Medicare 101

Medicare Insurance Plans

What Is Medicare?

Whether you are in San Antonio, Texas or Tampa, Florida, many of us are familiar with Medicare. But what about its textbook definition? Well, Medicare is a federal health insurance program for people in the U.S. who are 65 and older, and for certain younger people that have disabilities. The program was signed into law by President Lyndon Johnson in 1965, and currently covers over 60.8 million Americans.

Who Is Eligible For Medicare?

In general, individuals are eligible for Medicare if they are at least 65 years old and are a citizen or permanent resident of the United States of America.

Individuals who are under 65 years old can also be eligible if they are disabled. People under 65 and disabled must be receiving disability benefits from either Social Security or the Railroad Retirement Board for at least 24 months before automatic enrollment into Medicare occurs. Additionally, you can be any age and receive Medicare if you have either end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS).

How Do I Apply For Medicare?

A few ways actually. If you are 65 and receiving Social Security or Railroad Retirement Board benefits, you will be automatically enrolled in Original Medicare (Part A&B) and you can expect your card in the mail the three months prior to your 65th birthday.

If on the other hand you are not receiving Social Security or Railroad Retirement Board benefits, you will need to enroll ahead of time. You can start this process when you are 64 years and 9 months old, which is the start of your seven-month initial enrollment period. To do so, apply online, visit your local Social Security office, or call Social Security at 1-800-772-1213.

How Much Does Medicare Cost?

Many people may be surprised to learn that Medicare is not free.

Let’s start with Part A, which we will talk about more in depth shortly. Part A is premium-free if you have worked at least 10 years (40 quarters) and payed Medicare taxes. If you did not reach this threshold, you will have to pay for Part A, depending on the length of your work history. If you worked 30-39 quarters, you will pay $252 a month for Part A in 2020. If you worked less than 30 quarters, you will pay $458 a month for Part A in 2020.

With Part B, which we will talk about more in depth shortly, there is a premium due for everyone in America, unless you qualify for full-Medicaid benefits. This amount is dependent on your yearly wages, not work history. Most people will pay $144.60 a month for Part B in 2020, but check the chart here to see what you will pay.

What If I Plan Keep Working Past Age 65?

If you plan to keep working past age 65, then you may be able to delay enrolling in Medicare (dependent on the coverage you have at work). If you find that the work health insurance is getting pricey or the benefits are not as good good compared to Medicare plan options, enrolling in Medicare may make sense for you when first eligible. We recommend to check with your benefits administrator to see what is possible.

Keep in mind that while Part A may be premium-free for you, Part B will not, so take that into account if you want to sign up when you first turn 65 and are still working.

What If I Served In The Military?

As a veteran-owned agency, we are dedicated to meeting the needs of those who serve our country and those who have served in the past. When it comes to Medicare and military-affiliation, it is crucial to consider all options you have available to you. Let’s start with some distinctions:

1). If you are like Barry Harrin of The Harrin Group here in San Antonio, Texas, who served in the military but did not retire, you may wonder what to do when you reach 65? Well, while it is true you should have coverage, dependent on the level of care the VA offers to you, it is highly encouraged to apply for both Medicare Parts A & Part B when first eligible, and possibly Part D as well. We say this because if you need care outside of the VA system, you will be responsible for all cost-sharing, if you just have VA and not Medicare also. As you will learn below, Original Medicare has its downsides and you should really consider either acquiring a Medicare Advantage plan which has drug coverage (Part D) built into it, or getting a Medicare Supplement plan and a stand-alone drug plan (Part D), so you have the freedom to get care, treatment, and second opinions outside the VA health system. For more on the VA and other health insurance coverage, click here.

2). Now, if you are someone who retired from the military, you receive TRICARE and once 65 rolls along, that turns into TRICARE for Life. This is contingent on ensuring you have both Medicare Parts A&B. When it comes to drug coverage (Part D), TRICARE for Life provides coverage. With TRICARE for Life, Medicare pays first for Medicare-covered services, TRICARE for Life will pay the Medicare deductible, coinsurance amounts and services that Medicare does not cover. In many cases, TRICARE for Life will be adequate coverage in itself for many seniors, but it is worth checking into all available options when 65 comes along. For more on TRICARE for Life, click here.

