Tuesday, August 30, 2016

Confusing Parts of Medicare

Are you confused about all the different parts of Medicare ... the so-called Medicare "alphabet?"  If so, you are not alone. Whether people are getting prepared to sign up for Medicare for the first time or are already using it, the different parts can seem like a foreign language.  Below is a brief summary of the different parts, as well as a little basic information that everyone needs to know. 

Medicare Parts A, B and D

Medicare is broken up into four different parts and each one has a different purpose and, in some cases, different requirements that determine whether or not you are eligible.

Medicare Part A:  This section will help pay for your stay in a hospital or skilled nursing facility. It might also pay for home health services and hospice care, if the patient meets certain criteria.  If you or your spouse paid into Medicare long enough during your working years, you do not pay monthly premiums for Part A.  If neither you nor your spouse paid into it while you worked, you can still buy Part A services by paying monthly premiums.  Everyone is entitled to Medicare Part A, either free or for a monthly fee.

Medicare Part B:  This section will help pay for doctors' services (whether in or out of the hospital) and outpatient care, including lab work, tests and health screenings.  It can also cover the cost of some types of medical equipment and supplies, under some circumstances, as well as most vaccines or drugs that the doctor gives you in his office.  You do pay monthly payments for Part B.  However, low-income people may quality for state assistance.  There is a seven month window to sign up for Part B ... three months before your 65th birthday month, during your birthday month, and three months after your birthday month.  If you wait too long to sign up, you can still obtain it, but you will pay extra premiums for the rest of your life.  Medicare Part B only covers about 80 percent of their approved costs and the patient pays the other 20 percent.  At the bottom of this article is more information on the two options you have for covering your portion of the bills.

Medicare Part D:  This section covers the cost of prescription drugs that you take at home.  There is an additional premium involved in getting a Part D drug plan, unless you purchase it as part of a Medicare Advantage Plan.

Medicare Supplements and Medicare Part C

Medicare parts A, B and D are frequently called "basic Medicare."  People often believe they are all you need.  However, sometimes they do not realize they need to sign up for Part D to cover their drugs.  In other cases, people do not realize that when they settle for basic Medicare alone, they are still obligated to pay 20 percent of their medical bills ... which can be substantial.

What do people do to solve these problems?  They have two choices.  First, they can get the three parts of basic Medicare (A, B and D) PLUS purchase a supplemental health insurance policy.  Second, they can simply get a Medicare Advantage plan, also known as Medicare Part C, PLUS a Part D plan if the Medicare Advantage plan they choose does not include drug coverage.  Confusing enough?  Below is a little more information.

Supplemental Insurance:  Many insurance carriers offer supplemental policies, sometimes called Medigap policies, including Anthem, Humana and United Healthcare.  There are different rates, depending on the size of the deductibles and co-pays you prefer. The government even has a website to help you compare Medigap policies.  If you decide to get a Medigap supplemental policy, do it as soon as you sign up for Medicare Part B.  If you buy one within six months of enrolling in Part B, the insurers cannot deny you coverage or charge higher premiums because of preexisting medical conditions.  With supplemental insurance, your doctor or hospital will send medical bills to Medicare first.  Once Medicare reimburses the doctor or hospital, next they bill the supplemental insurance carrier.  After that, they will bill you for any remaining costs.  This system sometimes confuses people, because they keep getting statements from the hospital, doctor and the insurance companies for the same procedure.  Sometimes they think they are being double-billed.

Medicare Advantage or Part C:  This is a completely alternative way to receive your Medicare services.  Everything is administered by one private managed care plan.  There are both HMO and PPO options.  These plans are required to cover everything that is offered in basic Medicare, but they may charge lower co-pays and/or offer additional benefits.  Some of the companies that offer these plans are Kaiser Permanente and Scan. The government also has a website to help you learn more about Advantage plans. The plan you buy may also include Part D drug coverage, or the company could offer you a choice of drug plans at a separate price.  Often they offer extra benefits such as dental, vision and hearing care.  In some cases, there are NO premiums, other than what you would pay for basic Medicare.  With other plans, you may have an additional premium.  They may restrict your choice of doctors to only ones who are in their network, or they may charge a higher copay if you go out of network.  Only one company is billed, the Medicare Advantage company, which is less confusing for some people, since they only receive one set of statements and bills for each procedure.

The Medicare Advantage choice is often the least expensive, since there is frequently no premium or only a small premium above the cost of basic Medicare.  However, it is always beneficial to shop around to make sure that you are getting the most for your money, from a reputable insurance company.  Make sure you are aware of all the major choices available in your state.

Summing Up Medicare

To bring it all together, it is important that everyone contact their local Social Security office as soon as possible when they get close to age 65.  In addition, most people will want to attend informational meetings and get more details about the insurance options for both Medicare Supplemental Plans and Medicare Advantage Plans in their state.  Don't make a decision until you have met with two or three different companies and learned about all your choices.

If you start with a company and realize that you wish you had chosen a different company or type of plan, you are not stuck with your first choice.  There is an open enrollment period every year between October 15 and December 7.  During that time, you are free to move to a different plan.

You May Also Want to Find Out About Common Medicare Mistakes

In addition to knowing the various parts of Medicare, you may also want to read the blog post linked below.  It explains the most common Medicare mistakes made by people approaching retirement:

COMMON MEDICARE MISTAKES  

Looking for more information about Medicare, retirement planning, where to retire, common health problems as we age or more?  Use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles.

You are reading from the blog:  http://www.baby-boomer-retirement.com

Photo credit:  morguefile.com


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