CDIS Blog
If you’re nearing age 65, you’ll likely be eligible for Medicare soon—federal health insurance designed for older Americans. While Medicare covers a substantial amount of your healthcare needs, it doesn’t cover everything, and there are costs associated with your benefits. Many seniors decide to supplement coverage with Medicare Supplement insurance, or Medigap. Whether you’re on a fixed income, or simply looking for information, understanding the different costs associated with Medicare and Medicare Supplement will help you make an informed decision with coverage that fits your needs and your budget. Here are some costs to keep in mind.
Costs of Original Medicare (Part A and Part B)
Original Medicare is a federally funded health insurance program specifically designed to serve seniors age 65 or older, some people with disabilities, and others with End-Stage Renal Disease. Original Medicare includes Part A (hospital insurance) and Part B (medical insurance). Part A is free for most people—as long as you paid taxes throughout your working life. However, Part B carries a monthly premium that varies annually and by income.
2024 Medicare Part B Premium Amounts
Part B premiums vary based on income. Individuals who earn $85,000 or less or $170,000 or less as a married couple will pay $174.70 per month for the Part B premium in 2024. Premium amounts are calculated using the Income reported on your tax return.
Additional Costs of Medicare—Out-of-Pocket Expenses
In addition to Part B premiums, as a Medicare recipient, you are responsible for paying a variety of out-of-pocket expenses associated with your medical coverage. For instance, there are Part A and Part B deductibles that must be met before coverage begins, as well as coinsurance, copays, and in some cases, excess charges. While these costs vary, they can add up quickly, and many seniors buy a Medicare Supplement plan to shoulder the financial burden.
Costs of Medicare Supplement Insurance
Medicare Supplement insurance helps to pay for some of the costs associated with Original Medicare. Different plans offer different combinations of benefits. For instance, some pay your Part B bills and your Part A bills. Others offer only partial coverage. For many seniors, Medigap insurance makes it possible to get medical treatment when you need it without being burdened by out-of-pocket expenses. It’s important to note that the costs of individual plans vary significantly between companies. You may be able to find the same plan with the same benefits at a lower price if you compare. Comparison shopping is smart, and the best way to find the right coverage at a price that fits your budget.
References:
https://www.medicare.gov/supplement-other-insurance/medigap/costs/medigap-plan-costs.html
https://www.medicare.gov/sign-up-change-plans/decide-how-to-get-medicare/whats-medicare/what-is-medicare.html
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CDIS Blog
Whether you are already a Medicare beneficiary, or about to become one, you’re likely to run into some new language concerning your healthcare coverage. What’s the difference between a copayment and coinsurance? Is Medigap the same thing as Medicare Supplement insurance?
As a federal health insurance program, Medicare has a name for everything—and that’s a good thing. But, the more familiar you are with the terminology, the easier it will be to navigate your health insurance options. Here are a few of the most commonly used terms associated with Medicare. Take a few minutes to read through the list, and keep it handy. When it’s time to make informed decisions about your Medicare coverage, you’ll be in a better position to make smart choices with coverage that fits your needs best.
Coinsurance The amount you pay for medical services after you pay your deductible. Coinsurance is typically a percentage. For example, you may have coinsurance equal to 20 percent.
Copayment The amount you pay for medical services or supplies, like a doctor’s visit, hospital outpatient visit, or a prescription drug. A co-payment is typically a set amount, not a percentage. For example, you might pay $10 or $20 for a doctor’s visit or prescription drug.
Cost sharing The amount paid for medical services or supplies, like a doctor’s visit, hospital outpatient visit, or prescription drug. This amount can include copayments, coinsurance, and/or deductibles.
Excess charge If you have Original Medicare, and the amount a doctor or other health care provider is legally permitted to charge is higher than the Medicare-approved amount, the difference is called the excess charge.
Extra Help A program designed to help those with limited income pay for Medicare prescription drug costs, like premiums, deductibles, and coinsurance.
Formulary The list of prescription drugs covered by a prescription drug plan. Also called a drug list.