3). Lastly, we sometimes run into folks who have what is called The Civilian and Medical Program of the Department of Veterans Affairs (CHAMPVA). To be eligible for CHAMPVA, the veteran can’t be eligible for TRICARE/TRICARE for Life. CHAMPVA provides coverage to the spouse or widower and children of a veteran who was/is rated permanently and totally disabled due to a service-connected disability, died of a service-connected disability, or died on active-duty and the dependents are not otherwise eligible for TRICARE benefits. In most cases, the beneficiary of CHAMPVA is required to have both Medicare Parts A&B. Like TRICARE for Life, Medicare pays first, then CHAMPVA covers their allowable amount. CHAMPVA also covers drug coverage (Part D). While TRICARE for Life seems to work well for most folks on its own weight, CHAMPVA does not cover everything (ie. $50 outpatient deductible per year, patient cost sharing of 25%), therefore we highly recommend you consider either a Medicare Supplement plan or Medicare Advantage plan when first eligible, for more inclusive benefits. For more on CHAMPVA, check out the short video below:

What If I Am Low Income?

Well, if someone is about to turn 65 and they happen to be very low income, there are some options available. Medicaid is a term many are familiar with and this simply is a joint federal and state program that can help with medical costs and other services as well, for people under 65 and over 65. For the latter group, Medicare Savings Programs (MSP) are what you want to check into, as they can help cover your Medicare premiums (ie. Part B), co-insurances, and more. There are different levels of Medicare Savings Programs, that are dependent on your income: 1. Qualified Medicare Beneficiary (QMB), 2. Specified Low-Income Medicare Beneficiary (SLMB), Qualifying Individual (QI), and Qualified Disabled and Working Individuals (QDWI) program. QMB will cover the most for someone, and QI/QDWI will be on the lower end as far as coverage. To see more on these programs and income limits, click here. If you are already on Medicaid before turning 65, then you should automatically convert to a Medicare Savings Program. If you are in Texas and want to apply online, click here. There are also certain Medicare Advantage plans (Part C) that are tailored for folks that are “dual” (ie. Medicare and Medicaid) that you should look into when turning 65 and have Medicaid.

If someone does not qualify for Medicaid, one option that many do not know about is called “Extra Help” from the Social Security Administration, which can assist with prescription drug costs, estimated to be worth about $5,000 a year. To qualify, the individual must be receiving Medicare, have limited resources/income, and reside in one of the 50 States or the District of Columbia. You can apply online in minutes here. There are different levels of “Extra Help”, such as 100%, 75% and so forth, but acquiring any level may allow you to have more leeway in enrollment periods for changing your Medicare Advantage plans in the future, so keep that in mind.

What Are The Parts Of Medicare?

1. Part A- Hospital Insurance 

In a nutshell, the following are covered by Part A:

  1. Inpatient care in a hospital
  2. Inpatient care in a skilled nursing facility (not custodial or long-term care)
  3. Hospice care
  4. Home health care
  5. Inpatient care in a religious non-medical health care institution

Here are some more details:

  • Part A covers hospital stays (including stays in a skilled nursing facility) if certain criteria are met (the hospital stay must be at least three days, three midnight’s, not counting the discharge date)
  • The nursing home stay must be for something diagnosed during the hospital stay or for the main cause of hospital stay like for instance, hospital stay for broken hip and then nursing home stay for physical therapy would be covered
  • If the patient is not receiving rehabilitation but has some other ailment that requires skilled nursing supervision, then the nursing home stay would be covered
  • The care being rendered by the nursing home must be skilled, as Medicare Part A does not pay for custodial, non-skilled, or long-term care activities, including activities of daily living (ADLs) such as personal hygiene, cooking, cleaning, etc
  • The maximum length of stay that Medicare Part A will cover in a skilled nursing facility per ailment is 100 days (the first 20 days would be paid for in full by Medicare with the remaining 80 days requiring a co-payment)
  • If a beneficiary uses some portion of their Part A benefit and then goes at least 60 days without receiving skilled services, the 100-day clock is reset and the person qualifies for a new 100-day benefit period

*Keep in mind that deductibles, copay’s, and coinsurance’s may apply for Part A coverage in 2020. For instance, you will have to pay a deductible of $1,408 for each benefit period in the hospital and a copay of $352 a day if in the hospital past day 60. In addition, you will have to pay $176 per day, if in a skilled nursing facility past day 20.  

