Four Basic Steps to Medicare Health Care Coverage

Medicare enrollment can be daunting for the inexperienced. There are layers of choices, not to mention levels of bureaucracy. I recently helped a client maneuver this important decision tree.

Medicare Alphabet

Part A begins automatically when you turn age 65. There is no premium cost. It covers inpatient hospital, skilled nursing facility, hospice care and others.

Part B covers doctors, outpatient hospital, durable medical equipment, and other services not covered in Part A. The premium cost is currently $105 per month. But your premiums could be higher if your Modified Adjusted Gross Income is above $85,000. The annual deductible is currently $147 and you pay 20% of your health care costs. This coverage does not begin automatically at any age. You have to enroll. There are a couple of enrollment times, but the first one begins three months prior to the month of your 65th birthday and ends three months after that. If you forget to enroll, you will get hit with a 10% premium increase for each 12-month period that you could have enrolled in Part B but didn’t do it. Ouch!

Part C is the Medicare Advantage plan or plans. These are private health insurance plans that contract with Medicare to provide Part A, B and D. If you have a Medicare Advantage plan, you do not need a Medigap policy (see below). Typically Medicare Advantage plans limit annual out of pocket costs. There is a monthly premium, which includes the Part B premium of $105. These plans include vision, dental care and hearing exams. Ordinary Medicare does not include those extras. These Medicare Advantage plans usually restrict the choice of healthcare provider to their network or require a doctor’s referral to see a specialist. The two largest providers in the Bryan/College Station area are Humana and Scott & White. You can find a list of their plans at https://www.medicare.gov/find-a-plan/questions/home.aspx. You will have to fill in some blanks and answer some questions, but that is just to get you to a list of plans that come close to meeting your needs.

My client looked at two types of plans at this site: Medicare Advantage plans with and without Part D (prescription coverage). Over the two types, he looked at 27 plans. On top of that, Medicare Advantage plans come in the following flavors.

HMO (must receive drug coverage thru this plan)
PPO (must receive drug coverage thru this plan)
PFFS (fee for service)
SNP (special needs plan)
Part D is the prescription drug coverage. The monthly premiums vary. You will also pay an annual deductive and a share of the prescription costs.

Medigap policies provide some protection from unlimited out of pocket costs while Medicare does not. Medigap policies do not include vision, dental care and hearing tests while Medicare Advantage plans do. Medigap Plans reuse the alphabet trick. They come in A-D, F, G & K-N. We don’t have room here to go into any detail about all these plans. I suggest you go to www.medicare.gov to compare these Medigap options. In general, you do not need Medigap if you get a Medicare Advantage plan.

ObamaCare and Medicare

Before my client and I got started, he asked how the Affordable Care Act (ObamaCare) would affect his enrollment timing and his choices in health care coverage. I eased his concerns with the following information.

ObamaCare does not replace Medicare, and Medicare is not part of our state health insurance marketplace (sometimes called an exchange). So if you have Medicare, keep it.
If you have Medicare Part A (hospital insurance) or Medicare Part C (Medicare Advantage), you are considered covered and won’t owe the fee for not having health insurance in 2014. But having Medicare Part B (medical insurance) alone does not meet this requirement.
The Four Steps
Step 1: Enroll in Medicare if you are not receiving Social Security benefits. If you are, then you do not need to enroll. My client needed to have a Medicare number when he completed the application for a Medicare Advantage plan. He had to go back and sign up for Medicare before he could enroll in the Medicare Advantage plan of his choice.

Step 2: Decide whether you want to have prescription drug coverage. My client does not have any prescriptions but wondered if he should get the coverage just in case he started to need a prescription. We analyzed the costs of the Medicare Advantage plans with and without drug coverage. In the end, he decided that he could self-fund even expensive drugs until the open enrollment period when he will be able to change his coverage. Open enrollment is the annual period during which Medicare enrollees can reevaluate their coverage, whether it is original Medicare or Medicare Advantage or a prescription drug plan through Medicare Part D. The period is mid October to early December.

Step 3: Compare Medigap policy coverage to Medicare Advantage plans and to ordinary Medicare coverage. Use the website links I provided earlier in this article. Decide which you prefer and enroll online. My client preferred the Medicare Advantage plans because they provide vision care, dental care and hearing exams.

Step 4: Set up an account on MyMedicare.gov for a list of preventative services for which you might be eligible.

Fortunately, my client has fairly simple and straightforward health care needs. He spent about two hours with me comparing the plans and making some comparative calculations about the premiums and out-of-pocket costs. The next day he put in about 30 minutes on the phone with the plan provider of his choice. He wanted to double-check the enrollment process for that particular plan. If you have more complex needs and/or you don’t work with someone like me, this process will probably take you longer to get through.