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Hi, I'm Kathe, your instructor for this class as part of the course, Making Medicare Decisions. I'm going to skip the introductions for now to make the course a little bit shorter, but you can learn more about me in the class, Meet Your Instructor. Today we're going to talk about why original Medicare just isn't enough, the differences between Medicare Advantage plans and Medicare Supplement insurance plans, and just how do you make the decision between the two.
We’re going to take a look at Medicare Parts A and B and what you would be responsible for if that's all you had. Let’s take a look.
First, let’s talk about what Medicare covers.
Medicare Part A covers hospitalization and inpatient care. When you're hospitalized, you’ll pay a deductible that covers you for the first 60 days.
*In 2018 the deductible was $1350.
This is per occurrence, not per year, so you can wind up paying that Part A deductible more than once during the year.
From days 61 through day 90, there's a daily co-pay.
*That copay, in 2018 is $335 per day for days 61-90, up to $10,050 per benefit period (not year).
On days 91 through day 150, you are using what's called lifetime reserve days.
*In 2018 the copay while you are using Lifetime Reserve Days is $670 per day, up to $40,200.
When you’re using lifetime reserved days you do have copay.
Now, one thing that you need to know about the lifetime reserved days is once you used these days, they're gone forever. They're not like the days one through 90 that reset on different occurrences. Once you have been in the hospital for over 150 days and have used up your lifetime reserve days, you pay all costs. This means that you could potentially have an unlimited liability. An unlimited liability is just plain unacceptable to me, so that's why I don't really care which type of plan you choose, Medicare Advantage or Medicare Supplement insurance. I just think that you should choose whichever is best for you, but I don't believe that you should just have original Medicare.
Let's now talk about skilled nursing care. Skilled nursing care is when, let's say for example, you fall and break something. You're in the hospital for a few days. You're released from the hospital but you still need additional care. In order for Medicare to cover your skilled nursing facility, you need to have been in the hospital as an inpatient for at least three days. Sometimes you can be admitted to the hospital and actually stay overnight, but you're an outpatient according to the hospital.
Because of this anytime that you go to the hospital, I recommend you to ask, “Am I an inpatient or am I an outpatient?”
If you are not in the hospital as an inpatient for a minimum of three days, Medicare will not pay for any of your skilled nursing facility. If you are eligible, Medicare will pay for the first 20 days, and then for days 21 through 100, you're responsible for a co-pay.
* In 2018, that copay is $167.50 per day.
Then after you've been in the skilled nursing facility for 100 days, Medicare will not pay anything and you're responsible for all costs.
Now that you have been reminded about the copays and deductibles of Part A, let's take a look at Medicare Part B. Medicare Part B is the part of Medicare that covers your doctors, outpatient services, tests, and supplies.
Unlike Medicare Part A, there is a monthly premium for Medicare Part B.
*In 2018 the monthly premium for most people is $134 per month. If you make more than $85,000 for singles and $170,000 for married people, you’ll pay more.
In addition to the monthly premium that you must pay for Part B, Medicare Part B has an annual deductible. This is different from part A deductible where you can pay more than once throughout the year. For Part B it's an annual deductible.
You only pay it one time a year, and then after you pay it, Medicare will cover 80% of the approved amount for your medical expenses and you'll pay 20% of the approved amount plus 100% of excess doctor charges.
*In 2018 the annual deductible is $183 per year.
You could be expected to pay 100% of excess doctor charges.
What's an excess doctor charge? Well, about 90% of all doctors in the United States do accept Medicare, but they are not required to accept Medicare assignment. So, if a doctor does not accept Medicare assignment, then that doctor can charge up to 15% more than the approved amount, and you would be responsible for that. This is usually not a problem for a $300 medical bill, but it can be a problem if you have a $300,000 surgery. This is another potentially large liability that you have with original Medicare by itself.
Now, as far as clinical laboratory services, Medicare Part B usually pays 100%, and it will usually also pay 100% of the approved amount for home healthcare. For outpatient services, the payment is based on the procedure that you're having done.
Lastly, let's talk about blood. You're responsible for the first three pints of blood, and then after that, Medicare will cover 80% of the approved amount and you're responsible for the remaining 20%.
Now that we've discussed what your potential costs can be, let's take a look at how you can limit some of those liabilities that you have with original Medicare by itself.