2. Part B- Medical Insurance:

In a nutshell, the following are covered by Part B:

  1. Doctor’s visits for outpatient care
  2. Lab services and x-rays
  3. Preventive care services
  4. Durable medical equipment (DME)
  5. Ambulance services
  6. Vaccination coverage

Here are some more details:

  • Part B medical insurance helps pay for some services and products not covered by Part A, generally on an outpatient basis. Part B is optional and may be deferred if the beneficiary or their spouse is still actively working. There is a lifetime penalty (10% per year) imposed for not taking Part B, if not actively working.
  • Part B coverage includes physician and nursing services, x-rays, laboratory and diagnostic tests, influenza and pneumonia vaccinations, blood transfusions, renal dialysis, outpatient hospital procedures, limited ambulance transportation, immunosuppressive drugs for organ transplant recipients, chemotherapy, hormonal treatments such as lupron, and other outpatient medical treatments administered in a doctor’s office. Medication administration is covered under Part B only if it is administered by the physician during an office visit.
  • Part B also helps with durable medical equipment (DME), including canes, walkers, wheelchairs, and mobility scooters for those with mobility impairments. Prosthetic devices such as artificial limbs and breast prosthesis following mastectomy, as well as one pair of eyeglasses following cataract surgery, and oxygen for home use is also covered.
  • As with all Medicare benefits, Part B coverage is subject to medical necessity. Complex rules are used to manage the benefit, and advisories are periodically issued which describe coverage criteria. On the national level, these advisories are issued by CMS, and are known as National Coverage Determinations (NCD). Local Coverage Determinations (LCD) only apply within the multi-state area managed by a specific regional Medicare Part B contractor, and Local Medical Review Policies (LMRP) were superseded by LCDs in 2003.

*Keep in mind that deductibles, copay’s, and coinsurance’s may apply for Part B coverage in 2020. For instance, you will have to pay a yearly deductible of $198 and then a coinsurance of 20% for all services thereafter. Unlike Medicare Advantage and some Medicare Supplement plans, there is no yearly limit for what you pay out-of-pocket. So if you have a $1,000,000 hospital bill, you are liable for $200,000 of it, or 20%! 

What Is Not Covered By Medicare Part A&B?

Good question, well here are some items and services that Original Medicare does not cover:

  • Drug coverage (retail/mail order)
  • Most dental care
  • Eye exams related to prescribing glasses
  • Dentures
  • Cosmetic surgery
  • Massage therapy
  • Routine physical exams
  • Acupuncture
  • Hearing aids and exams for fitting them
  • Long-term care
  • Concierge care (ie. boutique medicine)

3. Part C- Medicare Advantage: 

So now that you know about Original Medicare (Part A&B), let’s take a look at the next part.

Medicare Advantage plans are referred to as a Part C plan. These are Medicare-approved private health insurance plans for those individuals enrolled in Original Medicare, Part A, and Part B. When you join a Medicare Advantage plan, remember that you are still in the Medicare program and must continue paying your Part B premium.

Medicare Advantage plans provide all of your Part A (hospital insurance) and Medicare Part B (medical insurance) coverage. These plans generally offer additional benefits, such as a gym membership (Silver Sneakers), vision, dental, hearing and many include prescription drug coverage. Medicare Advantage plans often have networks, which simply means you may have to see certain doctor’s and go to certain hospital’s in the plan’s network to receive care, but some feature out-of-network benefits, depending on the plan. Medicare Advantage plans may potentially save you money because out-of-pocket costs will be capped at a certain limit, versus no limit with Original Medicare.

When we first turn 65, come off a work plan after 65, or disabled and about to start to receiving Medicare, we are faced with an important decision. Do I keep Original Medicare or go to a Medicare Advantage plan or maybe a Medicare Supplement plan, which we will look at shortly. In both cases, we recommend that you seriously look at going with either of these options, as Original Medicare has tremendous costs that many don’t realize, such as 20% for doctor services, a hefty hospital deductible and no maximum-out-of-pocket, which means a senior on a fixed income might be in a heap of financial trouble if not lucky with their health. That is why education is crucial and we do our very best to inform you on the hidden costs of Original Medicare.

For more in-depth information on Part C or Medicare Advantage plans, check out our dedicated page.

4. Part D- Prescription Drug Coverage:

Part D has to do with your prescription drug plan and its important to note that as a Medicare beneficiary, one does not automatically receive Medicare Part D prescription drug coverage. And the fact that Original Medicare Parts A&B, will not cover drugs that you can get at a pharmacy or by mail, usually only medications given in-house (ie. hospital, doctor’s office). Medicare Part D coverage is optional, but can be valuable if you take medications or want to be on the safe side of things in case you are prescribed expensive medications in the future. Sometimes we run into folks here in San Antonio, Texas and state-wide, that insist on using coupon-based programs like GoodRX for medications, but we warn against this because it is not considered creditable drug coverage. Therefore, if you choose to use GoodRX solely versus getting a stand-along drug plan or getting a Medicare Advantage plan that has it drug coverage built-in, and are pass the period of eligibility for Part D, you might have to pay a late-enrollment penalty if you decide to enroll at a later time. This penalty will last for the rest of your life, unless you qualify for financial assistance, such as Extra Help or Medicaid at some point.

