Medicare – Frequently Asked Questions
Congratulations! You’re turning 65! Welcome to what many might consider to be one of the most confusing and intimidating times of your adult life. Between deciding what to do with your Social Security, your investments, and whether or not to retire, adding Medicare to the mix can make the already complicated situation that much more difficult to get through. The good news, however, is that it doesn’t have to be.
Although there are countless questions to answer when considering your options in Medicare, we have observed that they fall into 3 main categories:
1) Do I need it? 2) How much is it going to cost me? And 3) How do I know which insurance to select?
To address the first question, there are no short answers. You may not need Medicare if you are receiving benefits through an employer or group plan and intend to remain actively employed beyond age 65. Additionally, you may not wish to enroll in Medicare if doing so would inadvertently cause a spouse or a dependent to be dropped from your family health insurance. That being said, it is important for you to compare not only health insurance premium, but also compare the benefits you receive under your current coverage.
Many employers will cover the full cost of a monthly insurance premium, but have high deductibles, large copays, and minimal coverage. Individuals in poor health under such a plan may experience significant out-of-pocket throughout the year making Medicare a potentially more cost-effective option despite having to pay a monthly insurance premium. Conversely, some employers may offer very strong benefits at a very high premium which is passed onto the insured. And other employers, still, may offer incredibly comprehensive benefits at a very reasonable cost to the employee. All of these scenarios should be taken into consideration when trying to answer the question of whether or not you even need your Medicare in the first place.
BGA Insurance Group Can Help You Understand These Questions
Once your decision has been made on taking or not taking your Medicare, the next logical question relates to the cost. Again, there are no short answers here. Medicare has multiple parts to it, and differing costs. At age 65, your Part A (Hospital) benefits come to you automatically on the virtue of having paid into the system for a minimum of 40 quarters (10 years). The base premium for Part B (Medical) for 2016 is $121.80. Most individuals will pay this premium, although if your income is above or below certain thresholds, you may have to pay more or less depending on your individual situation.
Part C of Medicare refers to the Medicare Advantage system. These plans usually come in the form of an HMO, PPO, or a PFFS through a private insurance company that has a contract with Medicare. If you elect a Medicare Advantage plan as your insurance, that plan becomes your primary insurance. Medicare generally will not cover any costs for services, procedures, or items received. Although Medicare is not directly billed, you are still responsible for paying your monthly Part B premium of $121.80 because a beneficiary must be eligible for Part A and enrolled in Part B to select a Part C plan.
Part C or Medicare Advantage plans may charge a monthly premium for coverage. Since these plans are offered through private insurance companies, premiums tend to vary from company to company and year to year. Some companies charge no insurance premium above the required Part B premium of $121.80.
The last part of Medicare is Part D. Part D refers to the prescription drug coverage offered through Medicare. Prescription coverage can be obtained from a number of different sources. A beneficiary may get coverage in the form of a stand-alone prescription drug plan (PDP) or through the prescription benefit that comes with some HMOs or PPOs. Other individuals may also have coverage from the VA, Tricare, or State Pharmaceutical Assistance Programs. As with Part C plans, the costs for Part D plans vary.
The last question to answer is generally the most complicated one to answer, and is why we at BGA Insurance Group stress the importance of in-person consultations. With so many different options to choose from, it can be very challenging to pick the right insurance. Excluding options like retiree packages, union benefits, continued employer coverage, Tricare, or Medicaid, there are generally 2 routes to choose from: Medicare and a supplement, or Medicare Advantage.
At BGA Insurance Group, we broker plans on both sides of Medicare. By nature, a Medicare Supplement tends to be front-end loaded. In other words, you will generally pay a higher monthly premium for your insurance, but many – if not all – of your back-end expenses will be covered in entirety. Additionally, Medicare Supplement plans are standardized by Medicare itself to be identical from one insurance company to another – meaning a Medicare Supplement Plan F with ABC Insurance Company is word for word, benefit for benefit identical to a Plan F with XYZ Insurance Company. The only differences you’ll experience include your monthly insurance premium, the financial strength of the insurance company, customer service, and the little plastic card you carry in your wallet.
The costs of the Medicare Supplement plans vary not just from company to company, but also from plan to plan depending on how comprehensive you want your coverage to be. Again, at BGA Insurance Group, not only do we offer many companies, but we also offer many plans within each insurance company. To describe each plan, Medicare uses language which may be difficult to understand. An in-person consultation with a BGA Insurance Group broker is guaranteed to provide you with a thorough understanding of how each plan works.
