.Medicare is multi-faceted and complicated – but don’t despair – you can get help.  This article provides some of the basics about the different Medicare plans.  It won’t make you an expert, but it will provide you enough information so you will know what types of questions you need to ask.

Health Insurance, or Medicare Alphabet Soup!

First of all, are you sixty-five yet or close to it?  If so, you will qualify for Medicare and need to sign up for Part A.  You have a seven month period around your 65th birthday to sign up.  Let’s say your birthday is the 15th of May.  Starting the first of February (3 months before your birthday) until the end of August the same year, you can sign up.  If you miss that window, you will incur penalties (potentially for the rest of your life) and you do not want that!  Even if you are still employed and have no plans to retire yet, you STILL need to sign up within that seven month window for Medicare.  You don’t have to start using Medicare until you quit work if you don’t want to.  But. You. Still. Have. To. Register.

Once you reach the age of 65 and are retired, Medicare will be a major part of your health care.  You must do the research to discover:

1. which types of health insurance you need
2. the type of coverage you want and/or need
3. how much coverage you can afford

The best advice I can give you is to find an independent insurance broker that specializes in Medicare.  They are able to look across all the different types of coverage available for you based on your specific needs.  The broker will ask you about your travel plans – will you be traveling outside your state or outside the country?  They will ask about extra coverage, like dental and vision.  Even the types of medications you take now will be important to help you find the best, most affordable coverage for YOU.

Basic Medicare

Medicare Part A – hospital services

What does Medicare Part A cover?  Part A helps pay for hospital and facility costs.  This includes things like a shared hospital room, a skilled nursing facility and in limited circumstances, at home.  It also helps cover meals and nurse care.  However, Medicare has limits to what it will pay for each category.  Be sure to read specific Part A documentation to determine what is covered.

Medicare Part B – medical costs

If you are still working and are covered with insurance from your workplace, you don’t need to file for Medicare Part B – YET.  Most likely, you will file when you retire because you will probably want health care coverage.

What does Medicare Part B cover?  Part B covers medical services and supplies that are medically necessary to treat your health condition. This can include doctor visits, outpatient care, preventive services (like flu shots), ambulance services, and durable medical equipment.  It is care that happens outside of a hospital.

As in Part A coverage, there are limits to what is covered.  Be sure to read specific Part B documentation to determine what is covered fully and partially.

Parts A and B together are called Original Medicare. The federal government runs these two parts.

Medicare Part C – Advantage plans

Part C plans are offered only through private insurance companies and are approved by Medicare. Part C plans are also known as Medicare Advantage or Medicare Health plans.  They cover everything Parts A and B cover, plus more.  Usually they cover more of the costs you’d have to pay for out of pocket with Medicare Parts A and B.  Part C plans put a limit on what you pay out of pocket in a given year, too.  Some of these plans cover preventive dental, vision and hearing costs.  Original Medicare doesn’t.

Medicare Part D – prescription drug coverage

Part D helps pay for prescription drugs. These plans are only available through private health insurance companies. They’re called prescription drug plans. They cover commonly used brand-name and generic drugs. Some plans cover more drugs than others.

Many Medicare Advantage plans include Part D prescription drug plans built right into them.

Medigap policies

Original Medicare pays for many, but not all health care services and supplies.  Medicare Supplement Insurance policies, sold by private companies, can help pay some the health care costs that Original Medicare doesn’t cover.  For example, copayments, coinsurance and deductibles vary greatly among insurance companies and plans.

Some Medigap policies cover only services while you are in your home state or area; others cover travel outside the United States.

So, how do Medigap policies work with Original Medicare?  If you have Original Medicare and buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs.  Then, your Medigap policy pays its share.  You must pay premiums for a Medigap policy.  All Medigap policies are standardized, meaning they must follow federal and state laws designed to protect YOU.  They will be clearly marked “Medicare Supplemental Insurance.”  All policies offer the same basic benefits, but some offer additional benefits so you can choose which one meets your needs.

Comparing Medigap plans

One of the main things to note is all policies under a specific part, i.e., Part F, will have the exact same coverage for all categories.  The difference lies in deductibles, copayments and coinsurance.  How would you go about choosing which is best for you?

For the following example, Plans 1 and 2 are standardized, so basic coverage is identical.

Plan 1 costs $100/month, has a $1000 deductible per year, has coverage only in the state where you reside, copayments of $20 for each doctor visit.