One of the biggest concerns we see for folks here in San Antonio, Texas and frankly all over the USA, is the burden of medication costs inhibiting seniors living costs. This is especially true for many of the insulin injections and so forth. Therefore, it is imperative to fully analyze what your drugs will cost on your new plan (ie. stand alone Part D, or Medicare Advantage), and see if there are ways to lower your costs, such as getting “generic” medications over the similar ingredient “brand-name” medications (see the video below)

For more in-depth information on Part D or Medicare Prescription Drug plans, check out our dedicated page.

Medicare Supplemental Insurance (Medigap)

Medicare Supplemental Insurance or Medigap, are different than Medicare Advantage (Part C), as it supplements Original Medicare only. These plans are offered by private companies, and can help pay some of the costs that Original Medicare does not cover, such as co-payment’s, coinsurance’s, and deductibles.

Medicare Supplement plans are considered standardized coverage, meaning all policies offer the same basic benefits and are identified by a letter (ie. Plan G). The one we focus on here at The Harrin Group in San Antonio, Texas, is a Plan G, which is pretty easy to understand. For instance, after meeting the $198 Part B deductible yearly, the plan will cover the rest of your medical bills, 100%. Keep in mind that effective January 1’st 2020, Plans C & F are no longer available to people turning 65, but if you are already enrolled, you stay on these plans. 

Medicare Supplements

To acquire a Medicare Supplement plan, you must have Medicare Part’s A&B, pay a monthly premium to the insurance company for the plan, and will want to have a separate, stand-alone drug plan (Part D). Medicare Supplement plans only cover 1 person, so couples will need their own plans, but may be eligible for a household discount, dependent on the insurance company. You cannot have both a Medicare Advantage plan and a Medicare Supplement, so its important to choose the one that works best for you. Keep in mind that, once you miss out on your Medigap enrollment period (3 months before 65, month of, and three months after), you will need to qualify medically to get on a Medicare Supplement plan, unless you qualify for a guaranteed issue event, such as leaving work coverage after 65. See here for more instances. We call the Medigap enrollment period the “get out of jail free card”, because the insurance company has to accept you, even if you have stage 4 cancer, so that is why its vital to consider all options in the period leading up to 65 and right after.

Here at The Harrin Group in San Antonio, Texas, we are very straight-forward folks and want you to know an insider tip. Agents/Brokers get paid a commission for each plan someone signs up on, but they get more on Medicare Advantage plans than Medicare Supplements. Now in some cases, Medicare Advantage plans may work well for you but we always recommend to start with a Medicare Supplement if one can afford them, due to predictable cost-sharing (ie. $198 yearly Part B deductible, then no more medical bills for a Plan G), and more freedom in seeking providers, as anyone who accepts Medicare, should accept a Medicare Supplement. This is crucial when looking at specialty facilities, like the MD Anderson Cancer Center or Mayo Clinic for instance, who do no operate on an network basis, like a Medicare Advantage HMO and some PPO’s. So be weary of an over-eager salesman pushing a Medicare Advantage plan on you when turning 65. 

For more in-depth information on Medicare Supplements or Medigap, check out our dedicated page.

If I Want To Read More About Medicare, Where Should I Go? 

We would start with the latest 2020 “Medicare & You” handbook, published yearly by The Centers for Medicare and Medicaid Services (CMS). You can access the ebook-version here.

More A Visual Learner? Here Is A Quick Recap From The Harrin Group:

There are varying enrollment periods for Medicare and it can often be quite confusing for people. For instance, you may qualify for a Special Election Period (SEP) if you are on your state’s Medicaid program or receiving “Extra Help” from the federal government with your prescription drug costs, which allows you to change coverage at multiple points throughout the year. If you would like us to help you determine if you qualify for “Extra Help”, that is something we definitely do for our clients here in San Antonio, Texas and beyond.

The Harrin Group offers free, comparative quotes on Medicare insurance plans from multiple insurance carriers so you can get the best possible rate.

Want to see how much we can save you ⇒ 

 

Sources: Social Security Administration, Texas Medicaid, Medicare.gov, Veterans Administration, TRICARE, CHAMPVA, Medicaid.gov, GoodRX, CMS.gov, MedicareAdvantage.com, MHC Corporate, Aetna Medicare