Guaranteed issue rights Rights you have when insurance companies are required by law to sell or offer you a Medigap policy. With guaranteed issue rights, an insurance company cannot deny you a policy or charge you more for a policy because of a past or present health problem.
Guaranteed renewable policy An insurance policy that can’t be terminated by the insurance company unless you make untrue statements to the insurance company, commit fraud, or don’t pay your premiums. All policies issued since 1992 are guaranteed renewable.
High-deductible Medicare Supplement Plan A type of policy that has a high deductible but a lower premium. You pay the deductible before the policy pays anything. The deductible amount can change each year.
In-network Doctors, hospitals, pharmacies, and other healthcare providers have agreed to provide members of a certain insurance plan services and supplies at a discounted price. With some plans, you are only covered if you receive care from in-network doctors, hospitals, and pharmacies.
Medicare Advantage Plan (Part C) A Medicare health plan offered by private companies that contract with Medicare to provide Part A and Part B benefits. Most Medicare Advantage Plans offer prescription drug coverage.
Medicare Advantage Prescription Drug (MA-PD) Plan A Medicare Advantage plan that offers Medicare prescription drug coverage (Part D), Part A, and Part B benefits in one plan.
Medicare Prescription Drug Plan (Part D) Part D adds prescription drug coverage to Original Medicare. Medicare Advantage Plans may also offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans.
Medicare Supplement Open Enrollment Period A one-time-only, 6-month period when federal law allows you to buy any policy you want that’s sold in your state. It starts in the first month that you’re covered under Part B and you’re age 65 or older. During this period, you can’t be denied a policy or charged more due to past or present health problems. Some states may have additional open enrollment rights under state law.
Network The facilities, providers, and suppliers your health insurer or plan has contracted with to provide health care services.
Out-of-pocket costs Health or prescription drug costs that you must pay on your own because they are not covered by Medicare or other insurance.
Penalty An amount added to your monthly premium for Part B or a Medicare drug plan (Part D) if you don’t join when you’re first eligible. You pay this higher amount as long as you have Medicare. There are some exceptions.
Referral A written order from your primary care doctor for you to see a specialist or to get certain medical services. In many Health Maintenance Organizations (HMOs), you need to get a referral before you can get medical care from anyone except your primary care doctor. If you don’t get a referral first, the plan may not pay for the services.
Tiers are Groups of drugs that have a different cost for each group. Generally, a drug in a lower tier will cost you less than a drug in a higher tier.
References:
https://www.medicare.gov/glossary/c.html
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CDIS Blog
When it comes to Medicare and health insurance, smart decisions today often lead to long-term financial security tomorrow. The majority of Medicare recipients purchase some form of supplemental coverage. Why? Most seniors know that once they turn 65, they’re eligible for Medicare Part A and Part B. Why would anyone need more coverage? Health insurance can be complicated and taking a few minutes now to understand which services are covered by Original Medicare, which are not, and how supplemental coverage works will help you make an informed decision.
Original Medicare Has Limitations
Original Medicare is a government-funded program designed to provide basic health care needs for seniors age 65 and older. Part A (hospital insurance) is free for most people, as long as they pay taxes throughout their working life. Part B (medical insurance) is not free. The monthly premium in 2024 for most seniors is $174.70, deducted from your Social Security benefits. Part A and Part B together create Original Medicare. Part C (Medicare Advantage) and Part D (prescription drug benefits) are not considered part of Original Medicare but are offered through private insurance carriers approved by Medicare.
Part A and Part B cover a substantial amount, but they do not cover all of the medical services you could need. Eye care, dental procedures, and prescription drug benefits are not included as part of Original Medicare. In addition, even after paying a monthly premium for Part B, you are responsible for paying deductibles, copays, and coinsurance. For this reason, many seniors choose to add to or ‘supplement’ Medicare coverage with additional benefits. There are three ways to add to Original Medicare: Medicare Supplement (also called Medigap), Medicare Advantage, or prescription drug coverage.
