Before you can choose a plan let’s start by understanding what is Medicare. Medicare is a federal health insurance program that was originally signed into law July 30, 1965. The need for a federally funded health insurance program was based on half of the elderly population in America had no insurance or inadequate insurance coverage. Over the years, the Medicare program has expanded its eligibility and covered services. In general, we all know you must be 65 or older to be eligible for Medicare, but Medicare is also available to individuals under 65 who may have certain disabilities or have End-Stage Renal Disease (kidney failure). Today the Medicare program covers an estimated 50 million Americans and growing every day.

Here are the four components of Medicare

    Part A (Hospital Insurance): Covers hospital care, emergency services, nursing home care, home health services and hospice.
    Part B (Medical Insurance): Covers medically necessary services and supplies used for diagnosing and treating medical conditions, and preventive services.
    Part C (Medicare Advantage Plans): Combines Parts A and B and often Part D.
    Part D (Prescription Drugs): Offers standalone prescription drug coverage.

Now you know about Medicare you want to be sure you know the difference between your many options; in particular how Medicare Supplements, also known as Medigap Plans, and Medicare Advantage Plans differ. Many people sign up for Advantage Plans thinking they are Supplements, they are not.

A Medicare Supplement is used with original Medicare. Any provider that accepts Medicare will accept a Medigap plan because they only need to bill Medicare. Medicare pays their part (generally 80% of Medicare covered benefits) and sends the remainder of the bill to the Medigap carrier which pays their part (generally 20%). It is important to note that Medigap plans do NOT include Part D Prescription Drug Coverage and for those that do not get a Part D Prescription Drug plan when they are first eligible will be subject to a penalty when they do get a PDP at a later date. There are some exceptions to the Part D penalty. A Medigap plan stays consistent with their core benefits from year to year; however your monthly premium and the Part B deductible are subject to change.

A Medicare Advantage plan works differently than a Medigap. With a Medicare Advantage Plan a private company TAKES OVER for Medicare. You remain in the Medicare system but Medicare is no longer responsible for your bills. Advantage plans follow the same type of model as many employer group coverage such as HMO or PPO type plans. With this type of plan it is important to remember several things. First, most Advantage Plans have networks so you want to make sure all your providers are in the network. Otherwise you will be paying higher costs and in some cases you could be responsible for 100% of care outside the network. Second, Advantage Plans have copays associated with them. It is important to be aware of these because they can add up to be quite a bit of money. Third, most Advantage Plans have the Part D Prescription Drugs “built in” this is a nice bonus. Lastly, Advantage Plans typically have value added benefits. These benefits vary between plans but typical benefits include Health Club membership, limited dental, eye and/or vision.

A few things to keep in mind. When switching to a Medigap from an Advantage Plan you will also need to add a Part D Prescription Drug plan. There are several types of Advantage Plans that DO NOT have the Part D built in so this is something you need to keep in mind when choosing any plan. Finally not all Part D plans are the same. Although they are required to be at least as good as the Medicare model they can vary greatly in costs, deductibles, copays and specific drugs that are covered under their formulary.

It is important to have a prescription drug comparison completed to determine which plan that best fits your needs. Well also recommend that you evaluate your Prescription and Advantage Plans every year as they are subject to change annually. Because these plans vary even from state to state as well as county to county, we strongly recommend that you talk to us to help you understand your needs and provide a solution that’s right for you.

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