Let's take a look at the chart. On the left, it shows the first way. You keep original Medicare, Part A, and Part B, you take a standalone drug plan. You will also purchase a Medicare Supplement Insurance Plan to fill-in those gaps that we’ve just talked about. That’s why Medicare Supplement Insurance is also called Medigap because it fills the gap.
There is a second way to limit your liability, and the chart shows it on the right. This second way is to trade in your original Medicare Parts A and B for something called Medicare Part C, which is also known as Medicare Advantage.
Medicare Advantage is primarily HMOs, but there are also other types of plans. We are going to focus today on the HMOs because those are the most wildly popular Medicare Advantage plans. We are going to start with the pros of Medicare Advantage
First of all, there's usually no or low additional monthly premium on top of your Part B premium. But, one of the nice things about Medicare Advantage is that many of them do not have an additional premium on top of that, and if there is monthly premium it can actually be taken out of your Social Security check.
It is very easy to qualify for this type of plan. The only disqualifier is an end-stage renal disease. If you have end-stage renal disease, then you will not be able to get a traditional Medicare Advantage plan, but there are other plans that you can qualify for and you can take the class regarding that.
Medicare Advantage is a one-stop shop. You are only going to carry one card in your pocket because it's going to carry all of the parts of Medicare. Also, you'll most likely have a primary care physician. Even if you have a PPO, most require that you choose a primary care physician.
The HMOs all require a primary care physician, and the nice thing about this is that they're going to know about all of your care so that you don't have one doctor canceling out what another doctor is doing.
You will have a predictable co-pay. So, if you're going to your primary care physician, you'll know how much that's going to cost. You'll know how much your specialist is going to cost. You'll also know how much it's going to cost to go to the hospital.
This next one is my favorite: the maximum out of pocket for medical expenses. Keep in mind that it doesn't apply to your medications. But once you hit the maximum out of pocket, you'll have no more medical expenses through the end of the year.
Some people are already on a plan at work and they find out that the Medicare plan is available through that insurance company. That's fine to enroll in that company's plan, but please just make sure that you understand how it works. Because most Medicare Advantage plans work a little bit differently, especially for medications, then your work plan does.
Also, another popular benefit that Medicare Advantage plans offer is extra benefits. That is, benefits that are not covered by original Medicare. Now, these extra benefits can be transportation, vision, dental, hearing, gym memberships. Some of the plans even allow you to go to a skilled nursing facility without that three-day hospital stay.
Now let’s take a look at some of the negatives of Medicare Advantage.
Well, first of all, it's usually limited to a local network of doctors and you have less choice. Let me give you an example that's pertinent to where I live in San Diego. We have a healthcare system called Scripps. There are many different Scripps medical groups and clinics all over San Diego. For example, Scripps Coastal, Scripps Clinic, Scripps Mercy, etc. A lot of people don't realize that your ability to see a specialist is based on the group that your primary care physician is located in. For example, if your primary care physician is at Scripps Coastal and you have a podiatrist at Scripps Clinic, and you have an ophthalmologist at Scripps Mercy, you will probably not be able to see all of those doctors. A lot of people don't realize this. They look up their doctors on the website and say, “Oh, they're all part of Scripps so I'll be able to see everybody.” But that might not be true. Your specialists are usually tied to your primary care physician, so it's very important that you understand that.
You also need to know even if you're in a Medicare Advantage plan for an extended length of time, you might not be able to go to a Medigap plan because those plans are medically underwritten. What that means is that if you develop a medical condition, you might not be able to switch to Medigap, which is also known as Medicare Supplement. Also, if you go out of your coverage area, which in San Diego is the County of San Diego, most of these plans do not allow you to see a doctor out of your area. I don't want to say that none of them do, but the majority do not.
You're always able to get emergency care in the United States, but let's say you want to see a podiatrist out of your area. You might not be able to do that. Also, the terms can change every year. Everything about the plan can change. Your prescription coverage can change. Your primary care physician co-pays can change. Your specialist co-pay can change. Everything about your plan can change every single year, and that's why you'll get an annual notice of change. This will tell you what those changes are. And, the insurance company can drop the plan altogether. In 2015, San Diego had three PPOs. In 2016 there was only one. Everyone who had the plans that were dropped had to get a new plan. Additionally, these plans are not standardized. You can have three or four different plans with the same insurance company and they're going to look completely different.
