Medicare Open Enrollment time is here again. The airwaves are flooded with offers for Medicare Supplements, Medicare Advantage programs, and Medicare Part D plans from various vendors. Choosing the proper plan can be incredibly complex. The twists and turns of the system make it more than slightly possible that an insured can innocently turn a wrong corner that costs him or her dearly.
The Medicare law has four Parts labeled A through D. In addition to the four Medicare Parts, you may wish to buy a one or more supplemental policies.
Medicare Part A generally covers hospital stays, but not necessarily all charges made to you as a hospital patient. Every new hospitalization has a deductible of slightly more than $1000.00 and then additional co-pays up to various limits. Part A has been paid for through premiums you have paid during your working years. There is not an additional premium for
Part A and you must sign up for it as soon as you are eligible at age 65.
Medicare Part B covers 80 percent of the Medicare Approved provider charges for services and testing. Most people sign up when they are 65. There is a monthly premium usually paid from social security proceeds. Some people who work after their 65th birthday can remain on their employer’s health plan until they retire. You will have 90 days to sign up for Part B from the month after you attain age 65 / your retirement or you risk suffering a penalty. High income earners will pay a higher Part B premium than other beneficiaries.
There are dozens of available choices for supplemental policies under original Medicare from multiple insurance companies. The government has set specifications for these policies. Unfortunately, they are named Plans A through N. This has nothing to do with the Parts in the law briefly discussed above. All Plan A policies offer the exact same benefits and all other Plan A supplemental policies and so on. The charges for these supplemental policies are all individual to the various companies selling them and to the states in which they are sold.
Confused yet? Here comes the zinger. The major achievement of the Affordable Care Act (Obamacare) was that it eliminated the insurance company’s ability to exclude people who had pre-existing conditions from coverage. This remains true for new Medicare insureds, but only for the first 90 days of eligibility and in certain circumstances beyond the control of the insured. Otherwise, the insurance companies are allowed to ask health questions and decline to sell supplemental policies to people whose answers they don’t like.
Part D refers to policies that help buy down the costs of prescription drugs. Again, the government provides a website that allows you to enter your prescription drugs and then reports back the premium prices and companies providing Part D coverage in your area. It would be remiss not to mention the donut hole. After you spend a yearly sliding amount for prescriptions, there is a period of time when you must pay the entire retail price for prescriptions. After you pass another threshold, Medicare Part D picks up the tag again.
You may have noticed that Part C has not been mentioned. Another name for Part C is Medicare Advantage. This is an overarching policy that offers a much lower monthly premium cost than the supplements, at least the coverages of original Medicare Parts A & B, more surface simplicity, in some cases prescription coverage, and limited coverages for things like dental, vision, and even perhaps a health club membership that are not included in traditional Medicare. Advantage plans do not cover the 20 percent that supplement plans are designed to cover.
Medicare Advantage plans are usually (but not always) health maintenance organizations (HMOs). Unlike the traditional supplement plans, they are not all identical to each other in either price or benefits. Choice of doctors and hospitals is more likely to be limited.
atombash.com spoke with Kansas City Blue Cross / Blue Shield Medicare Advantage Sales Manager Moe Jackson for some very instructive descriptions of what Medicare Advantage is all about.
According to Ms. Jackson, all Medicare Advantage plans are built around a uniform template provided by the government. At a minimum, all plans must offer at least the benefits provided by Medicare Parts A and B. They may offer much more, but the exact offerings of benefits and premiums are specific to each plan.
During the open enrollment period going on now through December 7, 2015, new Medicare enrollees and current beneficiaries may enroll in a Medicare Advantage Plan. Unlike the Medicare Supplement plans to original Medicare, insurers may ask about only one health condition (end stage renal disease) as a qualifier to join the program.
According to Ms. Jackson, should someone insured under a current Medicare supplement plan choose to return to traditional Medicare from Medicare Advantage during the first year of coverage, they may do so at the same plan level they original held with the Medicare Advantage plan’s parent company and without underwriting.
There are co-pays with Medicare Advantage programs that are generally either flat amounts or a percentage of the Medicare allowable charge for a service. There is a stop loss feature to all these plans. In other words, there is a maximum annual expense to an individual. But this maximum expense does not include co-pays for prescription drugs.
And anything that is not a covered service under Parts A and B (say plastic surgery for example in most cases) will not be covered under Medicare Advantage.
So, how does one choose what is proper for them? The first answer is to find a knowledgeable agent who can actually explain all of the various options to you.
It all becomes a question of risk. How much risk are you as an insured willing to assume? With Medicare Advantage, you are making a bet that you will go through the year with minimal additional expense other than your Plan B premium. With some Medicare Supplements, you are passing off that risk to the insurer, but at a higher monthly cost.
The annual enrollment period for all Medicare programs ends on December 7, 2015 for programs that begin on January 1, 2016.