View a short presentation from the BGA Insurance team:
There are many benefits to using a Medicare Supplement as opposed to a Medicare Advantage plan. A Medicare Supplement retains Medicare as the primary insurance. As such, every single doctor, hospital, clinic, or medical facility in the country that accepts Medicare as primary is guaranteed and legally required to accept your supplement regardless of whether or not you or your doctor have ever even heard of that company. If in retirement, you plan to travel, or if you have homes in 2 states, you are never out of network.
In addition to ease of use and no network restrictions, a Medicare supplement allows you the freedom of selecting an individual prescription drug plan (PDP) that can be tailored around your individual prescription medications. At BGA Insurance Group, we regularly assist our clients find and enroll in the most cost-effective Part D plan customized to cover their individual medications.
The Medicare Advantage system is a hodgepodge of plans offered through a slew of companies each more complicated and confusing than the last. By law, all Medicare Advantage plans are required to offer all of the same basic benefits of Original Medicare A and B, although some plans will offer benefits beyond those of Original Medicare. For example, some Part C plans will offer Part D coverage. Others will provide assistance with over-the-counter items up to a certain dollar amount, and many Medicare Advantage plans will pay for a basic gym membership. Unlike a traditional Medicare Supplement, however, Medicare Advantage plans tend to be back-end loaded. In other words, some plans charge no monthly premium for coverage – remember, you are still required to pay your Part B premium when enrolled in a Medicare Advantage plan – but there are many out-of-pocket expenses for services received through a Part C plan.
All Part C plans are required to provide beneficiaries and enrollees with a comprehensive outline of coverage detailing all potential expenses. There are copays for doctor visits and hospital stays. There is a coinsurance¹ for Part B medications and for durable medical equipment. Some plans may even have a deductible to satisfy prior to the plan paying for any services received. Since it is impossible to predict how many times over the span of a week, month, or year you will visit medical professionals or incur medical costs, budgeting for a Medicare Advantage plan can be tricky.
The silver lining, though, is that all Medicare Advantage plans are required to provide a maximum out of pocket, or MOOP. Once your MOOP is met, the advantage plan is required to pick up all subsequent medical expenses with no cap. Unfortunately, most plans’ MOOPs are higher than the combined annual premiums of Medicare Part B, a Medicare Supplement, and a stand-alone prescription drug plan (PDP).
Furthermore, the prescription benefit offered through a Medicare Advantage plan is treated as one-size-fits-all. Whereas with an individual PDP, a beneficiary can tailor a plan around his or her individual medications, the prescription formulary offered through a Part C plan is static. Hypothetically speaking, the copay for a medication through a PDP might be $20.00 and $50.00 under a Medicare Advantage plan.
Lastly, Medicare Advantage plans will limit or restrict your access to healthcare to a defined network of providers, hospitals, and other medical practitioners. Unhappily, this could mean the doctors you’ve had long-standing relationships with might not accept the Part C plan that’s best suited to your budget, needs, and preferences. An HMO will not allow beneficiaries to seek care out-of-network except in emergency and urgently needed situations for which there is world-wide coverage. A PPO will allow members to receive care out-of-network, but at a much higher cost-sharing. If a PFFS is available in your area, you may receive care both in and out-of-network, assuming the provider has reasonable access to the plan’s terms and conditions.
With so many insurance companies and products to choose from, facing Medicare can be daunting. What’s more, most insurance companies do not publicize their rates which can make it difficult to know which decision is right for you. Meeting with an insurance broker from BGA Insurance Group will not only provide you with a complete understanding of how Medicare works, it will also provide you with a firm grasp of all the different options available to you and all of the related costs therein.
There are many benefits to working with a BGA Insurance Group broker as opposed to a captive agent. First and foremost, we work for you. At BGA, we do not have a vested interest in any one insurance company. Our goal and our commitment is simple: we aim to find you the best possible coverage tailored around your individual situation at the lowest possible cost to you.
Prior to meeting with a broker from BGA, you should have a number of questions ready to have answered. You should have your Medicare card (if possible) available. You should also have premium and benefit information relating to your current insurance coverage prepared, so that we might make an accurate and informed comparison. We also request that you have a list of all current medications made up for us to explain how your individual medications will be covered through Medicare. Lastly, and most importantly, we ask that you have an open mind. There’s a lot to choose from out there. We’re here to help.
Depending on where you live, you will need to contact an agent that serves your area. BGA Insurance Group is licensed in Pennsylvania, New Jersey, Delaware and Florida.
The post Medicare – Frequently Asked Questions originally appeared on the BGA Insurance Group Blog