For those new to Medicare, the enrollment decisions required sometimes seem overwhelming. Learning the Medicare “lingo” is the first step. Before choosing among the range of options, it is important to understand Parts A, B, C and D as well as Medigap, also known as Medicare Supplement. Once you decipher the alphabet soup of Medicare terms, you can begin to identify which option suits you in terms of managing your health and saving you money.
How Medicare benefits are structured
Original Medicare is comprised of Parts A and B. Part A, referred to as hospital insurance, is primarily for inpatient care as well as hospice and home health care. Part B is the medical insurance component, which focuses on outpatient care, such as doctor visits, durable medical equipment and mental health services. Original Medicare does not cover drugs and does not provide a ceiling on out-of-pocket expenses. Therefore, many Medicare recipients choose one of two paths.
Some purchase a drug plan (Part D) plus one of several Medigap plans that offer supplemental benefits. Others enroll in Medicare Advantage, known as Part C. Medicare Advantage plans that are overarching link Part A, Part B, and usually Part D under one umbrella. This can save you money if it meets your healthcare needs.
Premiums, out-of-pocket costs and prescription drug costs
Among the factors that influence insurance costs are your home location, income level, medications and usage of network-based healthcare services. Medicare recipients eligible for premium-free Part A have a minimum of 40 credits, earned over a lifetime of working and paying Medicare taxes. In 2020, the Part B monthly premium due to Medicare starts at $144.60 and increases according to reported income. Any additional insurance purchased requires a premium due to the insurance company. The good news is that there are premium-free Medicare Advantage plans on the market. Also, unlike Original Medicare, Medicare Advantage Plans establish a cap on out-of-pocket costs for covered expenses.
Since supplement plans do not cover drugs, if you choose to enroll in Medigap, there will be an additional premium for the supplement plan plus the drug plan (Part D). If you select a Medicare Advantage plan with built-in drug coverage, your responsibility for premiums are limited to Parts B and C because Part D is included. However, be sure to check the plan’s formulary against your prescriptions. Drugs segmented into tiers reflect different price points.
Preferences that impact cost
Some people are adverse to the limitations of a healthcare network. Under Original Medicare, Medicare recipients can visit any physician or hospital that accepts Medicare across the country. Medicare Advantage is network-based. So if you are inclined to see doctors outside the network, it will cost more. Under some plans, out-of-network expenses are not covered at all or fall under a high deductible.
If vision, hearing and dental Medicare benefits are important to you, a Medicare Advantage plan is worth considering. In 2020, more benefits are available than in the past. Some packages through Medicare Advantage include wellness programs, transportation to the doctor’s office, over-the-counter drugs and adult day-care services. Utilization of these programs can result in cost savings.
Resources to research costs
Side-by-side comparison shopping is the best way to identify the plans that offer the lowest costs. Take the time to review your options and find the plan that is right for you.