What Are My Medicare Options? - Sixty Five Insurance Group

Before you decide on “options”, you need to understand why people feel the need to add something to Original Medicare. In other words, why isn’t Original Medicare enough?

Original Medicare (Parts A&B) – Deductibles, Co-insurance, and no stop loss! The GAPS!

On it’s own, Original Medicare (Parts A and B) is pretty good (especially in light of most non-Medicare plans). You have the freedom to go to any doctor or hospital that accepts Medicare and referrals are not required! In fact, if your care usually consists of a couple of doctor visits a year and/or accessing preventive care such as a mammogram or a prostate screening the costs are pretty manageable. However….

The issue with this approach can arise when you start needing care in a hospital setting and/or develop serious conditions. In cases like this, the deductibles and the co-insurance associated with Original Medicare can become costly.

For example, the deductible for an inpatient hospital stay is $1408 (2020). This is true even if it’s only for 1 day! Additionally, most don’t realize realize that this deductible is per benefit period which means it can come up more than once per year.

On the Part B side, after a $198 deductible (2020), the patient responsibility is usually 20% (Medicare usually pays 80%) on most doctor and medical services. While 20% does not seem too bad, if you are diagnosed with something more serious (such as cancer or a major heart procedure), then that 20% could be large as well…and there is no limit to high the charges can go! These are known as the GAPS in Medicare.

When Do You Get Medicare?

While most people start Medicare when they turn 65 years old, you can also gain access to Medicare before age 65 by virtue of a qualifying disability or by developing certain conditions such as ALS (Lou Gehrig’s Disease) or ESRD (End Stage Renal Disease). You could also be considered “new” if you delayed Medicare, continued working past age 65, and remained on your employer group health plan. Regardless of how you are approaching Medicare, as you are getting ready to take the “plunge” you may be wondering “now what”? You may have even heard that you could be fined or penalized by not signing up when you are eligible!

When it is time for Medicare, it can seem overwhelming and that is too bad because it shouldn’t be. Medicare is, by most accounts, a very popular government program. For many, it is the first time in a long time that they have affordable health coverage. The process of choosing your Medicare health plan should be exciting, not scary or confusing.

These GAPS are why most people choose to supplement Original Medicare. Supplementing Medicare effectively puts a ceiling (or “stop loss” or “maximum out of pocket”) on the potential costs that could be billed to you in the event of a major illness or accident. This gives peace of mind.

Now, assuming you decide to supplement Original Medicare, you generally have two options:

1. Medicare Supplements

Medicare supplements are health insurance policies sold by private insurers that work in conjunction with and help cover the GAPS in Original Medicare. They are also sometimes called “Medigap Plans” or “secondary plans”. You must be entitled to Part A and enrolled in Part B (Click here if you need help signing up for Part B) to qualify for a Medicare Supplement plan. These policies have a premium that must be paid in addition to the Part B premium.

Why Do People Choose Medicare Supplements?

You get to choose your doctors and hospitals. There are no networks.
Referrals are not necessary. Want to see a specialist? Call and make an appointment!
Your policy is guaranteed renewable. You cannot be dropped because you are sick.
You can predict your costs. Once you pay the premium, it is easy to determine your liability.

How Do They Work?

When a Medicare supplement owner receives a medically- approved service or treatment, a claim is filed with Medicare. Medicare will then process the claim and, if approved, pays its share (usually 80%). Once Medicare has paid, the supplement generally pays the remaining costs that would normally be paid by the patient. The amount that is paid depends on which Medicare Supplement plan they own.

Part A

– Helps pay for hospital stays, inpatient care, hospice, and skilled nursing.

Part B

– Helps pay for doctor visits, testing and outpatient care

Parts A& B are commonly known as “Original Medicare”

Part C

– Combines Part A and B of Medicare into one plan and is offered by private companies. These plans usually include prescription drug coverage.

Part D

– Helps pay for prescription drugs. Can be accessed as a “stand alone” plan with Original Medicare (A&B) or as part of a Medicare Advantage Plan (Part C).

How Do I Enroll?

If you are receiving Social Security or Railroad Retirement Board benefits, enrollment in Medicare is automatic when you become eligible. You will get your card in the mail.

If, however, you are not receiving benefits, you will have to enroll yourself when you become eligible. You can enroll online, call or visit the local Social Security office.

What Does Medicare Cost?

Part A

For most people Medicare Part A is premium free by virtue of a life full of working and paying taxes. In fact roughly 99% of beneficiaries do not have to pay premium for Part A. The work requirement is working 40 quarters (10 years) and pay payroll taxes. For those that did not work 40 quarters, there will be a premium. For those who worked less than 30 quarters, the premium is $458/mo. Working more than 30 quarters results in a prorated premium of $252.

Part B

Part B cost is based on your income. Most people pay the standard rate which is $144.60/mo. This premium is deducted from your social security payment of you are receiving benefits. If you haven’t started taking your social security, you will be billed quarterly. For people who earn more, Medicare calculates your Modified Adjusted Gross Income (MAGI) to determine your premium. Your MAGI is determined from your IRS tax return from two years prior. Currently about 5% of beneficiaries must pay more than the standard rate.

Part D

Part D plans can run as low as $13/mo for a basic plan and as high as $80/mo or more for plans with enhanced coverage. Which plan you enroll in should be determined by a thorough analysis of your prescription drug needs. Like Part B, people who earn more will have a higher premium requirement for Part D.