Medicare, Medigap, Medicare Advantage Plan Survival Basics
You may be one of the many millions of Americans nearing the age of 65 wondering if you will survive Medicare enrollment. As someone who has worked intimately with the Medicare program for a number of years, let me encourage you to relax. Yes, there is a great deal of confusion surrounding the program, but an understanding of the basics will allow you to put awe aside and send confusion packing.
Just what is Medicare?
Medicare is the Federal retirement program initially signed into law in 1965. It is often referred to as Original Medicare because it was the first or “original” program and is managed by the Federal government. Original Medicare coverage is available anywhere in the United States to seniors age 65 or over, people with positive disabilities under 65, and to people of any age with End Stage Renal Disease (ESRD).
How do you enroll?
If you are receiving Social Security benefits, Railroad retirement, or civil service benefits, your enrollment into Medicare will be automatic. In this case, approximately three months prior to your sixty-fifth birthday you will receive your initial enrollment packet, which will include your red, white, and blue Medicare card. You will notice an emblem of an eagle emblazoned on the front of the card. Simply sign the card, maintain it in a respectable place, and you are ready to go.
If you are not receiving Social Security benefits at the time you turn 65, then you will need to start your enrollment into Medicare yourself through the Social Security Administration. The time to do this is during your seven month Initial Enrollment Period, which includes the three months before your sixty-fifth birthday, the month of your birthday, and the three months following the month of your birthday.
Do you have to accept Medicare?
No. Although Medicare is a right granted American citizens and eligible legal residents, you do not have to enroll in Medicare if you do not want to. However, Medicare Part A is available without premium to most beneficiaries because either they or their spouse paid Medicare taxes while working. Medicare Part B does require payment of a premium, and unless you decline Part B, the premium will be deducted automatically from your Social Security benefit check. If you are not receiving Social Security at the time of your enrollment, then the Social Security Administration will bill you for Share B on a quarterly basis.
According to the Medicare publication, Understanding Medicare Enrollment Periods, if you decline Medicare enrollment during the Initial Enrollment Period, then in most cases you may risk a surcharge of 10 percent of either or both Piece A and B premiums for each twelve month period that you could have had Share A and/or B but were unenrolled.
What is the Special Enrollment Period for Part B?
An important exception to this rule as it applies to Part B would be if you or your spouse is working, and you are covered under the employer’s group health plan. If that is the case, then you can decline Fraction B enrollment under the Special Enrollment Period until either the employment or the group health coverage ends. If you decide to defer Part B enrollment, then you have the eight months following the month of termination to sign up for Part B without penalty. If you have questions about your Medicare eligibility or how much you might owe or have to pay, you would need to contact the Social Security Administration at 1-800-772-1213.
What benefits does Medicare provide and what is Part A and B?
Original Medicare offers a comprehensive range of medical and hospital benefits, and it allows doctors a relatively free and unrestricted hand in diagnosis and treatment. In fact, Medicare never gives prior authorization for services. That means your doctor can provide you with medically necessary treatment without having to explore permission beforehand from the insurance company. In Original Medicare, you could never be denied coverage because neither you nor the doctor sought prior authorization. However, it would be up to your medical provider to file claims correctly to Medicare and to show that your services were medically necessary. For purposes of administration and billing, the federally managed Unusual Medicare program subdivides your insurance benefits into two categories, Part A and Part B. In a nutshell, Part A covers inpatient hospital, skilled nursing facility, home health, and hospice benefits. Part B covers doctor services, outpatient services, and medical equipment, prosthetics, orthotics, and medical supplies.
Here is an example to relieve note how this might work. Let’s say you go into the hospital for a knee replacement. Medicare Part A would help pay for services such as room, meals and special diets, nursing, anesthesia, and medical equipment and supplies you use an inpatient, Share B will benefit pay for all doctors services such as inpatient admission and discharge evaluations, consultations, surgical procedures, and follow-up care. If you should be discharged to a Skilled Nursing Facility, then Part A would help pay for all services—including doctor services–received during your stay.
What are Medicare’s out of pocket costs?
