Medicare Supplement Plans
Medicare Health Plans
Medicare Prescription Drug Plans
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The high cost of medical insurance many people under age 65 experience makes Medicare insurance seem like a great deal! And, it is. But, it's also complex and requires that new beneficiaries meet various time frames so they are not required to pay penalties that may last their lifetime. Click here for a more detailed explanation of penalties that one might incur:
Original Medicare consists of two parts:
Medicare Part A - Hospital Insurance
Medicare Part B - Medical Insurance
Will I be automatically enrolled in Medicare?
You will automatically be enrolled in Part A when you turn 65. If you're drawing Social Security or Railroad Benefits you will automatically be enrolled in Part B as well. If you don't want to begin Part B because you have credible medical coverage at work, simply let Medicare know and they will dis-enroll you from Part B. In this case you will have to notify them to begin coverage when you lose your coverage at work.
If you don't have credible coverage elsewhere and in most cases if you don't sign up for Part B when you're first eligible, you'll have to pay a late enrollment penalty. You'll have to pay this penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn't sign up for it. Also, you may have to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B. Coverage will start July 1 of that year.
Why would I not want to begin Part B coverage even if I am still working?
Because in 2023 you will be charged $164.90/month if your income as a single person was less than $97,000/yr two years previously. If you earned more than that two years ago, you will pay more for Part B coverage.
Why do I mention that Medicare "helps" cover hospital and medical needs?
Because Medicare recipients are required to make deductible and co-insurance (percentage) payments when they use Original Medicare.
Is there a dollar limit that recipients may be out-of-pocket due to the deductibles and co-payments they must pay?
What are examples of out-of-pocket expenses for which Medicare recipients may incur?
The Part A 2023 hospital deductible is $1,600/benefit period. The Part B medical deductible is $226/year. Additionally, recipients are responsible for 20% of the Medicare approved amount of Part B expenses. For example, if a chemotherapy treatment were to cost $8,000/treatment, the Medicare recipient would be responsible for 20% of $8,000, or $1,600/treatment.
Is it possible to insure against out-of-pocket expenses?
Yes. Medicare Supplement plans (also known as Medigap plans) pay after Medicare pays their portion. They are regulated by the government and offered by private insurance companies. The plans are designated by a letter -- currently Plans A, B, C, D, F, G, K, L, M and N. Plans designated by the same letter cover exactly the same Medicare gaps even though the premiums that consumers pay differ greatly among companies!
Which Medicare supplement plan do you normally recommend?
The most comprehensive plan is Plan F. Normally, if Medicare covers a procedure, Plan F pays for deductibles and co-insurances. Because of legislative changes, Plan F is only available to those people who were already age 65 as of December 31, 2019. I see two problems with the Plan F: (a) it is expensive, and (b) although people already enrolled in the plan will be allowed to keep it, the plan will have older members who cost more to take care of. Thus, I expect premium costs to increase at a rate faster than plans with younger people.
Plan G covers all that Plan F covers except for the annual $226 Part B deductible. But, the lower premiums justify paying the deductible.
Other alternatives I show my clients are the Plan N and the high deductible Plan F. The Plan N requires a co-payment when seeing a physician or visiting the emergency room, but otherwise is similar to the Plan G. The high deductible Plan F requires meeting a co-payment of $2,700 in 2023. After meeting the deductible is covers expenses the same as a no-deductible Plan F. Click here to see a chart detailing all available Medigap plans:
Medicare Health Plans (Advantage Plans)
What is a Medicare Health Plan?
These are health plans overseen by the government and offered by private insurance companies. They are also known as: (a) Medicare Advantage Plans, (b) Part C of Medicare, and (c) Medicare replacement plans. No matter what the plan is called, beneficiaries assign their Parts A & B to a private insurance company and they become your Medicare coverage. The government pays them monthly to insure you. You must continue to pay for Part B of Medicare. These private companies must cover everything that Medicare covers, but they are allowed to require different co-payments and co-insurances. Plans must include a maximum amount (MOOP) that beneficiaries are responsible for. That amount varies by company, and the plans are allowed to change the MOOP on an annual basis. Remember, this is not a deductible. Rather, it's the amount a person can be responsible for before having 100% coverage for the remaining calendar year. This to me is the most important coverage that Medicare Advantage plans offer.
What are some of the advantages of opting for a Medicare Health Plan?
1. Most Plans offer an inexpensive monthly premium. Sometimes the premium is $0.
2. With a low cost plan, you pay very little if you don't need to use the plan.
3. Most plans include a drug plan at no extra cost.
4. The maximum out-of-pocket protection
What are some of the disadvantages of opting for a Medicare Health Plan?
1. Required co-payments and co-insurances may change from year to year and make budgeting more difficult
2. You are locked-in for the calendar year
3. Most plans utilize a network of medical providers. Going out-of-network may be prohibited or more expensive
4. Drug plan benefits may not be as rich as a stand-alone plan
5. Medical benefits may not be as rich as original Medicare
6. Some providers take original Medicare but not Medicare Health Plans
Medicare Prescription Drug Plans
Am I required to take a Medicare Drug Plan?
No. However, if you fail to take a plan when you are eligible, and then later decide that you want one, you will have to pay a one percent penalty for every month that passed that you could have had one. The penalty is based on the national average cost for a drug plan. In 2023, that cost is $31.50/month. So, the penalty would be $0.315/month for every month that passed in which an individual could have enrolled in a plan but didn't.
When can I enroll in a Medicare Prescription Drug Plan?
The initial enrollment period for someone new to Medicare begins three months prior to the month of their birthday and extends to three months following the month of their birthday. Changes may be made during the annual open enrollment period (AEP) for Medicare Prescription Drug and Medicare Advantage Plans which occurs every year between October 15th through December 7th. Changes made during this time begin the upcoming year.
Am I required to purchase a Medicare Prescription Drug Plan?
No. However if you don't purchase one within three months following the month when either Part A or Part B begins, you will be assessed a lifetime monthly penalty if you decide to later take a Medicare Prescription Drug Plan.
How do I choose which Medicare Prescription Drug plan is best for me?
The government simplifies the process for us by providing a calculator on their website in which your particular drugs can be input. Because many of the prescription drug plans have business relationships with different pharmacy chains and offer discounts when using them, the calculator allows you to choose which pharmacies you may want to use. After inputting your prescriptions and choosing your pharmacies, the calculator will take into account all expenses associated with purchasing your indicated drugs and will order them for you by cost effectiveness.
How do Medicare Prescription Drug Plans work?
Plans are overseen by the federal government and offered by private insurance companies. Some plans require a deductible to be met -- some don't. Some offer discounts by using network pharmacies -- some don't. All plans must offer at least two choices for each type of drug; i.e., a minimum of two cholesterol drugs or two blood pressure drugs. All use the same threshold ($4,600 in 2023) to determine when in the coverage gap ("donut hole").
Is it possible to obtain Medicare Prescription Drug Plan without buying a stand-alone Plan?
Yes, through a Medicare Health Plan.