A Short Guide To Medicare Options

As soon as you become eligible for Medicare you realize you are suddenly knee-deep in insurance decisions you have to make with little or no information to guide you. What is Medicare Advantage? Do you need Medigap? Why are you paying premiums to Medicare and an outside insurance company?

Let’s start with a short history of Medicare. In the beginning, upon retirement or disability, there was no affordable insurance option available to most people.

Medicare started out as a government-based insurance plan to cover the largest single cost in healthcare for the 65+ population – hospitalization. An inpatient hospital stay can easily run $15,000.00 a day. This part of Medicare, called Medicare part A usually has no premium.

However, since many retirees have ongoing health issues and little income, Medicare added coverage for visits to doctors and diagnostic testing. This new coverage, called Medicare part B, has a premium that you pay to Medicare.

Still, even between Medicare’s part A for hospital costs and part B for other healthcare costs, there are large gaps in Medicare’s coverage. So, in comes gap coverage insurance, otherwise known as Medigap.

Medicare was becoming a huge bureaucracy by this time. They needed to find a way to outsource this new option. At the same time, private insurance companies did not follow the same rules set down for Medicare. What could they do?

In the end, it was decided that private insurance companies could offer gap insurance, called Medigap, and collect separate premiums for it, but they had to use Medicare’s rules. This is why Medigap plan E through AARP will give you exactly the same coverage as Medigap plan E through Blue Cross and Blue Shield. This option is completely voluntary.

Medigap plans are secondary insurance. That means the bills go to Medicare first. After Medicare pays its share of the bills, they send the bills on to the Medigap insurance companies.

Unfortunately, these options, with all their premiums left a good portion of the 65+ population with insurance costs beyond their means.

Medicare’s current solution to this problem is Medicare Advantage, sometimes known as Medicare part C. Medicare Advantage plans offer low premium plans sold by private insurance companies.

Medicare has given broad boundaries that insurance companies must comply with for these plans. In exchange, Medicare pays part of the costs incurred by the insurance companies to offset the lowered premiums.

Medicare Advantage plans are primary insurance. With a few exceptions, bills go to the Medicare Advantage insurance carrier, and the retiree is responsible for whatever portion of the bill that the insurance company does not pay.

Still, wondering which plan is best for you? Ask yourself a few questions:

How much can you afford to pay in premiums on top of the Medicare part B premium?

According to PlanPrescriber.com, for Henderson County, North Carolina, Medicare Advantage plans range from $0 to $120 per month, while Medigap plans run from $111 to $375 per month. Medicare Advantage can also be combined with Medicaid and other local programs that help with healthcare costs to cover premiums and/or healthcare costs.

How often do you need to see a health care provider?

According to the Explanation of Coverage for Horizon Blue Cross and Blue Shield of New Jersey’s $0 premium Blue Value Medicare Advantage Plan, physical therapy sessions have a specialist copayment of $35. This is a pretty average copayment for these services in New Jersey on a Medicare Advantage plan. If you need physical therapy 3 times a week for 8 weeks, your out-of-pocket medical expenses just for physical therapy would come to approximately $420 per month for those 2 months. This is certainly more expensive than the $375 premium for Medigap discussed earlier. However, if you normally don’t see a healthcare provider very often – say twice a month – even with a couple of months that are more expensive, it averages out over the year to be less expensive.

How much do you travel?

Medigap offers you the same coverage anywhere you see a Medicare-eligible provider, whether you are visiting your sister in Seattle, Washington, or at home in Chimney Rock, North Carolina. Most Medicare Advantage plans, on the other hand, have very reasonable rates for seeing providers that are part of their local network but have much higher costs for “out of network” providers, if they offer any coverage other than emergency room services outside of their local network at all.

Medicare and it’s many options, plans, and rules can confuse anyone. The best thing you can do is to check all your options for your area. Call local insurance agencies and ask them to send you information on their plans. If Medicare hasn’t sent out their Booklet, “Medicare and You”, to you yet, call and ask for a copy. No article all by itself will give enough information to sort all of it out. Hopefully, this article has given you enough answers to start you on the right track. Getting the Medicare plan that is right for you really is possible. Just remember, it is your right and responsibility to make an informed choice.