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Home Sections Insurance & Securities Navigating the Medicare Alphabets
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Sections - Insurance, Securities and Taxation
Written by Joseph Dorotan   
Sunday, 04 December 2011 12:50

 

By Joseph Doratan, MBA, CFP®, a CERTIFIED FINANCIAL PLANNER™ Professional

 

L etters A, B and D correspond to the three (3) different parts of Medicare that cover the different specific Medicare services.

 

Part A is hospital insurance, which helps cover inpatient hospitalization, skilled nursing home, hospice care and home health care. Most people do not pay part A premium because they paid Medicare taxes while working.

 

Part B is medical insurance, which helps cover doctor visit, outpatient services and surgeries, other medical services and supplies not covered by Part A. Most people pay Part B premium of $96.40 this year, but it will be higher next year 2012, starting from $99.90, depending on their level of income. Regardless of any Medicare option one gets, he has to pay Part B premium unless he is qualified to get help on this from the government.

 

Part D is prescription drug plans run by Medicare-approved private insurance companies. These plans help cover the cost of drugs.

 

People who have Medicare A and B normally employ the three (3) parts through these following Medicare options:

 

#1. Original Medicare alone or with Part D - Original Medicare is Parts A and B in their pure forms administered by the federal agency Centers for Medicare & Medicaid Services (CMS), a branch of the U.S. Department of Health and Human Services.

 

Original Medicare is available to people who are 65 and over, who are under 65 but with certain disabilities, or people of any age with end-stage renal disease (ESRD).

 

The beauty of Original Medicare is that it allows one to use any doctor, hospital or provider accepting Medicare without restriction.

 

H owever, people with this have to reckon with deductibles, co-pays and co-insurance. For example, for 2012, the Part B deductible is $140.00. Part A deductible is $1,156.00 for in-patient hospitalization. Co-pay for the 61-90 days is $289.00 per day and for 91-150 days is $578 for the in-patient hospitalization.

 

#2. Original Medicare and Medigap, with or without Part D - This option gives people to keep the Original Medicare and thus continue to have benefit of being able to use any doctor, hospital or provider accepting Medicare.

 

But to help solve the significant out-of-pocket costs, private insurance companies offer Medicare Supplement, also known as Medigap. As the word ‘supplement’ or ‘gap’ implies, the intent is really to help cover what is not available with the Original. Medigap comes in several plans, but each plan name and its corresponding benefits are standardized among all companies offering Medigap. The benefits can be how much costs left over by Parts A and B the plan picks up or the medically necessary emergency care services needed during foreign travel.

 

Different insurance companies may also throw in extra benefits on top of these standardized plans, for example, vision discounts.

 

To be eligible to apply for these Medigap plans, one must have Original Medicare and not duplicating another Medigap plans. Some companies have other requirements on top of these. In general though, unless one can avail of it under certain guaranteed issue situations, insurance companies have the right to decline coverage if one does not pass their underwriting.

 

Like option #1, Original Medicare and Medigap may be added with Part D, the prescription drug coverage.

 

All these Medigap plans supplementing the Original Medicare have monthly premiums and normally higher than the monthly premiums associated with the next option.

 

#3. Part C alone or with Part D - Part C, more popularly known as Medicare Advantage (MA), is really a replacement of the Original Medicare and comes with some extra benefits. The optional extra benefits may be lower cost sharing, vision, hearing, dental, podiatrist and chiropractic services. MA plans are offered by private insurance companies. Just like Original Medicare, MA may be stand alone or if added with Part D is called MAPD.

 

MAs or MAPDs may come in several flavors. The most common are HMOs or PPOs. HMOs mean that referrals have to be made by primary care physicians for the services of specialists or other providers. Then, insurance companies have to approve such referrals before the use of service. In the case of PPOs, though no referrals are needed, insurance companies may still need to approve before the use of service. Typically, PPOs have larger network of providers than HMOs. Regardless of being with HMOs or PPOs, one has to use their in-network providers to keep his costs down. One has to pay more if out-of-network providers are used.

 

Most MAs or MAPDs have very attractive benefits despite premiums on some plans. Though the overall health costs seem to be mitigated even with the premium, the issue of having to reckon with the network must be well understood and seriously considered. A good starting question would be to ask if one’s doctors are in the network. How comfortable or important is it to be able to use the providers beyond the restriction?

 

Normally, as long as a Medicare beneficiary has no ESRD, he can enroll in a MA or MAPD, but only at certain time of the year, unless he is new to Medicare or losing his health coverage from other plan or he is deemed eligible due to certain exceptions. For this year, if one is planning to switch to another MA or MAPD, he has only up to Dec. 7, 2011 to do it.

 

#4. Supplemental Retiree Plan and a Medicare option - This option is available to certain retirees who continue to enjoy health benefits after retirement. In general, the supplemental retiree plan can help pick up some extra costs, usually drugs. The plan is usually coupled with one of the three (3) options above. For detailed features and benefits, retirees are advised to talk with their HR administrators to see if the plan added to the Medicare option is a good fit.

 

W hile the Medicare options are not overwhelming in number, choosing one over another is not easy. The following may help one decide:

1. What prescription drugs do you take regularly? How much are their estimated costs?

2. Who are your primary care physician and specialists? How do you feel if you see new doctors?

3. How important is it to get treated by a provider beyond the network available with a MA or MAPD?

4. How healthy are you? Do you have chronic conditions?

5. Where do you travel and how much travel do you do?

6. Besides Medicare, are you eligible for any health care coverage? Will you be able to keep that when you retire?

7. How much health costs have you spent this year? Do you expect similar costs next year?

8. How does health care fit into your total budget? Will you need financial help to pay for Medicare premiums or other health costs?

 

It is smart to ask these questions and review the options once a year. Help paying the costs may also be available from Medicare (1-800-633-4227), Social Security Administration (1-800-772-1213) or one’s local Medicaid office (known as Medi-Cal for CA). 

 

When it comes to Medicare options, timing is important. Because one does not get younger and healthier, if he procrastinates, he may find himself paying more and having less choices, not to mention that not all options and plans are available in all areas.

 

Lastly, if one needs more guidance in navigating through the Medicare options, he can contact his Medicare-certified insurance agent. For Californians, one may consider contacting the contributor of this article through 909-724-8618 or by e-mail at joseph@madeforu.biz. # # #

 

 



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