It’s likely you’ve never had your Medicare options laid out for you as a simple set of choices. Our goal here is for you to leave knowing the basic choices available to you when you have Original Medicare. To be clear, this will only outline your options within the scope of Medicare insurance. If you keep employer coverage or choose to participate in non-insurance related products (such as religious medi-share style policies), then this will not help you with those options.
Three Kinds of Coverage
Most are surprised to hear that it’s ONLY three. With as much mail and advertising that you’ve come across, you may be thinking that there should be plenty more. In all honesty, there are many options within these three kinds of coverage, but there are only three main ways to manage your Medicare insurance.
1. The Bare Necessities
Sometimes you just want to look for the bare necessities. In terms of your Medicare options, this is when you just have Original Medicare (Part A & B) and a Prescription Drug Plan (Part D). You can go to any provider in the country that accepts Medicare, which you will find is a vast majority. You are only responsible for your Part B premium (some exceptions apply where you are also responsible for Part A) and the premium for a Drug Plan. For reference, the average Part B premium is $144.60 per month and the average Drug Plan premium is about $33 per month. It’s important to note that Original Medicare doesn’t cover all medical related services. This isn’t necessarily bad, but both of the following two options are set up to lower Original Medicare copays & coinsurances and may cover extra services not covered by Original Medicare. So, this option is likely to have the highest out-of-pocket costs for services. For a list of what’s not covered under Original Medicare, please refer to our class on “What Medicare doesn’t Cover”. Because Medicare has penalties for not enrolling in Part B and Part D when eligible, this option will ensure you don’t pay any penalties. To learn more about this option, please refer to our class on “Original Medicare and a PDP”.
2. The Upgrade
This option is easy to grasp as long as you understand the first. We are simply taking “The Bare Necessities” (Original Medicare and a Drug Plan) and adding a Medicare Supplement (Medigap) plan. A Medicare Supplement is a plan that simply supplements your Original Medicare by picking up some or all of your Original Medicare deductibles, copays and coinsurances. “The Upgrade” comes with an additional cost. This option is often the most expensive because it maintains the network freedom of Original Medicare, while eliminating the unpredictable out-of-pocket costs associated with “The Bare Necessities”. On top of your Original Medicare and Drug Plan costs, you will have to pay anywhere from $40-$150 per month for a Medicare Supplement plan as a 65 year old. These plans are often priced based on your age and county. So, as you get older these prices will also increase. For this reason, on average only around 17-20% of a given county will choose to enroll in “The Upgrade”.
Medicare Supplement plans have enrollment restrictions depending on your health, but there are certain times when you can enroll during a guaranteed acceptance window. If you are just now starting to receive Medicare benefits or are within two months of leaving employer coverage, then you are eligible for guaranteed acceptance into one of these plans.
There are up to 11 kinds of Supplement plans available classified by letters of the alphabet, which offer various levels of coverage. The more coverage a plan offers, the higher price in premium it will be. Among the various levels of coverage, there is a plan that shifts all of your Original Medicare shares of costs to be paid for by the Supplement. This is known as the F plan. With this plan, it’s possible to pay your monthly premiums and subsequently nothing more for all Medicare covered services received. Just show your insurance cards without worry about potential out-of-pocket costs. To learn more about “The Upgrade”, please refer to our class on “What is a Medicare Supplement (Medigap) Plan?”.
3. The All-Inclusive Package
Many people find an all-inclusive package to be of great value. They save on costs by bundling everything. This is what a Medicare Advantage Plan (Part C) does. Often, the services you need are provided onsite or through an approved vendor. You can generally upgrade your package to provide more value as well as choose a bundle package that is tailored for you. True to the metaphor, on average anywhere from 30-50% of a given county will be enrolled into “The All-Inclusive Package”.
A Medicare Advantage Plan is when a private company manages your Original Medicare in exchange for lower shares of cost and increased coverage. By law, at minimum, these plans have to offer: at least what Original Medicare covers, an extensive network of physicians, and a quality of care on par with Original Medicare.
Let’s first talk about the advantages of this option. They will have either a low or $0 premium, lower shares of cost for most all of your Original Medicare benefits. Many Medicare Advantage plans offer primary care and specialist visits as well as diagnostic tests at no cost. A maximum out-of-pocket limit for all medical services received within a given year is automatically included. A maximum out-of-pocket limit is great for those concerned about catastrophic costs that could potentially arise from what life unexpectedly deals you. Lastly, they will often cover a variety of additional services that Original Medicare doesn’t cover. These can include: glasses and eye exams, hearing aids, over-the-counter medications, gym benefits, and more. These additional benefits vary by plan.
As we alluded to earlier, these plans do have network restrictions. This means that the doctors you wish to see must accept the plan you choose. Please take note that just because they accept Medicare does not mean that they will necessarily accept any Medicare Advantage plan. Since these plans are “The All-Inclusive Package”, your doctors will all have to be participating providers for the same plan in order for you to see them in-network. This generally won’t be an issue, but it’s important to do your homework before choosing an enrollment option. Networks are developed within and across counties. So, your doctors will often have a few Medicare Advantage plans that they accept.
If you are interested in the most bang for your buck and are okay with doing your due diligence prior to making your choice, then “The All-Inclusive Package” may be the option for you. To learn more, please refer to our class on “What is Medicare Advantage?”.
We hope that now you will be more educated than most of your peers and even most healthcare professionals! Believe it or not, most healthcare professionals do not understand or know what your Medicare options either. Many times they are only aware of what your options are with them, and even then they might not know how those options affect your costs and experience with others in the healthcare industry. This is why it’s important for you to know your options and have a way of navigating your healthcare. We recommend partnering with a trusted Medicare broker to take this lesson a step further and help teach you what your specific options are based on your needs and circumstances. Brokers are not allowed to charge you anything for their services. They are paid fairly and evenly by the health plan, no matter which option you choose. To learn more, please refer to our class on “How do Medicare Brokers get Paid?”.
For questions, a review of your situation, support in enrolling into Medicare or any other Medicare related service, please contact us at the option that best suits you.