For months I’ve been training as a Medicare counselor with my State Health Insurance Assistance Program (SHIP). Too often, when I’m answering questions about Medicare, an iron gate seems to drop over people’s eyes. So, I thought I’d give you a simple explanation of the two ways you can get your Medicare benefits.
Medicare, a Federal program created in 1965, provides health insurance for people age 65 and older and the disabled. Although it’s a government-run program, people also have the option of getting Medicare coverage through private insurance companies. After the Medicare Modernization Act of 2003 included financial incentives to insurance companies that provided Medicare plans, these plans (now called Medicare Advantage plans) really took off. The 2010 Affordable Care Act (ACA) scaled back these incentives, however, and, as a result, Advantage plans are changing their benefits.
You can choose either original Medicare or a Medicare Advantage Plan. Let me explain what the differences are between the two, and what you’ll want to consider when deciding how to access Medicare.
Medicare coverage is divided into four parts, A, B, C, and D. Part A covers hospitalization; all Americans are automatically enrolled in it when they turn 65. There are no monthly premiums for Part A. Part B covers doctors’ visits, lab work, tests, etc. and isn’t automatic. You have to sign up for it and pay a monthly premium. Part C is for the Medicare Advantage Plans, which you also have to sign up for; these plans have a monthly premium. Part D is drug coverage through private insurers and has a monthly cost.
Original Medicare (Parts A, B, and D)
Original Medicare is run by the Federal Centers for Medicare and Medicaid Services (CMS). CMS determines what health care providers can charge for each service you receive. If a provider accepts Medicare, it must accept this rate; Medicare pays 80 percent of the allowable costs and you’re responsible for the other 20 percent. You’re also responsible for annual deductibles for Part A and Part B. And, there are also copays for hospital stays, coinsurance for doctors’ care, and fees for lab work and other services. You can go to any provider or institution that accepts Medicare, there are no networks, and providers cannot charge more than CMS allows.
If you opt for original Medicare, you can purchase a Medicare Supplemental Plan (also called “Medigap”) for a monthly premium — but you don’t have to. There are 10 different Supplemental plans offered through private insurance companies. Each plan provides varying amounts of coverage for services CMS approved but doesn’t cover (like the 20 percent of the CMS allowable rate). All of the supplemental plans are designed by CMS, so the benefits are the same regardless of which insurer you choose. After deciding which of the 10 plans you want, pick the insurance company that offers that plan for the lowest monthly premium.
Original Medicare doesn’t include coverage for prescription drugs. So, if you opt for original Medicare, you may want to buy a drug plan, under Part D. These are offered through private insurance companies. For more details on drug plans see my article, “Singing the Part D Medicare Blues” in the July/August 2015 issue of The Women’s Health Activist.
Instead of original Medicare, you can choose a Medicare Advantage Plan, Part C
Medicare Advantage Plans are managed care plans, very similar to the kind of coverage that most of us are used to getting through our employers. They include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Point-of-Service (POS) plans. They all offer care through a network of providers. In the HMO plans you must use network providers. In the PPO and POS models, you can go out-of-network, but you’ll pay significantly higher copays. Medicare Advantage plans may include drug coverage. If you choose one of the plans that does, you won’t need to buy a separate Part D drug plan.
If you enroll in a Medicare Advantage Plan you will still be enrolled in Part A Medicare. You still have to enroll in Part B and pay the monthly premium. You will not have to pay the annual deductible for either Part A or B.
Medicare Advantage Plans can include coverage for services that original Medicare doesn’t cover, like vision, dental, and hearing care. These may also be important considerations for you.
How do you decide which way to go?
A lot of this has to do with what you can afford. Generally, Medicare Advantage Plans cost less per month than signing up for original Medicare, purchasing a Part D drug plan, and, possibly buying a Supplemental Insurance Plan. But, beware: Medicare Advantage Plans have copays for almost all services.
If you’re healthy, or don’t rely on Western medicine for your health care, Medicare Advantage might be the most affordable option. But you never know what the future holds. If you wind up with a serious illness or injury, your Advantage Plan will probably have significant copays that might negate whatever yearly savings you gained from signing up for the plan.
On the other hand, original Medicare with a Part D Drug Plan and a Supplemental Plan will probably cost more per month than an Advantage plan, but your out-of-pocket costs (such as copays) will be minimal. Original Medicare also offers the most flexibility in terms of what doctors and hospitals you can go to (i.e., any that accept Medicare).
It’s all a crapshoot and involves hedging your bets — which is what insurance is all about.
The following organizations can give you detailed information on Advantage Plans, Drug Plans, and Supplemental Insurance plans in your area and help you decide:
- The SHIP program: contact your local Office for the Aging;
- The Medicare Rights Center: a national non-profit. Contact their consumer helpline: 1.800.333.4114 or visit their website medicareinteractive.org;
- CMS itself has an official site for navigating Medicare: contact 1.800.Medicare (800.633.4227) or visit www.medicare.gov.
Good luck! I hope this begins to clarify the ridiculously complicated system that is Medicare.
Laura Kaplan is a lifelong women’s health activist and the author of The Story of Jane. She is a former NWHN board member.