Medicare - Your Protector
As you come close to the age of 65, you face the opportunity to
take advantage of a Medicare offering. Having recently faced this
myself I wanted to pass some of what I learned to you.
Timing - You need to apply for Medicare a couple of months
before you turn 65. Applying before your birthday could be really
important because it is very likely that your private insurance
company will declare you ineligible for your current insurance on
your 65th birthday. Also, if you miss your birthday by more than
90 days (some will say 30 days), your options under Medicare
will be limited and you could miss out on some of the benefits for
at least a year. Don’t miss this deadline!
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Choices - There are three categories of coverage; (1) “Original Medicare,” (2) “Medicare Advantage Plans,”
and (3) ”Medicare Supplement (Medigap) Plans.” Original Medicare is run by the government, whereas
Medicare Advantage Plans are run by private insurance companies under contract with the government
Medicare agency. Medicare Supplement plans combine many of the features of Advantage plans with extra
coverage for areas that Original Medicare or Medicare Advantage may require you to pay. Medicare
Supplement plans usually cost more, due to their additional coverage.
You have the choice of which plan suits you best and the costs vary accordingly.
There is one main publication that is available online called "Medicare and You" that does a good job of
describing your options in excruciating detail. There is also a good summary on the Medicare site called
"Medicare Options Comparison" that you may want to look after you read this article. It not only provides a
good summary similar to this article, but it also gives you additional links to get additional information.
Original Medicare Plan
This plan consists of Part A and the option of adding (for
additional premiums) Part B and Part D. You will
automatically be enrolled in the Original Medicare Part A
unless you specifically choose to add Part B or D or
choose a Medicare Advantage Plan (which is termed “Part
C”) or a Medicare Supplemental Plan.
[Simply put, Part A is coverage for a hospital stay, Part B is
coverage for doctor’s expenses and Part D is coverage for
medicine.]
Original Medicare is a fee-for-service plan administered by the Federal government. This means the plan pays for hospital stays, doctor charges (if you elected Part B) and medicine (if you elected Part D) minus a deductible and minus a co-payment.
Even if you choose to sign up for a Medicare Advantage or a Medicare Supplemental plan, you will still have to pay Medicare a premium (about $96/month) for Part B. What’s more, if you make above a certain amount of money, you may have to pay an additional premium. These payments have to be made directly to the government agency running Medicare (the Social Security Administration). Page 119 of "Medicare & You" goes into this in detail.
Medicare Advantage Plans
Medicare Advantage Plans, termed Part C, consist of Part A and Part B coverage. Each plan can be administered as an HMO (fixed choice of provider within a network), PPO (relative freedom of choice of provider), private fee-for-service or a special needs plan. Pricing for these plans varies widely, with some being offered at no additional cost beyond the cost of Original Medicare Part B. Usually the lower cost is offset by higher co-payments and deductibles. Also, the most prevalent Medicare Advantage plans are HMOs that require your doctor to be within a network and require pre-approval for many procedures. Part D is usually offered as an added cost option under these plans.
Many say that Medicare Advantage plans are better than the Original Medicare plans because your insurance company acts as your ombudsman, taking care of dealing with the government Medicare organization for you. To review the options for Medicare Advantage plans you can go to "How Medicare Plans Work."
Medicare Supplement (Medigap) Plans
Neither Original Medicare nor Medicare Advantage plans cover everything. Additional cost may be co-payments, co-insurance, deductibles, etc. These are affectionately referred to as gaps. Medicare Supplement plans help cover these cost and are hence called “Medigap” plans.
Supplement plans can be complicated, but the choice is aided by regulated standard offerings, labeled A through L. This standardization allows you to easily compare the costs of the coverage across insurance companies since the coverage is the same for each of the A-L offerings. The best summary of these offerings is on page 13 in the document "Choosing a Medigap Policy."
Prescription Drug Plans
A Prescription Drug Plan (PDP) provides insurance coverage for medications. Each insurer offering a PDP has a list of the drugs they cover and what type of co-pay you may need for each. It's important to find a plan that covers the drugs you are taking so as to minimize your overall drug expenses. There is a site with a plan finder that will help you choose the best plan for you. This can be found at "Formulary Finder."
These plans can be purchased on a stand-alone basis or in conjunction with a Medicare Supplement or Medicare Advantage plan. Co-pays and premiums are modest and the savings can be significant. Note that you want to choose a plan that considers as many of your drugs as possible in a low tier (you pay the least).
