Advantage plan must still pay their Part B premium. Premiums and benefits may change every year on January 1.
Which Option is Right For You
The option that is right for you depends on many factors, and these factors may change over time. These include your budget, how often you travel, your health, your medications, as well as your preferred doctors and hospitals.
For those who don’t want the restrictions of a provider network and the possible delays in care caused by prior authorizations, Original Medicare may be the best fit. Others may like the simplicity and affordability of a Medicare Advantage plan, along with the additional benefits it offers. As long as your doctors are included in the plan’s network, and your medications are covered on the drug formulary, this could be a the right choice for you.
Whatever choice you make, if you find your circumstances have changed, you have the opportunity to change your coverage every year, and more often if you qualify for a Special Enrollment Period.
The good news is you don’t have to decipher Medicare alone. The experienced team at Healthcare Educators will help show you all your options and help you compare a variety of plans. We will guide you through every step of the process. Contact us today.