Unfortunately, Medicare does not pay one hundred percent. In Original Medicare, beneficiaries are responsible for the Part A and B deductibles and coinsurance. These two terms are often misunderstood, but they are easy to understand. Deductible is simply a fixed share of costs you pay before the insurance begins paying on claims. You pay the deductible only once for the time period to which it applies. In Part A, you pay the deductible once per benefit period and this covers a total of sixty days of inpatient care received within that particular benefit period. The term “relieve period” is used only in Part A and means a unit of time that begins when you are signed in as an inpatient. The benefit period ends when you have been released from a hospital or Skilled Nursing Facility, and you stay released for sixty consecutive days. So, from the time you are first signed in, you can be released and re-admitted numerous times, but the benefit period does not end until you have been released and stay out of the hospital or Skilled Nursing Facility for sixty days in row. It is possible to have more than one back period in a calendar year. Part B also has its own deductible, but the Allotment B deductible is paid only once during your current calendar year (January through December). This means, for example, that if you have a doctor visit, or other Part B services such as x-rays, physical therapy, or chiropractic, you pay the cost out of your have pocket until you pay out the amount of the deductible. After that, the insurance begins to pay on the claims.
Once you have met the deductible, you are responsible for the coinsurance. Coinsurance is a percentage of an amount the insurer sets for the payment of medical providers (doctors, hospitals, skilled nursing facilities, etc.). What a doctor or hospital charges Medicare is not necessarily what Medicare approves for payment, and what you pay is based on Medicare’s celebrated amounts and fee schedules, not on what a provider charges Medicare. For inpatient care, there is a daily coinsurance that would apply to days sixty-one through ninety of an inpatient finish within a benefit period. For Part B, your coinsurance is twenty percent of what Medicare approves for payment. In other words, Medicare Part B is an 80/20 split once you’ve met the deductible. Medicare Part A is not an 80/20 split. As mentioned above, you a pay a fixed deductible, and after that you pay a daily coinsurance for inpatient days sixty and beyond (up to 150) received within a aid period.
Here is an out of pocket cost example to help illustrate how this works. Keep in mind that deductibles and coinsurance amounts may change from year to year. If we use the year 2010 as an example, we find that the Part A deductible (covering up to 60 days of inpatient care) is $1100 per benefit period. The Daily coinsurance for days sixty through ninety is $275 per day. For Fraction A, Medicare establishes fixed coinsurance and deductible rates that apply to all Part A facilities in the United States. Part B is a little different. For 2010, the Part B deductible is $155 for the calendar year, which means January 1 to December 31. The Section B deductible always applies to the calendar year, and you only pay the deductible once per year. After you meet the deductible, you pay the twenty percent coinsurance as described above. It is not possible to give an exact dollar amount of the coinsurance because it depends on the approved amount for each individual service you receive. That, in turn, will vary depending on your location and the kind of provider from whom you receive service.
Up to this point, I’ve provided a basic guide to understanding Original Medicare. The out-of-pocket costs and cost sharing I’ve described are different when you consider the Advantage Plan option for receiving your Medicare benefits.
What are Medicare Advantage plans?
Up until 1997, Original Medicare was the only means of receiving Medicare benefits. However, according to Legislative Observe 22, the Balanced Budget Act of 1997 allowed private insurance companies to begin administering the Medicare benefits established by the Federal government through private, managed care plans. Today, these private plans are known as Advantage Plans. All Advantage Plans must provide coverage for the same, core benefits established by the Federal government, though they may provide them in a different way than in the fee for service based Original Medicare program. It is notable to be aware that they are not supplemental insurance, and if you elect to join a private concept, that company takes over the responsibility of managing all of your health care and handles all claims and billing. That means that the Advantage Plan becomes the single and only payer for all of your doctor and hospital charges, and that Original Medicare does not pay on your claims while you are a member of an Advantage Plan. Enrollment in an Advantage Notion also means that no other supplemental insurance you might have can pay on any of the charges billed during your membership in the view. This also means that you agree to pay all out of pocket costs established by the plan, such as copayments for doctor and hospital care, and any other charges for other services such as x-rays, ambulance, emergency room, and outpatient hospital facility visits.
