Once eligible for Medicare coverage, the first step is signing up for Original Medicare, which includes Part A, for hospital stays and inpatient care, and Part B, for visits to the doctor’s office and outpatient care. Part A is sometimes referred to as premium-free Part A because most people are not required to pay for this portion of Medicare insurance because they have paid taxes while working.
Check your Social Security statement under the estimated benefits section, which includes a passage on Medicare. It will state if you have enough credits to qualify for Medicare coverage at 65 years old. Credits are earned by working, and most people need 40 credits to be eligible for benefits.
Options to Minimize Out-of-Pocket Costs
Original Medicare leaves a shortfall that impacts beneficiaries in terms of coinsurance, copayments, blood, deductibles, drugs, foreign travel emergencies and out-of-pocket limits. This is why many people decide to supplement their Medicare coverage with policies from Medicare-approved private insurance carriers.
A key decision is whether to sign up for a supplement plan that helps pay some of the out-of-pocket expenses or, instead, to enroll in a Medicare Advantage plan that marries Parts A, B and D. If you choose a Medicare supplement insurance policy, otherwise known as Medigap, you will need to sign up separately for Part D if you want drug coverage, a component excluded from the supplement plans currently available.
Medigap Plans Available
If you determine the best course of action for you is to supplement Original Medicare insurance with Medigap, you will be presented with up to eight plans to choose from in 2020. These plans are identified by letter: A, B, D, G, K, L, M and N. If you are wondering why the letters do not follow the alphabet precisely, it is because Plans E, H, I and J were eliminated in 2010, and C and F are being phased out after 2019.
Medicare Supplement Plan J
Before Plan J was discontinued in 2010, as a result of the Medicare Prescription Drug, Improvement and Modernization Act, it was highly favored relative to the other plans. Basic supplement plan coverage, which is Plan A, includes Medicare Part A coinsurance, hospital costs up to 365 days after all Medicare benefits have been used, Part B coinsurance or copayment, the first three pints of blood purchased per year and hospice coinsurance or copayments.
All the other Medicare Supplement plans are required to provide at least that much coverage. Plan J added coinsurance for a skilled nursing facility, Parts A and B deductibles, Part B excess charges, foreign travel emergencies up to plan limits, preventive care up to $120 per year, recovery at home up to $1600 per year and prescription drugs up to $3,000 per year.
Changes to Plan J
Changes in Original Medicare caused the demise of Plan J. Once Original Medicare began to cover wellness visits, home health services and introduced Part D for prescription drug coverage, the appeal of Plan J declined. However, the plan is grandfathered for those already enrolled. The plan termination only impacts new Medicare recipients shopping for supplement plans.
Medicare Supplement Plan Enrollment
When a Medicare recipient turns 65 years of age and is enrolled in Part B, they will have a guaranteed issue right to purchase any Medicare Supplement plan sold in the state. This 6-month initial enrollment period will allow you to choose from any available Medigap policy, but after this period ends, you may be subject to medical underwriting and can be rejected or charged more for a policy.