Medicare… What is it and how does it affect me?
Medicare is a Federal Health Program designed specifically for individuals over age 65 or disabled and receiving Social Security disability benefits. This program is specifically managed for the Federal Government by CMS – Centers for Medicare and Medicaid Services. There are specific requirements to be eligible for Medicare. 1st Be an American Citizen or Permanent Legal Resident (Green Card) and at least one of the following requirements:
- 65 years old
- (Any Age) Disability Income from SSA Social Security Administration
- (Any Age) Disability Income from Railroad Retirement Board
- Lou Gehrig’s Disease (ALS)
- End-Stage Renal Disease
Medicare and the various programs with it can be very confusing… Don’t Worry if you continue reading you will be a pro and understand what programs you can take advantage of.
Why? It can be a bit intimidating because it is different than all of the health plans typically offered at your job corporate America typically offers. Don’t worry, we are going to break it down so it is simple to understand.
First–Medicare is broken down into 4 separate parts:
- Part A – Inpatient Hospital Insurance
- Part B – Physician Visits and Outpatient Procedures
- Part C – Medicare Advantage Plans (Insurance Companies replace Part A & Part B Insurance plus Ancillary Benefits according to Insurance company
- Part D – Prescription Drug coverage offered through Private Insurance Companies
OK, now that we have covered the 4 Parts of Medicare, this is a bit challenging to understand. If you are wondering just how Medicare works, it’s perfect for us to consider one part at a time. As mentioned before we will begin with Parts A and B.
Medicare Part A and Medicare Part B are also known as Original Medicare coverage. Part A, known as hospital insurance, and Part B, known as medical or perhaps health insurance, work in conjunction with each other to provide you with the most benefits and advantages you will need.
There are many Americans that are eligible for free hospital insurance and generally tend to be enrolled in Parts A & B once they are eligible by age or other qualifying events. Please remember that usually Part A is provided at no cost, yet there is a monthly fee for Part B that is taken directly out of your benefit check from the Social Security Administration or Railroad Retirement Board.
Just to be clear, Original Medicare Parts A&B will cover approximately 80% of your healthcare costs and you will be responsible for the remaining 20%, this is known as co-insurance. Don’t worry, we will cover ways to cover that 20% portion a bit later. Coinsurance falls under the category of out-of-pocket expenses. However, keep in mind, there is no cap on the annual maximum on your out-of-pocket expenses. Please remember if you need to have extensive hospital stays or major surgery, this could get very expensive.
If this scenario is causing you to worry about out-of-pocket costs leading to possible financial ruins, you might want to consider adding a Medicare Advantage or Medicare Supplement (Medigap) Plan to your particular situation.
Medigap plans are standardized by Federal and State Government agencies. The only thing about Medigap plans that are not standardized or uniform is the monthly premiums or costs that the insurance companies can charge the clientele. This is where a good insurance agent can guide you to make certain you are getting the best program available for the least amount of premium.
There are plans available to cover any gaps or loopholes in your coverage to make certain you won’t face financial ruins. Both Medigap and Medicare Advantage plans are sold by private insurance companies and highly regulated by the Federal Government and State Insurance Commissioners.
In order to take advantage of Medigap Plans or Medicare Advantage Plans you must be enrolled in Original Medicare Part A&B. Remember, Medigap Plans and Medicare Advantage Plans are administered by Private Insurance Companies and cover things such as deductibles, copays, and coinsurance amounts that typically you will be responsible for. These plans vary and you must check with an appropriately licensed agent to discover the correct plan for your situation.
While Original Medicare provides excellent benefits, the one area that it doesn’t cover is prescription drug coverage. Here is where Part D—Prescription Drug Coverage comes into play. It can be offered as a stand-alone plan or combined with a Medicare Advantage Plan. Typically a Part D plan whether stand-alone or combined with a Medicare Advantage Plan will offer lower drug prices at participating (Network) pharmacies or in some cases Mail Order refills. If you get your prescription filled at a pharmacy that is not in the network, typically you will have to pay more for the drugs. Copays and Coinsurance vary from plan to plan, However, typically a drug plan will offer drugs at deeply discounted prices. Remember, you must consult with a licensed insurance agent to take advantage of a prescription drug plan.
So far we have covered quite a bit of information and it can seem to be overwhelming or a lot to keep up with. Don’t worry, it will all make sense as we go forward. Also, remember, a licensed agent is trained to offer the best program for you and your situation.
There are programs that are all-inclusive to cover your particular needs keeping you covered without unnecessary worries. We didn’t go over Part C. Part C is known as Medicare Advantage Plan. It is a plan that is again administered and offered by Private Insurance Companies. By Law, it must cover Plan A and Plan B benefits and it typically has other benefits that normal Medigap plans do not offer. Depending on the plan that is chosen, it can have Dental, Vision, and Hearing benefits. In addition, this plan can have prescription drug coverage or without. It just depends on what your particular needs mandate.