While the Advantage plans must meet the level of coverage as determined by Original Medicare, how they do so and the costs involved may differ. For example, some Advantage Plans may set out-of-pocket maximums for services, which would limit the amount you would pay in a given year should you reach a catastrophic level of coverage. Plans generally set co-pay levels for doctor visits, but the co-pays will vary from concept to conception. Plans may choose to pay more some services than Original Medicare, such as for inpatient care, which would mean you would pay less in the private plan than in Fresh Medicare. Other plans might pay less for certain services than Unusual Medicare, such as for skilled nursing facility care, which would mean you would pay more for those services in the plan than in Original Medicare. Another feature of Advantage Plans is that they may add benefits not generally covered by Medicare, such as payment for eyeglasses, dental, and hearing aids. Some plans include coverage for gym memberships and exiguous, non-emergency transportation.
The term, “Advantage Plan,” does not really tell you very much about the nature of the plans, how they are structured, or how they work. To make this more concrete, any privately managed Medicare insurance plan is an Advantage Notion if it has been authorized by Medicare. The most common kinds of Advantage Plans are health maintenance organizations (HMOs), preferred provider organizations (PPOs), and private fee for service (PFFS) plans. There are some other kinds of private plans, such medical savings accounts (MSAs), but the HMO, PPO, and PFFS are probably the most commonly offered.
Which is best, Unique Medicare or an Advantage Plan?
That is a difficult question. The acknowledge depends on a number of factors, such as your occupy, specific medical needs and expectations for coverage and medical costs. Keep in mind that the variety and quality of plans varies immensely throughout the United States from insurance company to insurance company, and even plans offered by the same insurance company may vary in quality and care due to differences in how the plans are managed. Some people may really like their Advantage Plan because of good customer service, responsiveness to medical needs, quality of care, inclusion of drug coverage, and simplification of paperwork and billing. Generally speaking, people in better health with few medical needs tend to be more satisfied with their plans than people with chronic and severe conditions. However, some companies now offer special needs plans to cater to individuals with extreme conditions, and some special needs plans are specifically for beneficiaries enrolled in both Medicare and Medicaid. In order to have the best chance of success with a private plan, it is important that you do your research to be obvious that the plan will be able to meet your specific needs.
What is Medigap Insurance, and where does it fit into the Medicare Program?
Medigap insurance is Medicare supplemental insurance. Medigap policies are written by private insurance companies and work only with Original Medicare and are available for purchase in the private insurance market. Medigap policies cover the costs that Original Medicare doesn’t pay, such as the coinsurance and deductibles associated with Portion A and B services. Medigap insurance is very different from Advantage Plan insurance. Whereas Advantage Plans manage your Medicare benefits and are responsible for claims and billing, medigap policies have nothing to do with the management of your Medicare benefits and coverage. Their critical function is to only pay after Current Medicare in order to pick up some or all of the costs that Unique Medicare doesn’t pay. What the Medigap policy pays for and how worthy depends on the type of policy you purchase.
Although medigap policy offerings may change in July 2010, at this writing there are twelve medigap policies, and they are called after the letters of the alphabet, A through L. Each policy covers a slightly different set of benefits, and the policies are standardized, which means that each policy is the same regardless of the insurance company from whom you prefer. Thus, a medigap policy F is the exact same policy whether you consume it from Aetna, Blue Cross, Mutual of Omaha or any other insurer. It is important to be aware that Medicare has nothing to do with Medigap sales, premiums, or regulation. Medigap insurance is subject to the insurance laws of the state in which you reside, and all purchases must be made from the private insurance company selling polices. As such, all premiums are paid directly to the private insurance company and cannot be deducted from your Social Security benefits.
Medicare enrollment can give any prospective beneficiary a lot to think about, but the basics outlined in this article should help guide you through much of the initial confusion you may face concerning Medicare enrollment, Advantage plans and Medicare supplements. Remember, Original Medicare is the program managed by the Federal government. Advantage Plans are an alternate means of having your benefits managed through private insurance company, and medigap insurance is simply an optional supplementary policy that pays after Unusual Medicare to pick up some or all of the benefits that Medicare doesn’t cover. Remember, once enrolled in Original Medicare, you have comprehensive coverage anywhere in the United States and its territories. For more detailed information, call 1-800-MEDICARE (1-800-633-4227).