I wanted to start a new thread with the purpose of providing information for those individuals closing in on Medicare age and for those already on Medicare. It can be a very confusing, and quite frankly, a daunting thing to face. It doesn't need to be though so I will do my best to sift through the government confusion and industry jargon. The goal here is to assist anyone who may have questions about this program. Literally any questions about it. The idea here is to inform people. I will not recommend specific Insurance carriers, nor specific plan types. That is not the purpose of this posting.
The original thread we had some good discussion in is here:
After a while I thought it could be useful to provide some type of consolidation in one thread. So here goes...
WHAT IS MEDICARE?:
Medicare is a federal health insurance program in the United States, primarily for individuals aged 65 or older. However, it also covers some younger people with disabilities and those with End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS).
It is divided into four parts: Part A (Hospital Insurance), Part B (Medical Insurance), Part C (Medicare Advantage), and Part D (Prescription Drug Coverage). Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Part B covers certain doctors' services, outpatient care, medical supplies, and preventive services. Part C offers an alternative way to receive your Medicare benefits through private insurance companies, and Part D covers prescription drugs.
Eligibility for Medicare begins at age 65, but those under 65 with certain disabilities or diseases like ESRD or ALS can also qualify. Most people are automatically enrolled when they turn 65 if they're already receiving Social Security benefits. Others may need to apply through the Social Security Administration. The specific benefits and costs can vary depending on the individual's situation and the parts of Medicare they choose.
Part A typically has no cost if you've worked and paid Medicare taxes for 40 quarters in your life (or a spouse has, who you would receive the benefit from). It does not need to be consecutive months. Part B does have a premium. Current year the base amount you would pay is $164.90/mo. If you make more than roughly $90,000/year filing individually or $180,000 joint then it starts to increase somewhat.
The term "Original Medicare" is used to describe Part A and Part B. Individuals can use original Medicare by itself if they so choose, but it is not typically advisable for these reasons. First, it covers 80%
of your covered medical expenses, and you would be liable for the other 20%. The problem with this is that 20%
you are liable for has no cap
to it. So essentially you can be significant amounts of money if you are receiving costly medical care, like surgeries, injections, expensive MRI's, dialysis etc.
Original Medicare also does not cover prescription drug coverage. That is what is called Part D. It is only offered through private insurance companies either through stand-alone Part D plans or through Medicare Advantage plans (also known as Part C) but more on that later.
If an individual does not enroll into Part B or D when they become Medicare eligible and do not have other qualifying coverage (like group coverage from an employer or VA benefits) then they will start to acquire a late enrollment penalty. each month they don't have those coverages.
This works out like this. If you don't sign up for Part B when you're first eligible, you may have to pay a late enrollment penalty for as long as you have Medicare. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn't sign up for it. For instance, if you were eligible for Part B for two years before you enrolled, you could face a 20% increase in your premium.
The cost of the Part D late enrollment penalty depends on how long you went without Part D or creditable prescription drug coverage. Medicare calculates the penalty by multiplying 1% of the "national base beneficiary premium" times the number of full, uncovered months you didn't have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium. The national base beneficiary premium may increase each year, so the penalty amount may also increase each year.
It's important to note that these penalties are in addition to your regular Part B or Part D premium, and they continue for as long as you have Medicare coverage. Again, these would only apply if you opted not to enroll in them when eligible AND also did not have other qualifying coverage. Please note, I do not agree with these penalty rules. I just find it useful to inform you they exist, because the government does a very poor job letting beneficiaries know about them. And I have met countless people with late enrollment penalties because they weren't ever informed.
