Understanding Medicare Health & Drug Plans

Understanding Medicare Health and Drug Plans is as simple as A, B, C, D… literally! There are four types of plans that you need to know about:

  1. Original Medicare (Medicare Part A and Part B)
  2. A Medicare Advantage Plan (Medicare Part C)
  3. Additional drug coverage (Medicare Part D)
  4. MediGap (additional insurance to pay for any costs not covered by Parts A, B, C, or D).

Okay, that seems simple enough, but what does this alphabet soup actually mean? Let’s run through the options.

Medicare Part A & B
Medicare Part A & B are the original Medicare. Medicare Part A is Hospital Insurance and Medicare Part B is Medical Insurance.

Hospital Insurance (Part A) may cover:

  • Hospital care
  • Skilled nursing facility care
  • Nursing home care (for medical reasons, so this does not include people who only need ‘custodial care’ – bathing, eating, and other requirements of daily living)
  • Hospice care
  • Home health services.

Medical Insurance (Part B) may cover:

  • Services and supplies that are needed to diagnose or treat medical conditions
  • Preventative services
    • Examples include:
      • Ambulance services
      • Clinical research
      • Mental health services (inpatient, outpatient, and partial hospitalization)
      • Second opinions
      • Some prescription drugs.
      • Durable medical equipment (DME) like blood sugar monitors, crutches, hospital beds, wheelchairs and other medical devices and equipment.

With Medicare Parts A & B you have the right to choose any doctor, hospital, or health care provider that accepts Medicare.

Part A and B Premiums and Deductibles

The premium (how much you pay) for Part A is free if you paid Medicare Taxes for 30 quarters (about 7 ½ years) otherwise it will cost up to $422 each month in 2018.

The premium for Part B will cost about $130 on average in 2018, but you may pay less if you receive social security.

Part A comes with a $1,316 deductible (how much you pay before Medicare kicks in). For inpatient procedures (ie. time spent in a hospital) you pay $0 for the first 60 days, $329 per day from days 61-90, and $658 per day for anything over 91 days.

Part B has a $183 deductible afterwhich you pay 20% of the Medicare approved amount (this amount must be agreed to by Medicare and is often lower than the actual cost).

Medicare Part C – Private Provider

Medicare Part C is the name given to Medicare Advantage. It combines Part A and Part B but is provided by private insurance companies who have been given approval by Medicare.

Medicare Advantage (Part C) means that you can only use health care providers who are operating within your private insurers network.

If you have paid Medicare taxes for 30 quarters or more then, with Medicare Advantage, Part A is free, Part B will cost about $130 on average in 2018, and you will also have to pay a monthly premium to your Medicare Advantage Plan. Other costs and coverages vary by plan.

What are the pros/cons of Medicare Advantage (Part C)?

Medicare Advantage plans usually provide extra coverage (but not usually full coverage) for dental, hearing, and vision expenses, plus your out-of-pocket expenses which will typically be lower with a Medicare Advantage Plan. There is a yearly limit on your out-of-pocket expenses and once you hit that limit it may all be covered.

There are some downsides to Medicare Advantage. You may be required to pay a co-payment (a set price, for example $20) or co-insurance (a set percentage, for example 20%) on covered services. The cost of the premiums may also be higher.

Medicare Part D – Drug coverage

If you chose either Original Medicare (Part A & Part B) and want a prescription drug plan (sometimes called a ‘PDP’) then you must also choose a Medicare drug plan (Part D).

It is best to sign up for Part D as soon as you are eligible for Medicare otherwise you may have to pay a late enrollment fee.

Part D (prescription drug plans) are only offered by private insurers that have been approved by Medicare. In order get Part D you first need to register for Part A and B, then call 1-800-MEDICARE (1-800-633-4227).

Note that you may not need drug coverage if you are already covered by your employer, union, Department of Veterans Affairs, or other provider. If you are already covered then it is worth comparing your current coverage to the coverage offered by Medicare Part D (prescription drug plan) using the Medicare Plan Finder.

If you choose Medicare Part C then your private insurer may already cover the cost of prescription drugs. If you are not satisfied with the level of coverage then you can register for a plan through Medicare Part D but you will have to revert to original medicare (Part A and Part B). If your Medicare Part C does not cover any prescription drugs then you are eligible to sign up for Medicare Part D with another private insurer.

The cost and coverage of Medicare Part D will depend on which private insurer that you choose.

MediGap – Supplemental Coverage

Original Medicare doesn’t cover all the medical costs you’re likely to face. A serious injury or illness could result in a large financial burden for you or your family as a result of co-payments (paying a set fee for certain services,for example $10 per doctor’s visit), co-insurance (paying a set percentage for services, for example 10% per hospital stay), and deductibles (the amount you pay before coverage kicks in, for example $1,316 for Part A in 2018).

MediGap insurance covers these costs, but only if you have Medicare Part A and Part B. If you have Medicare Part C (Medicare Advantage) and you want MediGap then you will have to leave your plan and register for Part A and Part B (Original Medicare) first.

It is illegal to be sold or to use MediGap if you have a Medicare Advantage plan! Also, it’s important to note that MediGap only covers one individual, so you and your spouse will have to each get your own plan.
You can fInd a MediGap plan on the official website by entering your ZIP Code.

If you have any questions then reach out to one of Aging Life Network’s Care Managers today or call us at 505-338-0720. Our team is more than happy to walk you through everything you need to know!

Sources and Additional Resources:

  • Use the Medicare Plan finder to complete a personalized or general Medicare Plan search.
  • While Medicare A, B, C, D and MediGap are the most common plans you may have the option to join other medicare health plans, which you can find here.
  • If you have limited financial resources then you may be able to gethelp paying your Medicare costs.
  • If you already have coverage through your employer, union, or the military then Medicare can still work for you. Find out how Medicare works with other insurance plans here, and how Medicare Part D can work with other insurance plans here.
  • Find out how to get started here
  • Learn whether you will automatically be enrolled here
  • Sign up online here if you aren’t automatically enrolled.

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