Ask the Medicare Specialist

QUESTION:

How do Original Medicare Parts A and B work? What are Parts C and D?

ANSWER:

As promised, we are going to start from “the beginning” in hopes of preparing those who are new to, or are already on Medicare, for the Annual Election Period ( AEP) that begins October 15th. The foundation of it all is Original Medicare A and B. And as I tell every prospective client, they must first understand how the red, white, and blue card works in order to get a full grasp of the differences between Medicare Advantage Plans and Supplements, which is vital.

Part A is Hospital coverage and is provided at no cost. However, there is a deductible of $ 1,408 for any inpatient stay of 60 consecutive days or less. One of the more curious aspects of Medicare is the person who stays just one or two days in the hospital pays the same as the person who stays 11, 31, or 60. That doesn’t change unless the hospitalization is longer than 60 consecutive days. On the 61st, the charges are then billed on a per day basis, $ 352/ day from days 61- 90 and $ 704 per day for days 91- 150. Although not common, someone who had Medicare only and spent 125 days in the hospital would be on the hook for $ 36,000.

When I explain this to people, most are surprised and even a bit fearful, which is not my intent. “This is why you are here to see me,” I explain, “to get protection from those kinds of bills and others.” Both Advantage Plans and Supplements accomplish that.

The other service that Part A covers is Skilled Nursing, which I often describe as inpatient rehab, the goal of which is nursing people back to health so they can return to living independently at home. It’s not the same as long term care, which is not covered by Medicare. The first 20 days in a Skilled Nursing Facility are covered at 100% by Part A. Days 21 through 100 are billed at $ 178 per day, which can get quite costly.

Part B is Medical coverage for outpatient procedures and services and has a premium of $ 144.60/ month. It includes doctor visits; testing such as blood work, x- rays, CT Scans, etc.; Durable Medical Equipment ( DME) like oxygen, a wheelchair, C- Pap machine, etc.; outpatient surgeries such as cataract, carpal tunnel, a colonoscopy, or any other a patient has performed in a surgical center or hospital in one day and sent home the same; chemotherapy or other infused drugs like Remicade; radiation; and physical therapy. These and other Part B covered services I have not listed are all paid for at 80%, putting the Medicare beneficiary on the hook for the other 20%. Medicare has no cap on what one can be billed in a calendar year. To ensure that medical bills aren’t endless, an Advantage Plan or Supplement needs to be purchased. Medicare also doesn’t cover prescription medications, so Part D is also necessary for most everyone.

The following is my formal definition of Part C: “Part C is a health care option that allows a Medicare beneficiary to choose a private insurance company to administer medical benefits and pay claims in place of Medicare.” To put it simply, Part C is Medicare Advantage. In layman’s terms, when one goes with an Advantage Plan HMO or PPO, what he or she is choosing to do is have Medicare take on a completely different role than what I just described. What Medicare does when one chooses an Advantage Plan ( Part C) is pay a private insurance company of that person’s choice approximately $ 800 per month to “take over” so to speak. In other words, Medicare stops paying for hospitalizations as well as 80% for outpatient services. In lieu of doing that, Medicare pays a private insurance provider to become the beneficiary’s one and only insurance company. Those who have Advantage Plans don’t show their Medicare card at a doctor’s office or hospital. They show only the card provided by the insurance company they chose. In fact, people on Advantage Plans can put their Medicare card in a drawer or file cabinet because again, Medicare is out of the picture when it comes to covering services or paying claims.

Advantage Plans have become very popular and at last count in 2019, 34% of those on Medicare, more than 22 million people, have chosen them. My agency has approximately 4,000 clients enrolled in HMO’s or PPO’s. When chosen wisely, which my agency ensures, they provide good value and premiums are lower than Supplements, as little as $ 0 per month, while also offering ancillary benefits such as dental, vision, gym memberships, and others Medicare plus a Supplement do not. Please be advised Advantage Plan HMO’s and PPO’s are not for everyone, however, and do pose some risks. We will get into those, other reasons people like and choose Advantage Plans, as well as the many ways they differ from Supplements in the next two columns. Go to our website where you can listen to podcasts and replays of my biweekly radio show regarding the pros, cons, and contrasts of the two types of Medicare plans. Part D is Prescription drug coverage. All but a select few Advantage Plans include Part D. Those on Supplements need to buy a separate policy known as a Stand- Alone Part D. There are some differences in drug coverage between Stand Alone Part D and Advantage Plans, which I will also address in the next two weeks. Except for veterans and others who are provided prescription coverage elsewhere, we advise every single Medicare beneficiary to enroll in Part D, even those who are not currently on medications. If you have questions or would like to schedule a nocost consultation in one of our office locations, over the phone, or via a Zoom internet meeting, give us a call or email.

I hope everyone stays safe and healthy while enjoying the remainder of summer!