If you take a lot of prescription drugs you may discover that Medicare Part D has a big gap that could cost you a lot of money. Part D covers up to $2400 in drug costs by covering 75% of the costs. From $2400 to $5451 (in 2007) Part D pays you NOTHING. At $5452 and above Part D kicks in again, covering 95% of the costs. This is called the “doughnut hole” and many think the drug companies were behind it. The more your Prescription Drug plan covers, the less likely you will be to fall into the doughnut hole.
Medicaid
This is a plan that is administered by your state that is available for people with low incomes. Since the Medicaid plans vary by state, if you think you may qualify as having low income or special needs as defined by your state, you should check into Medicaid. This publication talks about Medicaid coverage: "Medicaid at a Glance 2005."
Getting Started
Amazingly the government Medicare site is a great resource for practically all you need to know. The only other source would be insurance companies offering Medicare Advantage or Medigap policies. It is good to study the Medicare site before going anywhere else. The site can be found at www.Medicare.gov. You will want to join this site, but you will need to get your Medicare card first. You can do this by calling Medicare directly or by applying online through the Social Security Administration. This link should work:
Enrollment form
Good luck and don’t miss the date!
--Les Briney can be reached via info@ofdenterprises.com.
Even if you choose to sign up for a Medicare Advantage or a Medicare Supplemental plan, you will still have to pay Medicare a premium (about $96/month) for Part B. What’s more, if you make above a certain amount of money, you may have to pay an additional premium. These payments have to be made directly to the government agency running Medicare (the Social Security Administration). Page 119 of "Medicare & You" goes into this in detail.
Medicare Advantage Plans
Medicare Advantage Plans, termed Part C, consist of Part A and Part B coverage. Each plan can be administered as an HMO (fixed choice of provider within a network), PPO (relative freedom of choice of provider), private fee-for-service or a special needs plan. Pricing for these plans varies widely, with some being offered at no additional cost beyond the cost of Original Medicare Part B. Usually the lower cost is offset by higher co-payments and deductibles. Also, the most prevalent Medicare Advantage plans are HMOs that require your doctor to be within a network and require pre-approval for many procedures. Part D is usually offered as an added cost option under these plans.
Many say that Medicare Advantage plans are better than the Original Medicare plans because your insurance company acts as your ombudsman, taking care of dealing with the government Medicare organization for you. To review the options for Medicare Advantage plans you can go to "How Medicare Plans Work."
Medicare Supplement (Medigap) Plans
Neither Original Medicare nor Medicare Advantage plans cover everything. Additional cost may be co-payments, co-insurance, deductibles, etc. These are affectionately referred to as gaps. Medicare Supplement plans help cover these cost and are hence called “Medigap” plans.
Supplement plans can be complicated, but the choice is aided by regulated standard offerings, labeled A through L. This standardization allows you to easily compare the costs of the coverage across insurance companies since the coverage is the same for each of the A-L offerings. The best summary of these offerings is on page 13 in the document "Choosing a Medigap Policy."
Prescription Drug Plans
A Prescription Drug Plan (PDP) provides insurance coverage for medications. Each insurer offering a PDP has a list of the drugs they cover and what type of co-pay you may need for each. It's important to find a plan that covers the drugs you are taking so as to minimize your overall drug expenses. There is a site with a plan finder that will help you choose the best plan for you. This can be found at "Formulary Finder."
These plans can be purchased on a stand-alone basis or in conjunction with a Medicare Supplement or Medicare Advantage plan. Co-pays and premiums are modest and the savings can be significant. Note that you want to choose a plan that considers as many of your drugs as possible in a low tier (you pay the least).
If you take a lot of prescription drugs you may discover that Medicare Part D has a big gap that could cost you a lot of money. Part D covers up to $2400 in drug costs by covering 75% of the costs. From $2400 to $5451 (in 2007) Part D pays you NOTHING. At $5452 and above Part D kicks in again, covering 95% of the costs. This is called the “doughnut hole” and many think the drug companies were behind it. The more your Prescription Drug plan covers, the less likely you will be to fall into the doughnut hole.
Medicaid
This is a plan that is administered by your state that is available for people with low incomes. Since the Medicaid plans vary by state, if you think you may qualify as having low income or special needs as defined by your state, you should check into Medicaid. This publication talks about Medicaid coverage: "Medicaid at a Glance 2005."
Getting Started
Amazingly the government Medicare site is a great resource for practically all you need to know. The only other source would be insurance companies offering Medicare Advantage or Medigap policies. It is good to study the Medicare site before going anywhere else. The site can be found at www.Medicare.gov. You will want to join this site, but you will need to get your Medicare card first. You can do this by calling Medicare directly or by applying online through the Social Security Administration. This link should work:
Enrollment form
Good luck and don’t miss the date!
--Les Briney can be reached via info@ofdenterprises.com.