This next section about traveling doctors may or may not apply to you. If you're living in a community for seniors such as an independent living, assisted living, or memory care, that's where it could apply. Many times, these communities have doctors that travel to the communities. That's not as important when you're in independent living, but when you get to assisted living it becomes more important to be able to see the traveling doctor and the most important when you're in memory care.
People in memory care can find it to be very traumatic to leave their homes. Many of these mobile doctors are not in-network for Medicare Advantage plans. So, if you're in a Medicare Advantage HMO and the travelling doctor is out of network, you will have to pay 100% of the costs to see that doctor.
Lastly, your doctor can leave the plan at any time. They do not have to wait until open enrollment. If your doctor leaves of his or her own volition, you will have to find a different doctor that is in-network.
Those are the typical pros and cons of Medicare Advantage.
What about the other type of plan, Medicare Supplement insurance, which is also known as Medigap? Let's first talk about the pros. This type of plan is very flexible. As long as the doctor accepts Medicare Part B, they must accept your plan.
There are no networks with this type of plan. Your coverage is anywhere in the United States. If you live on the West Coast and the top doctor for your condition is on the East Coast, you'll be able to go and see that doctor. Of course, Medicare will not cover your travel expenses and neither will your Supplement plan, but it will cover your medical expenses anywhere in the United States.
There's a wide range of plan choices. If you'll take a look at the chart, you'll see what the plans are called and what each plan covers.
Keep in mind that this part can be a little confusing because these plans are called plans, and the parts of Medicare are called parts, but they're both called a letter name. Plan A, Plan B, Plan C, and Plan D are different from Part A, Part B, Part C, and Part D. Please keep that in mind.
These plans are standardized, so a Plan F with one insurance company is going to cover exactly the same thing as a Plan F with another insurance company.
Medigap plans ARE guaranteed renewable, and the terms cannot change as long as you pay your premium. Now, keep in mind that the insurance company can raise your premium at any time.
These are open enrollments, so as long as you're healthy if you have a plan F with one insurance company and that insurance company raises your rate, you'll be able to go with any other plan with any other insurance company as long as you can pass their medical requirements. These plans are medically underwritten, so you will not able to switch plans if you cannot medically qualify.
That being said, if you live in California you're covered by what's known as the California Birthday Rule.
The Birthday Rule says that as long as you change plans to the same plan or a lower benefit level plan within 30 days of your birthday, the insurance company cannot ask you any medical questions and they must issue your policy. So, in California only, if you want to change plans because the premium increased or the customer service went down, or for whatever reason, you'll be able to do that and no medical questions will be asked within 30 days after your birthday. You should not cancel your existing coverage until the new plan has been issued, however.
So, what are the negatives of Medigap?
Well, it's always going to cost more than zero because these plans always have a monthly premium.
And, you’re going to need to get a separate drug plan even if you don't take any medications. If you want to know more about that please take the drug class on why you need a drug plan that is included in this course.
Another con is that the premiums for Medigap plans cannot be deducted from your Social Security check and you're going to need to carry three cards in your wallet.
And, the doctors might not talk to each other. Let's take a look at a scenario where you live in San Diego.
You've decided to see a Scripps doctor, a Sharp doctor, and a UCSD doctor. Those doctors don't talk to each other so it's going to be up to you to make sure that your primary care physician has all of your medical records. And, you might not be able to get one of these plans. These plans are medically underwritten, and yes, it is allowed under the Affordable Care Act to medically underwrite these plans. Don't think that you can take a Medicare Advantage plan while you're healthy, and then five or six years later, when you get cancer or Parkinson's disease, that you can just switch over to a Medicare Supplement plan, because you might not be able to.
Those are the typical pros and cons of Medigap insurance, which is also known as Medicare Supplement.
There you have it. Those are the important things that you need to know about Medicare Advantage and Medicare Supplement plans in about 20 minutes. I know, it was a lot of information. The good news is that you can retake this class as many times as you need to and you can take any of the other classes that are also offered as part of this course. I'll be adding classes over time as questions are asked or comments are added that more information is requested on a topic.
If you would like more information or would like to talk with someone about your own personal situation, go to MedicareQuick.com/Contact and we’ll get back to you as soon as possible.