Now lets talk about Supplemental coverage to original Medicare. Something to protect you from that pesky 20% that isn't covered by Part A and Part B. Think of the Supplemental plan as just paying the bill left over from Original Medicare (depending which Plan you opt for). So if the doctor or clinic/hospital accepts Original Medicare, then you can go there. Supplemental options are offered by private insurance companies, with which there are many. There are quite a few types of Supplemental Plans. With the most prominent being plans G and N. I know, I know... What is with these stupid letters? Well this is government for you. And to be honest it can be very confusing. But lets not get hung up on the letters anymore because we are talking about "PLANS", not "Parts" anymore. These plans are structured in that they will all be the same from each carrier (with some differences in things like a gym membership or a discount on dental etc). But the core coverage of protecting you from that 20% Medicare doesn't cover is the same between each private insurance company.
For new enrollees Plan G will be widely considered the most coverage. It covers the gaps Medicare Part A and B don't cover with a one time a year deductible of $226 (as of 2023). So you would likely not have any bills for doctor visits, surgeries, hospitalization etc with Plan G. There are some limits to this though but I will leave those out of this initial post.
Plan N is the other prominent Supplemental Plan. It works like Plan G but in addition you may have a $20 copay for doctor visits and up to $50 copay for ER visits that don't result in overnight admission to the hospital. But essentially those are the differences. But it comes at a lower premium amount. It just comes down to a value assessment by you.
There are other Supplemental Plans that may be an option for you but for now I will not write about them. Perhaps in a follow-up post.
Most states have what is called a "guarantee issue" for those that are turning 65, also known as your Initial Enrollment Period. This is where you can select a plan 3 months prior to your 65th birth month, the month of your birth, and 3 months after. This is the time they can enroll in a plan without going through medical underwriting. There are exceptions to this in some states. More on that in a follow-up post. But keep in mind that in most states, if you opt not to enroll in a Supplemental plan when you turn 65, you may miss your window to enroll with guarantee issue. Meaning if you have preexisting conditions, they may flat out deny you, or offer the coverage but with much higher premiums. And in most states those premiums go up each year as you age.
Supplemental Plans DO NOT include Part D (Drug coverage).
PART D (DRUG COVERAGE):
Prescription coverage should be gone over with scrutiny. Again, do you due diligence with drug coverage. I have seen people spend $6000 more per year than they needed to on their prescription coverage because they didn't want to spend a few minutes with someone who knows what they are doing (son, daughter, advisor, agent, broker etc). It can be a bit tricky, but I encourage you to look up your prescriptions or have a professional do it for you. It could save you a LOT of money each year.
Drug coverage can be acquired two ways: A stand-alone Part D plan from a private insurance company, or drug coverage built into a Medicare Advantage plan. Both will be structured in a similar way, meaning they will have a formulary of covered drugs in multiple tiers. Usually a 5 tier system. With tier 1 drugs typically being preferred generic, all the way up to tier 5 specialty drugs.
You pay 100% of your drug costs until you reach the deductible amount set by your plan. Not all plans have a deductible, and some plans only apply the deductible to certain drugs.
Initial Coverage Stage:
After meeting the deductible, you pay a copayment (a fixed amount) or coinsurance (a percentage of the cost) for each prescription, and the plan pays the rest. This continues until your total drug costs (what you and your plan have paid) reach $4,660 in 2023.
Coverage Gap (Donut Hole):
After total drug costs reach the initial coverage limit, you're in the coverage gap. In 2021, you pay 25% of the cost for both brand-name and generic drugs while in the gap. You stay in this stage until your out-of-pocket costs reach $7,400 in 2023.
Catastrophic Coverage Stage:
Once you've spent $7,400 out-of-pocket in 2023, you're out of the coverage gap and you automatically get "catastrophic coverage." For the rest of the year, you only pay a small coinsurance or copayment for your drugs.
It's important to note that not everyone will enter the coverage gap, and these stages reset and start over each calendar year. Also, the specific costs and coverage can vary depending on the Part D plan you choose.
