MEDICARE 101

Understanding Medicare

Medicare is the medical coverage that individuals qualify for after years of working and contributing to the system. This coverage typically begins automatically at age 65 and when you start receiving Social Security income.

Original Medicare:

Original Medicare consists of two parts: Part A and Part B. Part A covers hospital stays, while Part B covers outpatient doctor services. Each part comes with its own deductible, and Medicare generally pays 80% of the costs after the deductible is met. Typically, there is no premium for Part A, while most people pay a monthly premium of $174.70 for Part B as of 2024. Importantly, Original Medicare does not have a maximum out-of-pocket limit. For example, if you undergo surgery that costs $50,000, you would be responsible for $10,000 plus the deductibles.

Given this coverage, it is easy to see how Original Medicare can leave you financially exposed if you require medical care. Fortunately, there are two options to help limit your costs: Supplements plans (Medigap) OR Medicare Advantage (Part C) plans.

Supplements (sometimes called Medigap) plans are individual insurance policies you purchase to cover the 20% of costs not paid by Medicare, as well as to assist with deductibles. You may have heard these referred to by letter designations, such as Plans G, F, M, and N, which are some of the popular options available. It is crucial to note that all Medigap plans of the same letter offer the same benefits; the only difference you will find lies in the monthly premiums charged by different insurance companies.

Benefits of Supplements:

  1. No Network Restrictions: You can see any doctor nationwide who accepts Medicare, with no need for referrals.
  2. Simplicity in Billing: The only costs you will incur are the monthly premium for the Medigap plan and the Part B premium and deductible.
    • No Copays for Doctor Visits

Cons of Supplements:

  1. Lack of Additional Benefits: The supplement plans do not include Drug (Part D), Dental, Vision or Hearing benefits.
    • The above plans will need to be purchased individually with their own premium.
  2. Higher Costs: The costs are typically higher and will continue to increase as you age.

The alternative to Supplements are Advantage plans, you can only have one or the other.

An alternative to Medigap plans is Medicare Advantage (often referred to as Part C). These plans are managed by private insurance companies. Medicare provides a subsidy to these companies for each enrolled member. By law, Advantage Plans must offer the same coverage as Original Medicare while often including additional benefits like drug coverage and dental, vision, or hearing services.

Benefits of Medicare Advantage Plans:

  1. Cost-Effective: There is typically no additional premium for an Advantage Plan; you continue paying only your Part B premium.
  2. Included Additional Benefits: Many plans include drug coverage (Part D) along with dental, vision, and hearing benefits at no extra cost.

Cons of Medicare Advantage Plans:

  1. Network Limitations: Most Advantage Plans require you to stay within a certain network of providers.
  2. Out-of-Pocket Costs: You may still have to pay coinsurance, copays, or deductibles when using your benefits.

I am a local Medicare Advisor in the Charlotte area. If you would like me to review your situation or answer any questions, give Scott a call 980 829 2290. I would love to help you get the most out of the benefits you’ve earned!