Medicare has been around since 1965 and although it has grown topsy-turvy thanks to multiple Congresses, the program can be easily understood once you remove all the distracting information. Usually, once people are on Medicare, they’re left wondering what was all the fuss about? The apparent complexity arises from the alphabet soup of descriptive letters used to identify plans and the governmental brain freezing nomenclature. Additionally, articles on Medicare attempting to educate and clear the confusion tend to be so thorough in describing all facets of the program they just make it worse.
First some basics made simple:
- Medicare Part A – think hospital stays
- Medicare Part B – think doctor visits
- Medicare Part C – is Medigap, more on that later
- Medicare Part D – think prescription drugs
- If you are already receiving Social Security, you will be automatically enrolled in Medicare.
- If you are not receiving Social Security benefits you will need to sign up. Medicare is part of the Social Security Administration and you can enroll at your local SSA office, online or by phone. Note – online is pretty simple.
You now have Part A, which is free and Part B which has a monthly premium paid by you directly or taken out of your monthly Social Security benefit. Both will essentially pay 80% of your hospital or doctor bill but you are responsible for the remaining 20% without limit. Which is why a Medicare Supplement plan (also referred to as Medigap) is necessary. More confusion coming, as these plans also are alphabetically labeled A, B, C, D, F, G, K, L, M and N, not to be confused the A, B, C,D mentioned previously… Who thought this was a good nomenclature idea?
Medigap plans are sponsored by private insurance companies and if you are approaching 65 you are already receiving mail solicitations almost daily. These plans do not have their own benefit packages, they simply administer payments as directed by Medicare. There may be 15 plan G’s offered in your area, but they all provide exactly the same benefits.
So, what plan to choose? Plans F, G and N are the most popular, because they provide the most benefits. Plans F and C are being discontinued leaving G or N as what many consider the best choices. Plan G has a $203 (as of 2021) annual deductible paid by the insured, afterward the plan covers 100% of charges. Plan N, has the same deductible and is less expensive, but with per visit co-pays which can add up quickly when multiple visits are involved.
We suggest you seriously consider plan G or N. As to which insurance company to choose, remember that they all provide the same benefits. Focus on the premium cost and company name. Have you ever heard of the company in a good or bad light? Pick the one that makes the most sense and done! Well almost…
Now you need a prescription drug plan, Plan D. If you take only a few of the typical medications a senior may use and can get generic, most plans offered will probably do and the only difference is plan cost. If, however you require specific and expensive medications then you will need to use the drug plan calculator on the Medicare web site or use an insurance agent who specializes in Medicare. The later would be my choice since drug plans can change annually so some level of monitoring your drug costs is recommended. There is no one best plan. Now you are really done and can enjoy one of the few benefits of getting older!
A few final words regarding Medicare Advantage Plans. These plans combine Parts A, B, D and sometimes include dental and vision. They are private insurance company plans which are similar to HMOs. Medicare Advantage Plans are usually the lower cost choice but are limited regarding geographic area of coverage as well as approved medical providers and all have co-pays which can add up. Also, referrals are often necessary for specialists.
Because Medicare Advantage Plans can be very local, coverage may be restricted to just a geographic area with no coverage if you are away from home. They experience changes more frequently than do supplemental plans. Their low cost is appealing, particularly for someone who is in good health. However, if after being on Medicare Advantage you decide you do not like the limitations and you wish to switch to a Medigap plan, you will be subject to medical underwriting which can restrict your ability to change.
The “Medicare for Dummies” takeaways:
- Relax, you will like being on Medicare.
- For a supplement plan consider G or N.
- For drug plans consider your medication costs or speaking to your pharmacist as to what they see most often.
- Lastly, consider utilizing a trusted Medicare insurance agent to make these decisions. Insurance costs will be the same as if you went through the process alone.