Plan 2 costs $140/month, has no deductible,  covers you regardless of where you are in the world, and charges no copayments for doctor visits.

On the surface, you would expect Plan 1 to be the better option.  However, you travel outside the United States occasionally, and because of a recurring medical condition, you must visit the doctor at least once a quarter.  Now, Plan 2 is looking better.  It is definitely better to talk this through with a professional.  You do NOT want to make huge mistakes when signing up for coverage.  The bright side is you can change your plan during the open enrollment period next year, so you’re only stuck with the decision for one year.

One last thing, you can not have both an Advantage plan and a Medigap plan.  Okay, another “last” thing.  Any Medicare, Advantage or Medigap plan is participant-specific – both spouses must have their own policies.  One last, last thing . . . I promise . . . Medigap plans do not include prescription drug, eye care or dental provisions.  You must purchase those separately.

Medicare Plan F

Part F seems to be the preferred Medigap coverage for Baby-boomers.  The main reason is it will pay for ALL of the gaps in Original Medicare Part A and Part B, including both your hospital and outpatient deductible. It even pays the 20% that Medicare Part B does not cover.  This means zero out-of-pocket for you at the doctor’s office and you can choose any doctor from over 880,000 physicians in the U.S.   No referrals are required and it is guaranteed renewable the next year, regardless of your health.

Medicare Plan G

The coverage for Plan G is very similar to Medicare supplement Plan F with one minor exception: the Part B deductible. On Plan G, you pay the once-annual Part B deductible yourself. However the premiums can be quite a bit cheaper, and you pocket the savings.

Recently, I changed from an F plan to G.  I found that the payments for G were definitely cheaper than F (in my case, by $50 per month).  The Part B deductible – at this time – is $183, so my payback is less than 4 months.  I figured I would just plan to save $183 each year so I’m ready for next year’s deductible.  You can run the numbers and see if it works for you.  Oh . . . and apparently the government will not be providing new F plans in a couple of years . . . so you would be forced to choose a G plan if you want no co-pays and a very low deductible.  I imagine (this is just me guessing), that anyone with an F plan would be grandfathered.  But that’s just me guessing.

Medicare Plan K

Plan K offers a lower premium than Plans F and G, but less coverage than some Medigap plans.  Your annual out-of-pocket limit under Medicare Supplement Plan K is $5,240 (in 2018) for approved Medicare-related services. Once you reach your annual out-of-pocket limit, Medicare Supplement Plan K pays 100% of covered services for the rest of the calendar year.

Medicare Plan L

Medicare Supplement Plan L is another cost-sharing medigap policy. In exchange for slightly lower premiums than what you might pay for a Plan F, if you enroll in a Medigap Plan L, the insurance carrier will pay 75% of your covered medical expenses on most items, and you will pay the other 25%. You also agree to pay the Medicare Part B deductible and any excess charges on your own.  There is also a cap on your expenses, or your out-of-pocket limit or maximum.

Medicare Plan M

Plan M is similar to Plan N (below) except it covers the Part A deductible at 50% instead of 100%.

Medicare Plan N

Medicare Supplement Plan N is one of the newer Medigap plans.  It was first offered in 2010 and will usually have lower premiums than Plan F or Plan G.  However you will do more cost-sharing along the way:  you’ll pay a doctor copay – up to $20 each time you see a doctor – and will owe copays of up to $50 for an E.R. visit.

You will also pay excess charges. Some doctors bill an extra 15% above Medicare’s rate. This is called an Excess Charge. Plan F or Plan G take care of this for you. On Plan N, you pay the excess charge yourself.

***   Special Note:  In this article, I am not providing all aspects of Medicare coverage.  I want to make sure you have enough information so you are aware of the types of insurance coverage available and can have an in-depth discussion with an insurance agent or broker.   Also, I am not an agent or broker.  I have only provided information I found during my research.   ***

Next Steps?

So . . . now you have some of the basics on Medicare.  At least you have enough to be, as we say down south, “dangerous.”  Do your research – on the web, by making a phone call or two.  Do something . . . but whatever you do . . . DON’T FORGET TO SIGN UP FOR PART A when you turn 65!!

Okay, no more reminders.

Have you started your planning?  If so, leave me a comment below and tell me how far you are in your plan.  Have I missed something?

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