What is Medicare?
In the early 60’s, there was a lack of health insurance options for those retiring and leaving group employer coverage. President JFK recognized that need and fought to have a program in place to provide Government funded Medical insurance. Upon his passing, President Johnson took charge of that push and created Medicare, a Government funded health insurance program for individuals age 65 and older, and those not yet 65 but with certain health conditions. Medicare was signed into law on July 30th, 1965, and has been helping seniors manage rising health costs since.
Now, Americans who reach age 65 are eligible for Medicare, as well as anyone who has been on federal disability for 24 months. Other qualifying conditions include ALS and end-stage renal disease. Those who are eligible have the opportunity not just to sign up for original Medicare, but also for supplemental coverage that will help with things like prescription medications, vision, dental, gym memberships. The available options may also cover co-pays or coinsurances not covered by original Medicare. Silver Lining’s team are experts at evaluating all the options for our clients and helping us get the right one in place. Let’s look at the options.
Original Medicare
Original Medicare consists of 2 parts: Part A & Part B
Part A is Hospital Insurance. It covers services such as:
- Inpatient hospital care
- Inpatient mental health care
- Inpatient care in a skilled nursing facility (not long-term care or unskilled nursing facilities)
- Hospice care
- Some blood transfusions
Most people do not pay a premium for Part A, however there is a deductible of $1,484 (2021) per 60-day benefit period. That means every 60 days, that deductible can be charged again. (This is a good reason why many Silver Lining clients choose supplemental coverage.)
Part B is Medical Insurance. It covers services such as:
- Doctor visits and laboratory services
- Some preventative services
- Emergency department, urgent care services and outpatient procedures
- Ambulance services
- Physical therapy
- Chemotherapy
- Many other services
Most people pay the standard monthly premium of $148.50 (2021), however that can vary depending on your income. Part of Silver Lining’s consultation determines if there will be a higher premium charged due to high income, or if someone may qualify for assistance to help pay their Part B premium. Part B carries an annual deductible of $203. Once this deductible is met, you pay a coinsurance or copayment for covered services and supplies (typically 20%).
There is no annual maximum out of pocket with Original Medicare (Parts A & B only)
Things Original Medicare does not cover:
- Massage therapy
- International coverage (some exceptions apply)
- Dental
- Eye exams
- Cosmetic Surgery
- Long Term Care
- Prescription drug coverage
Prescription Drug Coverage (Part D):
Launched in 2006, Part D helps pay for prescription medications. While Part D is optional, it’s important to know that you should enroll in a Prescription Drug Plan (PDP) when you’re first eligible or you may be penalized if you enroll later. If you have Creditable drug coverage elsewhere (such as VA benefits or employer/union coverage), or get Extra Help, you may not be penalized. Part D plans are only offered by Medicare-approved companies. Plan premiums, deductibles, formularies, and tier pricing will vary from plan to plan, and benefits can change from year to year.
There are 2 ways to get a Part D plan:
1. As a separate “stand alone” plan that would add drug coverage to Original Medicare
2. Having a Medicare Advantage Plan that incorporates Part D into the coverage (MAPD)
As we tell all of our Silver Lining clients: Having the correct drug coverage is imperative and could save you significant money throughout the year.
Silver Lining Medicare Solutions uses the latest technology and programs that cross references all of your medications among all available Part D programs in your area to find the most cost-effective option for you.
Medicare Supplemental Plans (Medigap)
While Original Medicare pays for much of your covered medical expenses, you may decide to add a Medicare Supplemental Plan to your coverage. Also referred to as Medigap plans, these are policies that are sold by private insurance companies and help pay for some of the remaining costs that Medicare doesn’t pay for (such as deductibles, copayments, & coinsurance). Some may also offer international coverage for travel outside of the United States. You pay an additional premium for your Supplemental policy directly to the company you have coverage with. You must also continue to pay your Part B premium.
Medicare Supplemental plans are identified by the letters: A-D, F, G, and K-N. All Supplemental plans are standardized plans. This means all companies that sell Supplemental plans must offer the same basic benefits as set by state and federal laws. For example, if you choose Supplemental Plan G, you’ll get the same coverage no matter the company you choose to enroll with. Premiums vary from company to company. This makes it important to shop and compare Supplemental plans, and companies that offer them to avoid paying more for a policy with the exact same coverage.
Medicare Beneficiaries that choose the Supplemental route typically carry 3 cards in their wallet to cover their Medicare needs: Original Medicare card, Supplemental card, and Prescription Drug card.
Silver Lining Medicare Solutions shops rates and looks for additional savings (such as household discounts, EFT discounts, or plans offering Silver Sneakers) to find the most competitive rate with highly ranked companies.
Medicare Advantage
Medicare Advantage plans are sometimes referred to as Part C and are typically thought of as a “package” plan that combines your Hospital Part A, Medical Part B and usually Prescription Part D into one plan. These are plans that are offered by Medicare-approved private companies and they must follow the rues set by Medicare. If you are enrolled in a Medicare Advantage plan, you’ll still have Medicare, but you’ll get most of your coverage through your Advantage plan as opposed to Original Medicare. Each month, Medicare pays a fixed amount, per beneficiary, to the companies offering Advantage.
Medicare Advantage plans often include benefits that Original Medicare does not cover. These benefits can include:
- Prescription Drug Coverage (Part D)
- Dental services
- Vision exams and eye wear
- Hearing aids
- Home delivered meals after a hospital stay
- Silver Sneakers
- Over the Counter items
- Telehealth
When do you enroll?
Your initial enrollment period begins three months before your 65th birth month. This is the perfect time to have your consultation with Silver Lining Medicare Solutions. If you are currently drawing Social Security, you will automatically be enrolled in Medicare and will receive your card 3-4 months before your birthday. If you’re not drawing Social Security, you’ll need to enroll yourself into Medicare.
Even if your card arrives automatically, you’re not done. You’ll want to meet with a Silver Lining Medicare Solutions agent to figure out what supplemental coverage and prescription drug plans are right for you.
What if I’m still working?
There are three scenarios if you are still working. First, you can maintain group coverage and defer all parts of Medicare. That’s a good option for people who want to continue contributing to an HSA. Because an HSA is a tax advantaged account, those contributions would be penalized if you are enrolled in Medicare.
Second, you can maintain group coverage and enroll in Medicare A, hospital only. This is a good option for people who have dependents on their coverage. Typically employers will not allow employees to cover their dependents unless they are themselves insured. If you’ve met your max out of pocket, you should also keep your group coverage, because most of your expenses will be paid, at that point.
Third, you can enroll in Medicare Part A and B and drop your group coverage. Typically Medicare is less expensive than group coverage, and the coinsurances, co-pays and deductibles are less than group coverage.
Even if you think you know what route you’re going to take, making the comparison is important. Some assume their group coverage will be best, until they do a cost comparison with a Silver Lining agent. No one should leave money on the table, especially as they near retirement.
