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Thinking about Medicare? Chances are, if you’re nearing the age of 65, you know you’ve got to put some effort into learning about and making the right choices when it comes to your Medicare coverage. And if you’re already receiving benefits through an employer, you might want to take a look at Medicare coverage as a viable option.
The Basics of Medicare
How does Medicare work?
5. Medicare Supplement Plan & How Medigap Works
6. What you need to know about Original Medicare + Medigap
Enrolling in Medicare
10. Special Enrollment Period & Annual Enrollment Period
Making smart choices when it comes to Medicare will provide you with reliable health coverage, but we understand – learning about your options can seem overwhelming. We’ve prepared this guide to help explain how Medicare works and provide you with the information you need in order to make decisions about the coverage options available to you.
If you’re like most people, you’ve got a vague idea of what Medicare is, but if pressed, you might not be able to define it.
Put quite simply, Medicare is a national social health insurance program administered by the U.S. government for citizens age 65 or older. If you’ve paid into the system, you’re eligible to participate in the program and receive benefits.
Medicare benefits are also available to peopleunder the age of 65 with certain disabilities.
Medicare doesn’t automatically cover all of your expenses, however, so you need to purchase supplemental insurance to cover medical expenses that are not automatically paid for by Medicare
Medicare is overseen by a governing body called the Centers for Medicare and Medicaid Studies, or CMS. CMS is responsible for making sure that those who are eligible for Medicare have access to the program and its benefits.
Now that we’ve given a brief overview of the program, let’s take a look at how it works. We’ll look at each Part to get a better idea of what’s covered.
Medicare Part A covers hospital stays. There are a number of different types of hospital stays
that are covered. For example, you may be an inpatient at a hospital if you need surgery or have an illness. You might also require a stay at a rehabilitation center or skilled nursing facility, and some of those services are covered by Part A. Hospitals also offer extended care services such as home health care, which falls under Medicare Part A, as well as hospice care, which can take place on-site at a hospital or nursing facility, or at home.
Part A covers these services and more, although you are responsible for a large deductible.
The important thing to know is that Part A, while it is good coverage, comes with some substantial out-of-pocket costs.
Medicare Part B (sometimes called “doctor’s insurance”) covers doctor visits as well as a host of other services you would typically receive as an outpatient. Under Part B, you’ll pay a monthly premium (typically just over $120.00 per month) and you’ll have a deductible that you’ll need to meet before Part B provides any coverage.
t’s important to note that while it provides good coverage, Part B only pays for 80 percent of charges that are approved, and you are responsible for paying the remaining 20 percent of the approved amount.
There have been some changes to Medicare over the years. Medicare Part A and Part B served as the original foundation for the Medicare program, but since these two programs launched, additional parts and have been added, such as Medicare Part C and Part D, which we’ll review next. Because Part A and Part B serve as the original core for the program, they have come to be known as ‘Original Medicare’. You must have Original Medicare in place as your foundational care before you can consider adding Part C, Part D or, as the next section discusses, a Medicare Supplement Plan. Keep this in mind as you read on.
To provide yourself financial protection, you can choose to enroll in a Medicare Supplement policy, which is also called “Medigap” coverage. Medigap is a health insurance policy that you purchase from a private insurance company to pay the health care costs that are not covered by Original Medicare (remember those deductibles and coinsurance amounts you are responsible for paying under Part A and Part B?).
Purchasing a Medicare Supplement plan does not replace your Original Medicare coverage – it simply serves as a supplement to help cover all or some of the costs that Original Medicare doesn’t cover.
If you opt into a Medigap plan, you won’t have to stick to certain networks or get referrals for care as you might with Medicare Part C. All providers who accept Medicare will also accept your Medicare Supplement plan – the good news is that more than 90 percent of physicians nationally accept Medicare.
So, the combination of Original Medicare and Medigap Insurance means that you get help making up for that 20 percent that’s not paid by Original Medicare. Depending on the plan you select (there are many types of Medigap plans available), you may be responsible for no or very little out-of-pocket cost, although each plan comes with a monthly premium that must be paid to retain the coverage.
