If you are approaching age 65, then you’ve probably already received an overload of information on Medicare through ads, emails and the internet. It can be stressful when you know you have to make decisions on a variety of things and there are deadlines looming. We think the best approach is to start with the basics, the A, B, C’s so to speak. Let’s first define what each part is, then we can build on that.
Original Medicare has TWO basic parts, Part A, and Part B. There’s also a Part C and a Part D, but we’ll talk about that a little later.
Part A is the hospital insurance part; it helps to cover inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care. Most people don’t have to pay a premium for Part A. You’ve already paid into the system in the form of the Medicare tax deductions on your paycheck. However, Part A isn’t totally free. If you did not pay enough in payroll taxes, Part A could cost you $437.00/m.
Medicare Part A also a hefty deductible each time you are admitted into the hospital. It changes every year, but for right now in 2019 it’s $1,364/admission. Now for a quick disclaimer: technically the Part A deductible is per Benefit Period. So in an effort to keep it simple, we use the term per Admission because that takes care of 90% of the hospital admissions.
*** You can buy a supplemental or Medigap policy to cover that deductible and some out-of-pocket costs for the other parts of Medicare.
Part B is the medical insurance part; it helps cover the services from doctors and other health care providers, outpatient care, home health care, durable medical equipment like wheelchairs, walkers, hospital beds, and other equipment and supplies, and many preventive services like screenings, shots, and yearly “wellness” visits.
You need to know that Part B has a monthly premium and you may want to defer signing up for Part B if you are still working and have insurance through your job or are covered by your spouse’s health plan. But if you don’t have other insurance and don’t sign up for Part B when your first eligible to enroll in Medicare (i.e. Turing 65), you may have to pay a penalty for the rest of your life. The federal government sets the Part B monthly premium, which is $135.50 for 2019. It may be higher if your income is more than $85,000.
Part B also has a deductible like your Part A but the Part B deductible is per year. Not per Admission like your Part A deductible. So Part B has an annual deductible set at $185.00 per year for 2019 PLUS, 20% of the bills for doctor visits and other outpatient services.
If you are collecting Social Security, the Part B monthly premium will be deducted from your monthly benefit check. But…. what if you are not getting a social security check!! How will you pay for your Part B???
Social Security will automatically send you a quarterly bill for your Part B premium. That quarterly amount is $406.50. $135.50 X 3 months = $406.50. That is a lot of money to come up with every quarter. And if you forget to pay it and get your Part B cancelled, it will take an act of Congress to get it reinstated.
Our recommendation: PUT YOUR PART B PREMIUM ON BANK DRAFT.
With us so far? Good! Read on!
So now we’re at Part C. Part C is called Medicare Advantage. It’s an “all in one” alternative to the Original Medicare. Meaning it covers Doctor, Hospital and Drugs. It works just like your group health coverage you had at work. I like to call it Group Coverage for Seniors.
For example, like your coverage at work, you had a copay to see the doctor. You had a deductible and you had a Max out of pocket for the year and your work plan had drug coverage. But most important, your work plan had a Network of doctors and hospitals that you had to see to get the most bang for your buck. That is basically Medicare Advantage.
Medicare Advantage was introduced because seniors were retiring from work, going on Medicare and the only options was the Red, White and Blue Medicare card and a supplement. That was your only option. So, seniors complained to Congress because they wanted a Health Care Option like what they had at work. Hence Medicare Advantage.
Medicare Advantage plans generally are either health maintenance organizations (HMOs) or preferred provider organizations (PPOs). And many of the plans offer what I like to call Bonus Features like, Dental, Vision, Hearing, Gym membership and Over the Counter benefits.
Don’t worry about the term HMO vs PPO. You want to enroll in the best and cheapest plan in your area for your situation. The HMO’s are just as good as the PPO’s. Just make sure you doctors are in the Network!!!
Now regardless of what plan you get, Medicare Supplement or a Medicare Advantage plan, you are required to get a drug plan or pay a penalty. Unless you are a vet. So, when looking at your drug coverage, the key is to make sure your drugs are covered under your plan. Then you need to look at the actual cash price. If you want to avoid the GAP, your monthly cash price for your drugs must be below $335.00/m. If your cash price for your drugs is over $335.00/m, then your’re going in the GAP.
Also, stay away from combo drug and extended release drugs. The drug companies are taking two generic drugs and combining them into one drug and charging $400.00 per month. Take each drug separately and you will spend $10.00 a month. So take one pill each day and spend $400.00 or take two pills and spend $10.00. Your choice!!!
Extended release drugs are in the same boat. You can take one extended release per day and spend $300-$500.00/month or take two and spend less than $20.00/month.
Pay attention and ask questions. But more importantly, make sure you have a good Medicare Agent. If you agent is not helping you lower your annual drug bill, do you think they will help you with a claim issue?
Hopefully our definition of Medicare Parts A, B and C have provided you with a foundation for making the best decisions to meet your healthcare needs. We are always happy to explain these things further; we want you to feel confident that you’ve made good choices!
Remember “We Put the CARE in Medicare” so, we welcome your calls and questions. Call 833-777-GARY (4279)