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More information about Medicare
Medicare is quite confusing for many people so unfortunately many give up and just take the path of least resistance. This, oftentimes, leads to just doing as advised, and way too frequently that comes from a voice on the other end of an 800 number.
So the first point I want to make is, use a local agent and one who can offer you both medicare supplemental plans and medicare advantage plans. That way they can concentrate on what is going to work best for you. It will not cost you a single penny more to use a local agent and now if there are problems down the road you have an agent who can help you, instead of just another 800 number voice who has no idea who you are.
So here is the short breakdown of Medicare.
Medicare pays 80% of the Medicare-approved rates, which many times are only a fraction of the billed amount. You are responsible for, at the least, the other 20% and sometimes more. If the doctor, lab, or clinic accepts assignment then that means once they are paid the "approved" amount they will consider the bill paid in full. If on the other hand they accept medicare, but do not accept assignment then they are allowed to charge you an extra 15%. So that means without the extra insurance you are liable for either the unpaid 20% or that plus an extra 15% of the total bill.
Part A - Takes care of hospital bills minus a deductible, this deductible is $1,408 for 2020. This should not be confused with the approximately $300 per day for 5 or 6 days, copayment for most medicare advantage plans. All supplemental plans except one covers this deductible. Ironically enough Plan A is the only plan that does not cover the Part A deductible. Part A is also responsible for the skilled nursing benefit. However, this benefit is greatly mis-understood. It says it will pay your nursing home bill for the first 20 days and then it will pay the amount over and above the $176 for day 21 thru 100. However please note these numbers of days are not guaranteed. They will only pay this amount and continue to pay it if you are improving.
(I'm sure just reading that paragraph shows why understanding Medicare is so difficult).
(If you prefer or already have a Medicare Advantage plan, know that there is a way to cover that hospital copayment for a small price about $16 if you are age 65 about $27 for someone age 80 click here to see those details)
Part B - covers pretty much everything Part A does not except for drugs. All the same rules apply here as to how Medicare decides what a visit or procedure is worth and the percentage that they pay. There is a one time yearly deductible, for 2020 it is $198 (a 7% increase). The only supplemental plans that cover that for you are plan C, so basically plan on paying that unless you have a grandfathered plan F. Other than that when you choose original medicare and Part B that is when you normally also want to have a supplemental plan. Altogether there are 8 different supplemental plans titled Plans A, B, C, D,G,K,L,M,N. Do not confuse these with the PARTS. I am not going to explain each one here just know they exist. As stated earlier it is in your best interest to work with an agent.
Part C - also known as Medicare Advantage actually replaces original medicare A & B and a supplemental plan with one all-inclusive plan which also usually covers Part D which is the prescription program. I say it replaces those because medicare no longer pays any of the bills. You are basically assigned to the insurance company that you chose and now they are responsible for your health care bills. The government pays the insurance companies a lump sum every month for each person they have enrolled. That number is always difficult at best to find but I know it is around $900 per month and higher in some localities. You, the medicare recipient, still have to pay the part B premium. The Medicare Advantage premium is many times what is called a $0 premium, in other words, you don't pay a monthly premium, which makes sense since the government is already paying $900 plus per month. However you will have co-payments with these plans. Some allow you to see your primary doctor without a payment, some do not. All of them do require co-payments for most everything else including specialist doctor visits, some or most lab work, out patient surgeries, and of course the big one of about $300 per day for either 5 or 6 days for hospital stays. This is not the complete list but rather a generalized list to give you an idea of what to expect. The companies are required to put a maximum out of pocket limit on their policies and you will find that in most cases that will be around the $4,000 per year mark many times a little higher than that. As stated earlier there does exist small insurance policies that you can buy ($20 to $40 per month) that can cover those costs for you. You can read about those here. The other thing that needs to be mentioned here is that with Medicare Advantage programs, the vast majority of the time you must stay within their network of doctors and hospitals and you must use their referral system to go see a specialist or schedule a surgery.
Part D - This is the prescription drug program. If you have original medicare plus a supplement than you need to purchase a Part D program. They start at a little under $20 per month and can go as high as bout $80 per month. There is a great tool on www.medicare.gov that helps you to determine which is the best drug plan for you. You list all your drugs, which pharmacy you prefer and then it shows you all the plans and the expected cost over the course of the year. This is one of those spots where it really makes a difference as to which advisor you are working with. Many, especially the telephone advisors, will just sell you the program they represent or are most familiar with instead of taking the time to go through the tool offered on the government web site. Way too often people then end up paying $20 to $40 too much per month for their drug program. Most Medicare Advantage plans have the prescription drugs built into their plan so in that case you not only don't need a plan D, you actually can't buy one without cancelling you Advantage plan.
So there you have the basic rundown. Your choices boil down to:
- Keep original Medciare and buy a supplement and a prescription drug plan which will run you anywhere from about $140 per month to over $200 per month, depending on plan and age. (Yes the prices go up every year as you get older plus inflation). You will have excellent coverage here and your total out of pocket, not counting drugs or premiums, will be a little less than $200 per year. Hence your total cost per year will be somewhere between about $1,700 per year to a little over $2,400 per year.
- Sign up for a Medicare Advantage program. There are different programs and the prices range from $0 per month (the most common) to a little under $100 per month. The one where you are paying a monthly premium usually have better drug coverage, so it's important that you take your drugs into consideration. The thing to remember here is that you do have co-payments for most services and those can add up over the course of a year. So your out of pocket in this case not counting monthly premiums or drugs can be anywhere from $0 (not very likely) up to around $4,000. For the year.
- Sign up for a Medicare Advantage program and a small insurance policy that covers at least the big co-payments that the programs require of you. In other words the hospital stay co-payment. In this case you would have almost as good of coverage as the supplemental plans offer, but at a much lower monthly cost.
As with everything in life we always have to give up something to get something, there are no free rides. In the case of Medicare programs you either have to give up extra money to get great coverage and the ability to go to most any doctor you want, when you want. That would be using the original Medicare program plus supplement. Or you give up some of your freedom of choice and you have co-payments but you stand the possibility of saving money in years where you are basically healthy. Of course that could backfire and cost you more money if you were to go to a hospital once or twice in a year. So here you are possibly saving money but you are assuming a portion of the risk now. Or, you purchase a Medicare Advantage product and a small insurance policy that covers the biggest co-payments, hence both saving you monthly premium money and offering you really good coverage. In other words we give up a little money and some of the freedoms, which makes it a good middle of the road solution for some people. Please do go read the page on the small gap coverage policies that I have mentioned several times on this page. You might be astonished by how much coverage you can get for a very reasonable price.
Personal note: I really don't care which program you go with. I only care that you go with the program that will work best for you. There is no universally right answer, but there is a correct answer for you. It is my job, and should be every insurance agent's job, to make sure we help you find your best solution.