Now the time has come. You or someone you love is signing up for Medicare. The mailbox will be filled with more reading material than a first year law student will receive.
I will start by saying this general statement. If people only take Medicare Part B, they will have large gaps in coverage. There is a large deductible, many coverages are 80/20 with the Medicare beneficiary (fancy word for patient) paying 20% of the bill. There are also circumstances that the provider (Doctor or Hospital) will be able to balance bill the patient for amounts above and beyond the Medicare allowance.
Since the purpose of this article is to simplify the topic I will avoid many details. These details are very important. However, let us put them aside for another article which will follow. The Medicare Beneficiary will be called R.E. (respected elder) for the rest of this article.
R.E. can just take Medicare Part B and pay the extra expenses of the deductible and co-insurance. Part B does not have any prescription coverage. Most people choose to supplement their Medicare coverage. Once that decision is made, R.E. has the choice of buying a Supplement or exchanging their Medicare for an Advantage Plan.
The Advantage plan has the feel of being free or at least very inexpensive. Medicare pays a premium to a local HMO who will take R.E. as a client on one of their plans. Depending on the Plan there may be no premium or a relatively small premium. R.E. no longer has Medicare but they will use their HMO Insurance Card. Most Advantage plans come with a Part D Prescription plan included. What is the downside of such coverage. HMO coverage only pays for "in network providers". Out of network coverage is only for emergencies. If R.E. travels out of State or lives in another state for part of the year, this could be clumsy. They also want to make sure they are comfortable with the HMO Providers.
The second option for R.E. is to keep Medicare Part B and buy a supplement. These are purchased from Insurance Companies. Supplements are regulated by law. There are several plans offered but the coverage for the plans must be consistent among the Insurance Companies. They all are named by letters. Therefore if R.E. buys a Plan C, the coverage will be the same no matter which company he buys from. The difference will be in the premium and the customer service of the Insurance Company. Supplements do not include Prescription Coverage so, if that is desired, R.E. will need to buy a "stand alone" Prescription Plan.
The Medicare Prescription, commonly called Part D is the same whether it is purchased as a stand alone product or part of an Advantage Plan. In 2009 in works like this. The first $2,700 of prescriptions in a calendar year are purchased with a co-pay. Between $2,700 and $4,350, there is no coverage and R.E. would have to pay full cost for their prescriptions. This is called the "donut hole." After $4,350 of prescription cost in a calendar year, the prescriptions are covered with small co-pays.
To make matters more confusing there are specific periods of time for R.E. to enroll for coverage. There are also other plans called Fee or Service Plans. They are not as popular as the first two plans.
This article in its' attempt to make things simple is woefully weak in details. As stated previously, the details are very important. It was the attempt of the writer to try and create a basic scenario for R.E. so they can approach their decision with some fundamental knowledge. I strongly urge anyone making their decision to get all questions answered before proceeding. An Independent Insurance Agent can be a tremendous help because they have the opportunity to offer all plans and can clarify the differences.
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