Understand Your Options
Many seniors choose to purchase Medicare Supplement insurance as a way to add to their Medicare benefits. The easiest way to understand Medigap coverage is to think about what it offers. These plans were created to help seniors shoulder the costs of Medicare—the copays, deductibles, and coinsurance costs mentioned above. Even as a Medicare recipient, when you visit your doctor, you will be expected to pay money upfront to meet your deductible or satisfy a copay. Out-of-pocket expenses can be steep, and the more care you need, the more you will pay.
Medicare Supplement plans are sold through private insurers, as a way to supplement Medicare benefits. To make it easy for seniors, the government created ten standardized plans, named after the letters of the alphabet (A-N). Standardized means that every plan of the same letter, a plan “K” or plan “A” for instance, must include the same benefits, regardless of which company sells it. Companies can charge different amounts for plans—and they do. Seniors in the market for supplement insurance are urged to compare plans closely for price differences, and how benefits are delivered and received.
Medicare Advantage
Some seniors choose to purchase Part C, or Medicare Advantage (MA) as a way to add to Original Medicare coverage. With a Part C plan, you still receive your Part A and Part B benefits, but you also add new benefits through your MA plan. Plans vary significantly between companies, as do cost, delivery, and networks. However, unlike a Medigap plan, MA plans do not cover deductibles, copays, or coinsurance costs. Medicare Advantage adds new benefits, like vision and dental care, and even prescription drug benefits.
Part D, prescription drug coverage can be purchased as a stand-alone plan to add to Original Medicare. If you purchase a Part D plan, you will continue to pay a monthly premium for Part B, and also for Part D. Most Medicare Advantage plans include coverage for prescription drug benefits, and seniors looking for an all-in-one plan often turn to MA for Part A, Part Band Part D coverage in one. Note, that it is illegal for companies to sell you a Medicare supplement plan and a Medicare Advantage plan.
Deciding If You Need Supplemental Coverage
How do you decide if you need to add supplemental coverage to Medicare? Which additional coverage should you choose? Health insurance choices are personal, and what’s right for one person may not be for another. Think about your financial situation and your health. Remember that your healthcare needs may change as you age. Multiple hospital visits, ongoing doctor appointments, and more can potentially cost thousands of dollars in deductibles and copays. On the other hand, if you stay relatively healthy into your senior years and avoid the doctor, you may not incur high out-of-pocket costs. While no one can predict the future, supplementing Medicare insurance is a practical choice, which may eliminate the need to deplete savings should a major medical condition occur.
It is important to note that Medicare Supplement insurance cannot be purchased with a Medicare Advantage plan—it is one or the other. If you are considering adding to your Medicare coverage, decide if it is more valuable for you to have help paying out-of-pocket costs or extra benefits to visit the dentist, or eye doctor or get coverage for prescriptions.
References:
https://www.medicare.gov/sign-up-change-plans/decide-how-to-get-medicare/whats-medicare/what-is-medicare.html
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CDIS Blog
Prescription drug coverage offered through Medicare may be optional, but many seniors rely on it to get the medication they need to stay healthy and strong. If you’re considering coverage, or you’re already enrolled, you may have questions about some of the phrases used to explain your Part D benefits. Defining key terms will help you better understand how your prescription drug benefits work and what you can expect to pay for your medication.
Donut Hole (Coverage Gap)
Most Medicare Prescription Drug Plans have a coverage gap, also called the “donut hole”. This means there’s a temporary limit on what the drug plan will cover for drugs. Not everyone will enter the donut hole—the gap begins after you (and your plan) spend a certain amount of money on drugs.
While in the donut hole, you will need to pay for your prescriptions. However, most prescription drug plans offer savings on drugs once you reach the coverage gap.
Expect to pay no more than 40 percent of your plan’s cost for brand-name prescription drugs. However, this does count toward your out-of-pocket spending amount.
Medicare currently pays 49 percent of the total price for generic drugs during the donut hole; you pay the remaining 51 percent. The good news? This percentage will decrease each year until 2020 when it reaches 25 percent.
Formulary
The formulary is a list of drugs covered by a prescription drug plan. Many Medicare drug plans place drugs into different “tiers” on their formularies. Drugs in each tier have different costs. Different Medicare drug plans have different formularies, and most change annually. Even if your drugs are included in your plan’s formulary, be prepared to look it over every year for changes.