Medicare Advantage Plans:
These are the plans that are offered by private insurance companies. They are structured more like conventional health insurance policies. In the sense that you may have a low monthly premium (it is common in many places to have no premium on some plans). Many states have plans tailored to Veterans who have access to the VA for medical/prescription drugs. Often they will help reduce your Part B premium. These plans typically do not include drug coverage (because some veterans can get their drugs through the VA, but will offer richer benefits. They can also offer you a second opinion to a network outside the VA. Some regions will have Chronic Special Needs plans for individuals with chronic health conditions. Many areas have plans for Individuals who receive both Medicare AND Medicaid (from the state). These are called Dual plans.
Typically these plans are broken into two types. First being an HMO (Health Maintenance Organization). These will have a network of physicians, clinics and hospitals that you have access to at the structured copay and coinsurance rates. Most HMO plans require a referral from your primary care doctor to see a specialist.
Next will be a PPO (Preferred Provider Organization). These plans give a bit more flexibility to who you can see and where you can go. Like an HMO, they will have a network you have access to, but in addition to that, you will have access to go out-of-network. As long as that provider agrees with the terms of the policy. It's somewhat common to see higher copays and coinsurance for out-of-network providers though, so keep that in mind. Also, you are typically not required by the plan to have a primary care doctor selected. And you are not required by the plan to have a referral to see a specialist (some doctors/clinics may want one, but the insurance carrier doesn't require it).
Some insurance carriers will have Medicare Advantage plans that have a nationwide network you have access to. This can make getting care outside your home area easier than Med Advantage plans that are region bound, or more local private insurance companies that aren't nationwide. It is recommended to verify these network limitations. I understand this can be a slightly confusing for us RV'ers who travel a lot. Clarifying the network is an important part of selecting an Advantage Plan.
These Medicare Advantage Plans will all have a Max out-of-pocket limit on them. Depending on where you live it could be as little as $400 a year, up to $10,000 - $11,000+ (for out of network) a year. It really just depends on where you live. This is the limit on your medical expenses you would pay out of your pocket each year. At that point the insurance carrier takes over and pays the rest. With no limit. Please keep in mind, this limit does NOT include your prescription drug costs each year.
Medicare Advantage plans will often include ancillary benefits like some vision coverage, some dental coverage, a gym membership or transportation benefits. I've seen some with massage therapy coverage and acupuncture. They vary by region/state.
WHAT'S RIGHT FOR YOU?:
My experience is there is no "one-size-fits-all" plan for someone. Everyone's needs are different. Everyone's prescription drugs are different. Everyone's financial situation is different. Everyone's value's on what is important to them are different. Everyone's doctors are different. This is why I recommend spending the time to research, ask questions, talk to people who live this stuff.
Some helpful tips and Medicare rules and regulations (that protect you):
The industry is predatory. You will be inundated with marketing material as you approach 65. You will be inundated with marketing every year during the Annual Enrollment Period (October 1 - December 7). You will likely get phone calls from call centers soliciting you. They cannot enroll you over the phone for 2024 plans any longer without acquiring a signed Scope of Appointment 48 hours prior. If they attempt to do so, they are breaking Medicare rules. Feel free to let them know you know this. They will likely stop calling. I'd recommend never calling an 800 number on TV. Doing so will land your contact info into a call center and your phone will start ringing incessantly. Don't fall for the ads saying "Call us and ask how you can get $164 back each month!" How that works is for people with a low income subsidy from the state. They usually fall under the federal poverty line for income. The state may come in and pickup the cost of their Medicare Part B premium, which just so happens to be $164.90/month. If you have any real income and assets, you likely would not qualify. But they already got you on the phone because you were curious. Here is the Gov link to poverty limits https://aspe.hhs.gov/topics/poverty-...rty-guidelines
*Lastly, full disclosure. I am a licensed broker who does this for a living. I travel full time in our 45ft diesel pusher you see in my profile pic. I have a beautiful family consisting of my wife, my 5yo son and 3 dogs. You may see us in Florida, Texas, Colorado, Minnesota (where I grew up) or Washington state and everywhere in-between. My goal is to only inform people and hopefully help clear up the confusion. Nothing more. So please post questions and I will do my best to answer them as I check back to this thread.