Is Original Medicare Enough for You?
Which of the several types of Medicare arrangements is best for you?
If you are retired or thinking about retirement, this is something you need to carefully consider.
Although it is possible to rely solely on this type of insurance for medical costs, experts do not recommend it. Hospital indemnity insurance doesn’t cover normal doctor visits, prescription drugs and various other regular health care costs. Hospital indemnity insurance is actually designed to supplement your health insurance.
Original Medicare (Parts A & B)
Medicare is a government-funded health insurance program that provides basic coverage to those aged 65 and over and certain individuals with disabilities. Original (or Traditional) Medicare allows a covered individual to go to any doctor, health care provider, hospital, or facility that is enrolled in Medicare and accepting new Medicare patients. With Medicare coverage you generally pay a deductible before Medicare pays its share. When it pays its share, you will also pay your share (coinsurance) for covered services and supplies. There’s no yearly limit for what you pay out-of-pocket and Original Medicare only pays about 80% of approved costs for hospitals, doctors and medical procedures.
Medicare Part A (Hospital Insurance) covers services considered medically necessary such as inpatient hospital care, critical access care, short-term care in skilled nursing facilities, hospice, and home health care. There is no premium for most people for Part A.
Medicare Part B (Medical Insurance) covers medically necessary services such as doctor and outpatient care. There is a monthly premium for Part B coverage
Medicare Part D
Most people want more than the coverage Original Medicare provides, including drug coverage. That’s why there is Medicare Part D. This is stand-alone coverage provided by insurance companies strictly to cover the cost of prescription drugs. During your initial enrollment period or during a Special Enrollment period you may purchase Part D coverage whether or not you purchase a Medigap or Medicare Advantage Plan (though many of the latter include Part D coverage).
Medigap and Medicare Advantage
Even though Original Medicare (Parts A and B) covers a large share of your medical costs, what it doesn’t cover can still be expensive. Plus, it doesn’t cover a lot of medical necessities people want. To fill this need people may also want to purchase either Medigap or Medicare Advantage coverage. What’s the difference?
The essential difference is that Medigap covers the gaps between what you pay for Original Medicare and your total costs. Whereas Medicare Advantage may cover those costs but may also go beyond and provide additional coverages.
Medigap
Medigap, also referred to as Medicare Supplement Insurance, covers certain out-of-pocket expenses, such as deductibles and co-pays (“gaps” in coverage). It is purchased from private insurance companies with monthly premiums that can vary widely based on age and location. Medigap plans are standardized for all insurance companies. There are 10 of them, labeled Plan A, B, C, D, F, G, K, L, M and N. Some of the Original Medicare costs that may be covered by a Medigap plan include:
- A deductible for an inpatient hospital stay of $1,600.
- A copayment for each inpatient hospital day, such as $400 per day for days 61 to 90.
- A copayment for each day in a skilled nursing facility, up to $200 per day for days 21 to 100.
- A 20% coinsurance for medical services covered under Medicare Part B.
Medigap plans may cover all or a percentage of these costs, depending on which plan you choose. Plan K, for example, covers 50% of these kinds of costs, but the premiums are also less than other Medigap plans.
Medicare Advantage
Medicare Advantage, also known as Medicare Part C, fills gaps but also provides a number of other benefits that go beyond Medicare parts A and B. A Medicare Advantage plan may also include drug coverage, which is normally offered separately as Part D.
Most Medicare Advantage plans, according to Investopedia, operate as a health maintenance organization (HMO) or a preferred provider organization (PPO). HMOs require members to use the doctors and hospitals in their networks. PPOs generally let members get care outside the plan’s network, but members may have to pay more for such care. Some plans require prior authorization for specialist care or procedures, or a referral from a primary care doctor.
Plans might not cover care given outside of the network’s geographical area. On the other hand, Medicare Advantage plans often offer additional benefits not covered by Original Medicare, such as eyeglasses, routine dental care, or gym memberships.
Which Medicare Plan design is best for you? It’s difficult to say. If you want more than Original Medicare, would a Medicare Advantage plan or a Medigap Plan K and Plan D combination be best for you? If you chose a Medicare Advantage plan, which of the approximately 39 different Medicare Advantage plans available would you chose? With so many choices, you may want some help. Please give us a call. We’d be happy to discuss your unique situation.
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