Medicare is a Piece of Cake

What is Medicare and how does it work? Medicare is the federal insurance program designed to help older Americans afford healthcare. Medicare has been part of the American healthcare system for 55 years and helps millions of Americans pay for their medical expenses. Unfortunately, Medicare is fairly complex. There are a wide variety of options and plans, and choosing the right plan can have an important impact on both your physical and financial health. It’s important to choose the plan that works best for you so that you can live comfortably as you age. And helping you make the right choice is what Retirement Safety Zone is all about. So, what is Medicare? As mentioned earlier, it’s a federally funded health insurance program designed for seniors, and those were specific disabilities. There are essentially three different parts, each covering different aspects of healthcare. There’s also Medicare Advantage designated as Part C, which is designed to be an all-in-one comprehensive program. Follow our video series on Medicare for more specific details. How does Original Medicare work? Medicare work similarly to other health insurance plans in that you pay monthly premiums, depending on which program you enroll in, deductibles and copays. You pay all expenses and until your deductible is met, at which time Medicare kicks in and covers a portion of the costs and you pay the rest. You can go to any doctor, hospital, medical facility, or other healthcare provider as long as they’re certified by Medicare and are accepting new patients. You don’t need to choose a primary doctor and you don’t need referrals to go to specialists as long as they’re approved by Medicare. How does Medicare Advantage work? Medicare Part C, also known as Medicare Advantage, works much like a group insurance plan. You pay copays and co-insurance and your annual out of pocket costs are capped. That’s how much you pay before they cover all approved medical costs. The Centers for Medicare and Medicaid Services, CMS, regulate these plans along with all the Medicare related private insurance plans like Medigap and prescription drug plans. All advantage plans must offer at least the minimum benefits and no more than the maximum annual out of pocket. They typically include some benefits that original Medicare doesn’t cover, like some basic dental, vision, transportation, and a variety of health related bonuses. Most Medicare Advantage plans are HMOs, Health Maintenance organizations, or PPOs, preferred provider organizations. HMOs require you select a primary physician, obtain referrals for specialists and tests, and they do not offer coverage outside of their network, except for emergent or urgent care while out of network. PPOs are more relaxed. A specified primary care physician is not required, nor are referrals. Copays and co-insurances are lower in network, but out of network healthcare providers are still covered under the plans. Maximum out of pocket is also higher when out of network providers are used. That means the amount you pay before they pay. We’ll discuss details of Medicare, including what’s covered and not in the next video. Medicare In Depth. So, do you need supplemental insurance? Medicare A and B do not cover prescription drugs. They both have deductibles and charge you copays. Plan B also charges co-insurance of 20% for many health expenses with no limit to your annual out of pocket. At the very least, you’ll want to include a prescription drug plan. Drug plans can cost as little as $6 a month if you purchase one as soon as you qualify. But if you don’t buy a plan, you can end up with a lifetime late enrollment penalty that increases for every month you’re not enrolled. If you decide to stay with Original Medicare, it makes sense to enroll in a Medicare supplemental insurance plan, also referred to as Medigap. Depending upon the Medigap plan you pick, it will cover a portion or nearly all of your copays, co-insurance, and deductibles under Medicare. The primary cost for the plan varies between plan type and insurance company. Generally speaking, the more of your share the Medigap plan pays, the higher the premium. Medigap plans do not cover outpatient drugs, so do consider a standalone prescription drug plan. If you decide you would prefer a Medicare Advantage plan, you would still pay your premiums for Medicare A and B, but you would find many HMO and PPO plans that do not add a premium of their own. They typically include a prescription drug plan for no additional cost. However, you may have deductibles and you will have copays and co-insurance. Since they limit your maximum out of pocket expenses and add some extra benefits, like a small amount of coverage for a vision, dental, and hearing, an advantage plan can be a lot easier on your budget than part A and B alone. In our third video of this series, “How to Pick a Medicare Plan”, you’ll learn about the differences between your Medicare options. If you have questions about Medicare, get them answered right away by making a no-cost appointment with our experienced, independent Medicare agents at Retirement Safety Zone. Just want to learn more? Subscribe to our newsletter to make sure you don’t miss any of our posts about understanding Medicare.

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