So, let’s review the main points so far. These are the things you’ll want to consider as you look at the Original Medicare + Medigap option:
Combining Medicare Part A and Part B and supplementing with a Medicare Supplement/ Medigap is a lot like buying insurance in chunks and gives you options to consider when you’re looking at factors such as cost, coverage, a choice of doctors and hospitals, and some additional coverages or services. Now, let’s review Medicare Part C.
Medicare Part C plans are also known as Medicare Advantage Plans. You can opt into a Medicare Part C/Medicare Advantage plan instead of the Medigap option described in the previous section.
You get all of the same coverage that is provided with Parts A and B (and in most cases, prescription drug coverage as well) and, in fact, Part C/Medicare Advantage plans typically include additional benefits-dental, vision or hearing benefits, for example.
What’s the difference? Under a Medicare
Part C/Medicare Advantage Plan, private companies are contracted with Medicare to offer the benefits of Part A, Part B, and sometimes Part D and other benefits. It’s important to know that with this option, there is a network of doctors and hospitals that the plan provides for your care.
Medicare Part C/Medicare Advantage plans are often less expensive than a Medicare Supplement/Medigap Plan. In fact, some plans offer a $0 or low monthly premium, although you still need to continue to pay your Medicare Part B premium. Additionally, depending on where you live, you may not have access to this option as Medicare Part C/Medicare Advantage plans are available only in certain geographic areas.
Doctors and hospitals are reimbursed directly from the insurance company that issues the Part C/Medicare Advantage plan. You get all of the same coverage that is provided with Parts A and B (and in most cases, prescription drug coverage as well) and, in fact, Part C/ Medicare Advantage plans typically include additional benefits-dental, vision or hearing benefits, for example.
Prescription drug coverage is an important aspect of the Medicare system. While exact coverage and costs are different for each Medicare Part D plan, all plans must offer at least a standard level of coverage that is defined by Medicare.
Note that not all drugs are covered by Part D, so it’s important to confirm that your prescriptions are part of the formulary (list of drugs) for the plan you have chosen prior to enrollment. You can purchase a stand-alone plan, and some Medicare Advantage plans offer built-in prescription drug coverage.
Now that you understand your options, you may need to complete some additional research to find out which plan is right for you. Here’s what you need to know about enrollment.
First, there are three types of enrollment periods:
The Initial Enrollment Period, or the IEP, is when you first become eligible for Medicare. You qualify for the IEP when you turn 65, or 24 months after being deemed disabled by Social Security.
If you’re enrolling in Medicare for the first time because you’re turning 65, the following chart shows you the enrollment period that surrounds a June birthday. You can enroll in Medicare during a 6-month window of time surrounding your birthday month. For many, this can be a very busy time with lots of decisions to make regarding retirement and a host of other issues, so be prepared and mark deadlines on your calendar so you don’t forget them.
The IEP is your chance to establish your coverage. As your friends and colleagues may tell you, it’s important to make good choices about your coverage, so it really is worth your while to think ahead and explore your options to make sure you can have the type of coverage that’s important to you – and that makes the most sense for your lifestyle and your budget.
Don’t worry, you can update your options annually if you want to, but typically, you’ll have to qualify for a Special Enrollment Period or wait for the next Open Enrollment Period after your IEP.
There are a number of factors that qualify you for a Special Enrollment Period (SEP).
The Annual Enrollment Period (AEP) happens at the end of each calendar year and represents the period of time when you can change or update your coverage. Enrollment dates are October 15 – December 7 of each year. During this time period, all Medicare beneficiaries can enroll in a new plan, switch current plans, or drop their plans.
As you can see, there is a lot to consider when selecting your Medicare options. Take some time to review your options by visiting our website where you’ll find additional information and detail about your Medicare options, or call us directly. We have trained staff who can answer your question and assist you with additional details about your coverage options.
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The Internal Revenue Service (IRS) recently published Revenue Procedure 2022-38.