What is Medicare?
Medicare is a type of medical coverage that is provided by the federal government. The types of people can broker down into three categories.
- People who are 65 and older
- People under the age of 65 with certain disabilities
- People with End-Stage Renal Disease (sometimes referred to as ESRD, and is permanent kidney disease that requires dialysis and/or kidney transplant)
The Three Roads of Medicare
There are three different options available for those eligible for Medicare which we will list, and then break down in detail below.
- Original Medicare (Part A, Part B and optional Part D coverage)
- Medicare Advantage Plans (Part C or MA Plans)
- Medicare Supplement (Medigap)
Original Medicare (Part A, Part B and Part D coverage)
The basic coverage you receive when you become eligible and enroll in Medicare are called Part A and Part B. These two parts are referred to as Original Medicare.
Medicare Part A is the Hospital coverage provided by the federal government. This coverage for the following:
- Inpatient hospital stays
- Care in a skilled nursing facility (needed after an inpatient stay)
- Hospice Care
- Some home health care
Medicare Part B is the Medical coverage provided by the federal government. This coverage for the following:
- Certain doctor’s visits
- Outpatient care
- Medical supplies
- Preventive Services
Medicare Part D is prescription drug coverage, and is not provided by the federal government. Insurance companies and other private insurance companies in your area offer prescription plans to you. All plans offered by these companies are approved by Medicare, and follow the prescription drug rules enforced by Medicare. Part D adds prescription drug coverage to Original Medicare (Part A and B).
Medicare Advantage Plans (Part C or MA Plans)
Medicare Advantage Plans are also known as Part C, and is “all in one” option that bundles together Part A, Part B and Part D into one policy. This type of policy is once again sold by Medicare approved insurance companies and other private insurance companies in your area. Each of these plans have a plan premium cost from $0 and up depending on which company and plan you join.
When you join a Medicare Advantage Plan you still have Medicare, but the difference is that the insurance company you join now pays all your medical bills. Also, most Medicare Advantage Plans also include prescription drug coverage as part of the policy benefits. Once you join a Medicare Advantage Plan all medical bills come from the insurance company you join instead of Medicare.
There are some key differences between Medicare Advantage Plans and Original Medicare that are very important.
- Cost: Original Medicare has no cap on how much you pay out-of-pocket each year for hospital and medical bills, while Medicare Advantage plans have an out-of-pocket maximum you pay. Once you hit this limit while on a Medicare Advantage Plan the insurance company than pays 100% of the cost of most services. This is something to seriously consider.
- Coverage Types: Original Medicare only covers medical and hospital costs. Many Medicare Advantage Plans cover things dental, vision, hearing, and prescription drugs, in addition to medical and hospital costs. If you are on Original Medicare and want other coverage such as dental and vision you will have to find an insurance company to purchase a plan from separately to cover these costs. Outside of this you would have to pay for the full cost out-of-pocket.
- Coinsurance vs. Copay: With Original Medicare you pay a coinsurance of 20% for most medical care such as office visits and outpatient surgery. However, with Medicare Advantage Plans, you pay a copay that has a fixed cost. For example, your Medicare Advantage Plan may require you to pay $20 for each visit you made to your primary care doctor no matter how much the visit costs your insurance company. With Original Medicare, you would be required to pay 20% of the total cost Medicare is charged by the doctor for each visit. If the doctor charges $200 for that visit, you would have to pay $40 for the same exact visit you would have paid $20 for if you were on a Medicare Advantage Plan.
- Network: With Original Medicare you can see any doctor that accepts Medicare. Each Medicare Advantage Plan has its own fixed network of doctors, clinics, and hospitals that are “in network” for that particular plan. The network determines the doctors, clinics, and hospitals you can go to, and each plan has rules on getting care outside the network. In most cases you can visit out of network doctors, but you pay more to do so.
- Traveling: If you are on Original Medicare and outside of the country and need medical treatment you will not have coverage, except in very rare cases. Many Medicare Advantage Plans offer emergency care outside of the country, but can have limits as to how much.
Medicare Supplement (Medigap)
Medicare Supplement plans, which are sometimes called Medigap, are plans sold by insurance companies and other private insurance companies, and help cover some of the “gaps” that Original Medicare does not cover. Medicare Supplement plans do not come with prescription drug coverage so you will also need to purchase a Part D prescription drug plan.
There are a few key differences between Medicare Supplement plans, Medicare Advantage Plans and Original Medicare that are important to know and are as follows:
- Medicare Supplement Plans are not the same thing as a Medicare Advantage plan. A Medicare Supplement plan is a supplement to your Original Medicare, while Medicare Advantage Plans replace the coverage of Original Medicare completely.
- You cannot have both a Medicare Supplement Plan and a Medicare Advantage Plan at the same time. If you want to switch plan type you can do this during an eligible enrollment period such as the annual enrollment period which occurs October 15th to December 7th each year. There are also special enrollment periods that allow for a change of plan outside the annual enrollment period, but require certain circumstances.
- When you first enrolling into Medicare for the first time Medicare Supplement plans are guaranteed issue for a 7th month period which is 3 months before your 65th birthday, the month of your 65th birthday, and the 3 months after your 65th birthday. It is important to determine if a Medicare Supplement plan is the right plan for you during this guaranteed issue window of time.
How Do You Decide Which Path to Choose?
Each person enrolling into Medicare has a unique set of healthcare needs which need to be identified in order to make an educated decision on what path you should choose. At EnviZion Insurance our agents know the right questions to ask, and will work with you to find out what you need. Based on the doctors you see, clinics and hospitals you visit, and prescription drugs you take our agents will help you find a plan to fit your needs. The goal of our agent is to help you make an educated and informed decision so be confident when picking between Original Medicare, Medicare Advantage plans and Medicare Supplement plans.