Out-of-Pocket-Maximum
The out-of-pocket maximum, or limit, is the most you have to pay for covered services in one year. Typically, after you reach this amount in deductibles, copayments, and coinsurance, your plan pays 100 percent of any remaining costs of covered benefits.
Generic, Preferred, and Non-Preferred Brand Name Drugs
There are three tiers or levels of prescription drugs: generic, preferred brand name, and non-preferred brand name.
Generic drugs are typically the least expensive and are considered “equivalent alternatives” to more expensive brand-name drugs. A generic drug is identical to a brand-name drug in dosage, safety, strength, quality, and the way it works and should be used.
Preferred brand name drugs do not have an equivalent alternative or generic version available. However, they are widely used and accepted and can be obtained at a lower cost than non-preferred drugs.
Non-preferred brand-name drugs are the most expensive of the three. Usually, a less expensive alternative is available.
Extra Help For seniors with limited income and resources, financial help is available to help pay for medications. Eligibility for the Extra Help program is based on income but divided into levels offering full or partial benefits. If you qualify for full Extra Help, expect to receive premium-free drug coverage for the entire year with no deductible. If you qualify for partial Extra Help, expect to receive coverage for the entire year, while paying a reduced premium and deductible. Partial Extra Help recipients receive as much as 15 percent off the cost of drugs.
While some people qualify for extra help automatically, you may need to inform your prescription drug plan if you qualify for Extra Help. In most cases, Medicare will send documentation to you by mail if you qualify based on income. Or, you can provide your documentation, such as a bill from a nursing home, a Medicaid statement, etc.
References:
Finding Your Level of Extra Help: https://www.medicare.gov/your-medicare-costs/help-paying-costs/extra-help/level-of-extra-help.html
Save on Drug Costs: https://www.medicare.gov/your-medicare-costs/help-paying-costs/save-on-drug-costs/save-on-drug-costs.html
What Drug Plans Cover: https://www.medicare.gov/part-d/coverage/part-d-coverage.html
Generic Drugs: Questions and Answers: https://www.fda.gov/Drugs/ResourcesForYou/Consumers/QuestionsAnswers/ucm100100.htm
Costs in the Coverage Gap: https://www.medicare.gov/part-d/costs/coverage-gap/part-d-coverage-gap.html
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CDIS Blog
Original Medicare covers many important healthcare services—but it doesn’t cover everything and seniors often find that they need to add to supplement coverage. Routine eye exams, preventive dental work, and prescription drug benefits are not provided through Part A or Part B. Medicare Advantage (MA) is an alternative to Original Medicare—you’re still enrolled in the Medicare program, but you receive your Part A and Part B benefits through private companies approved by Medicare. In addition to hospital and medical insurance, an MA plan offers much more, giving seniors confidence that they can get the services they need. Here’s a quick look at Medicare Advantage’s extra benefits and what you can expect to get from Part C.
Extra Benefits Beyond Medicare
Over 17 million seniors rely on Medicare Advantage to secure extra benefits beyond what Original Medicare provides. While MA plans must cover all of the services offered through Part A and Part B (except hospice care), most offer more. Many provide comprehensive coverage—Part A, Part B, preventive dental, eye care, hearing assistance, wellness programs, and prescription drug coverage too. If you need new eyeglasses or simply want to explore your options with dentures, an MA plan may be the solution. Plus, MA plans always cover emergency and urgent care. They even offer emergency services outside of the plan’s service area (but not outside the U.S.). Medicare Advantage has grown significantly in the past few years, and now covers 31 percent of the 57 million people on Medicare. An easy way to secure Part A, Part B, and a few extra benefits, Part C is an all-in-one solution—hospital, medical, vision, dental, and prescription drug coverage.
References:
General: https://www.medicare.gov/what-medicare-covers/medicare-health-plans/medicare-advantage-plans-cover-all-medicare-services.html
Emergency service, End Stage Renal Disease: https://www.medicare.gov/Pubs/pdf/11474.pdf page 2
Stats: http://kff.org/medicare/fact-sheet/medicare-advantage/ 2016
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