Anyone who has entered the Medicare world either when helping their grandparents, parents, or themselves, knows how confusing and stressful it can be. Sure, it's a government program but Medicare is particularly mystifying. Big insurance companies take advantage of the lack of information surrounding Medicare to sell their latest and greatest products to the next unsuspecting customer.
We have seen the results of this complexity within member families. Our LGE Insurance Services Medicare Team is dedicated to educating, explaining and demystifying the world of Medicare for our members. Long after you read this article, we will be there to confidently make Medicare decisions and at no cost to you.
Let's move on to explain the basics of Medicare and some of the key facts you need to know before making any healthcare decisions.
Traditional Medicare is broken down into two primary parts: Part A and Part B.
Medicare Part A: This is the hospital part of your insurance. Any inpatient, hospital stays, some skilled nursing care, some hospice care, and some general healthcare procedures are covered under Medicare Part A. This is one of the simplest parts of your Medicare coverage, however depending on hospital coding and labeling, it can get complex.
For example, the healthcare status used in hospital paperwork between triage and admittance, or between admittance and dismissal, is called "under observation" and can be trouble for a patient. When a patient is "under observation" they are not meeting the requirements of hospitalization by Medicare to engage their nursing care benefit. Medicare says you must be admitted to the hospital for three full days before you can engage the nursing care benefit. Just be careful to pay attention to your status if you are ever hospitalized under Medicare.
For now, a good way to remember is "Part A covers your stay" (in most cases).
Medicare Part B: This is the doctoring part of your coverage, your typical health insurance coverage. It covers two types of medical services:
When you go to the hospital or doctor, the institution then turns around and bills Medicare for your procedures. So, let's say you had a knee replacement. The hospital says to Medicare "the knee replacement costs $10,000 here." Medicare says "No way- according to our DRG, (diagnoses-related groups, basically Medicare's master list of codes and amounts they cover) this procedure costs $5,000, so we will give you $4,000."
In this case, the hospital takes their $4,000 from Medicare and then bills you, the patient, for the remaining $1,000. Traditional Medicare only covers 80 percent of the approved amount, leaving you to pay for the remaining 20 percent.
Medicare Part D: This is the part of Medicare that helps to cover prescription drug costs. Though it is the smallest part of Medicare, it is incredibly important. The only time to change is during the Annual Election Period (Oct. 15- Dec. 7) and these plans require reviews annually. The plan costs and benefits can change each year, so it's always important to review your drugs and budget for the year with an advisor.
This is how Medicare works in a general sense. The remaining 20 percent that is left for the insured is the reason why people elect to buy Medicare Supplement or Medicare Advantage plans. Medicare supplement plans almost always cost more in monthly premium, but they have little to no out-of-pocket costs or co-payments. Whereas, Medicare Advantage plans have low monthly premiums (sometimes even $0) but high out-of-pocket costs.
Now we'll get into a breakdown of pros and cons to both types of Medicare insurance plans.
Medicare Supplement plans are more comprehensive, but come at a higher monthly premium. Anyone who likes to plan for every possible expense and avoid surprises belongs on a Medigap plan. Depending on which letter plan (the Medicare Supplement plans are lettered “A” through “N”) you choose, you may have little to no co-payments or out of pocket expenses other than your monthly premiums. For example, Plan G only requires you to meet a $203 deductible for your first non-preventive visit, then you are covered 100% for everything else you do that year. Anyone with preexisting conditions should choose a Medigap plan to be properly protected for the rest of their lives. Once you're out of traditional Medicare and enrolled in a Medicare Advantage plan, you must answer health questions to get back in.
These are key takeaways from this article and things to remember: