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Don’t have a clue about how to get Medicare or how the whole process works?
Here’s a crash course on the basics!
People often use these terms interchangeably because they don’t understand the difference.
In a nutshell, Medicare is for anyone over 65 (or under 65 and disabled) regardless of income, whereas Medicaid is based on financial need.
But as with any government program, Medicaid gets complicated real fast. In general, financial qualifications for Medicaid look like this:
There are four Parts to the Medicare law.
Ready to learn your A, B, C and D’s?
Part A: Covers Medicare approved inpatient hospitalization; Skilled Nursing Facility; Home Health Care; Hospice.
Part B: Covers Medicare approved pretty much everything else that is not covered by Part A, such as doctor visits, lab work, X-rays, ambulance and emergency room.
Exception: Prescription drugs - these are covered by Part D.
Part C: This is a new type of plan called a Medicare Advantage which takes over for Original Medicare. These plans typically require you to see “network” doctors and other providers. For a full explanation about Medicare Advantage, click here.
Part D: Part D of Medicare covers Medicare approved prescription drugs. For a fuller explanation about Part D Prescription Drug Plans, click here.
Even More Alphabet Soup! There are more letters in the Medicare Alphabet soup. The government has standardized the Medicare supplement plans offered by private insurance companies so people can compare apples to apples. These plans are labeled Plans A through N. For a full explanation about Medicare Supplements, click here.
There are two parts to Original Medicare — that’s the red, white and blue Medicare card.
“Part A” covers inpatient hospitalization.
“Part B” covers most other services, except for outpatient prescription drugs which are covered under “Part D”.
Both Part A and B have various deductibles and copays and coinsurances that you need to pay as your share. These are the gaps in the Medicare government program that most people fill in by purchasing private insurance such as a Medicare Supplement Plan (aka Medigap Plan) or a Medicare Advantage Plan.
Part A is free because you and your employer had been paying for this during your working years. For people who first start their Medicare Part B in 2020, Part B standard premium is $144.60. (Those who started Medicare earlier may pay a bit less.) Adjustments to the standard premium can occur if your income is very low, or if your income is higher than average.
A deductible is how much you must pay out of your own pocket in a calendar year before the insurance coverage kicks in.
This means you pay 100% of all your medical bills up to your deductible, except for certain items that bypass the deductible, primarily preventive services such a routine physicals and certain immunizations.
For example, under Original Medicare in 2020 the inpatient hospitalization deductible is $1408 when you enter the hospital (you don’t have to pay another deductible if you reenter the hospital within 60 days). The calendar year outpatient deductible in 2020 is $198.
Once you’ve met your deductibles, Medicare will start paying their portion of the bill while you pay your portion.
A Copay is a flat dollar amount you pay to your doctor or other medical provider after which Medicare pays its share.
For example, under Original Medicare, if you were to be hospitalized, first you would pay the Part A hospital deductible of $1408. If your hospital stay lasts longer than 60 days, you would need to start paying a flat daily “copay” of $352. After 90 days your copay increases to $704 per day. (Note: For some inexplicable reason Medicare’s terminology is out of line with the rest of the insurance industry; Medicare calls this flat daily payment a “coinsurance” rather than the more proper “copay” as used by every private insurance company and by every doctor’s office.)
The coinsurance begins after you meet your deductible. For example, in 2020 the Part B deductible is just $198 for the entire year. After the deductible is met, the “co” in coinsurance kicks in. You and Medicare share in the expenses, with Medicare paying 80% and you paying 20% of Medicare approved charges.
But how long do you have to pay that percentage? Read on…
No Medicare "Out-Of-Pocket Maximum"
As the name implies, this is the maximum annual amount you will have pay out of your own pocket before the plan begins to pay at 100% for the rest of the year. Private insurance plans typically have a special feature that protects you from having to pay more than a certain dollar limit for the combination of all your deductibles, copays and coinsurance. A $4000 to $6700 yearly out-of-pocket limit is typical. Medicare, however, does not have any out-of-pocket limit protection. That means that if a major health event occurred (for example, stroke, heart attack or cancer), on a $100,000 bill you would be responsible not only for your 20% coinsurance of the Medicare approved charges, but also for “excess charges”—that is, charges above Medicare approved rates. If your medical provider accepts “Medicare assignment” you would not have to pay for excess charges, but you would still be responsible for your 20%, which is $20,000 in this example.
In our opinion, this is the biggest weakness among Medicare’s various gaps and why it is so important to purchase either a Medicare Supplement or a Medicare Advantage plan so you can have a reliable out-of-pocket maximum protection.
A doctor, or other provider, who is “participating” agrees to accept the Medicare approved amount as full payment for covered services. This is referred as accepting Medicare assignment.
Here’s what happens if your doctor or other provider accepts Medicare assignment:
If a doctor or other provider doesn’t accept what Medicare pays as payment in full, this is referred to as being “non-participating.” While they will still bill Medicare, you will usually be required to pay the bill up front and Medicare will mail their 80% of Medicare’s allowable amount to you, not to the doctor. In addition, the doctor is allowed to bill you an extra 15% on top of Medicare’s allowable amount. This is known as the “excess charge.”
These are doctors who have opted out of Medicare completely. They may bill you whatever amount they wish and Medicare will pay nothing for their services.
Because some doctors and providers do not accept Medicare assignment, it is important to have a Medigap supplement that will pay not only the 20% of Medicare “approved” amounts, but also for “excess” charges—that is, charges over and above what Medicare approves. Be sure to keep in mind that not every Medigap policy pays for excess charges. That’s where our expertise as Medicare supplement specialists comes in! For help in choosing the best Medicare Supplement policy for your needs contact us.
A Medicare Supplement, also know as “Medigap,” is a policy issued by many private insurance companies to fill in the gaps (deductible, copays, coinsurance, excess charges) inherent in Medicare. Policies are standardized across insurers and consistently named with letters from A to N. With Medigap Plans, there are no networks you must participate in, so you are free to go to any doctor or hospital nationwide, so long as the provider accepts Medicare. For a full discussion of Medigap policies, click here.
Medicare Advantage plans, also known as Medicare Part C plans, are a newer option in place of a Medigap. It is less expensive than a Medigap policy, but it has HMO and PPO networks which are a strong component. Go to a non-network HMO provider and you will not get paid for the visit, except in the case of a bona fide, serious medical emergency. For a full discussion about Medicare Advantage Plans, click here.
Part D of Medicare provides drug coverage for those on Medicare. It is sold by many private insurance companies who are required to follow guidelines set by the Centers for Medicare and Medicaid (CMS). Part D drug plans come in many different “flavors”—featuring different deductible, copayment, coinsurance, and premium differences. The only way to know for sure which plan is best for you is to do an analysis comparing the drugs you are taking to the various drug formularies and plan designs that are available. Helping you to select the best drug plan for your personal situation is part of our free service at Trozan Insurance Agency! Call us at (970) 224-5500 or (800) 553-1444 or fill out our contact us form. For a fuller explanation about Part D Prescription Drug Plans, click here.
An HMO stands for "Health Maintenance Organization."
An HMO network requires you to choose a primary care physician, who coordinates your medical care. If you want to see a specialist, you may first need to see your primary doctor and get a referral depending on the plan you choose. You are restricted to going to a doctor or hospital that is part of the HMO network. Typically these networks are local or regional networks. If you go outside of the network, nothing will be covered unless you go to an emergency room or urgent care for serious medical needs.
PPO stands for "Preferred Provider Organization." A PPO network is usually larger than an HMO network. This gives you more choices in selecting a physician. In addition, some PPO networks are national, meaning that you can normally find a participating provider almost anywhere in the country. If a doctor agrees to participate in a network, the medical charges are discounted below the normal rate. So as a smart consumer always try to stay within your insurance plan’s network. However, if you need to go outside of the network to see a renowned specialist, you will still have insurance coverage although you will pay more in out of pocket costs than if you had stayed in-network.
Finally, with a PPO plan you do not need a referral to see a specialist.
The process depends on whether you are receiving Social Security benefits or not. Please go to our web page entitled How to Apply for Medicare for all the details.
Call us at (970) 224-5500 or (800) 553-1444 toll-free to set up a free, no-obligation consultation to go over your Colorado (and surrounding states) Medicare options and to answer any questions you might have. Or you may email us – right here!