Our Services - Medicare

Medicare Couple walking

Many people are under the impression that Medicare will somehow take care of itself and that it will cover all of their health care expenses in retirement.

Nothing could be further from the truth. Medicare is not automatic. It is not free. And it does not cover everything. There are deadlines that must be adhered to, or penalties will apply. There are coverage gaps that can be insured against, but the range of costs for these supplemental programs is staggering.  Information about the Medicare program itself is available and easy to understand via the “Medicare & You” handbook. But the book does not explain very well how Medicare is coupled with private insurance to provide complete health care coverage.  If you would like help in this regard please feel free to contact us, without obligation.

Click on the following image to view our magazine-style "flipbook" about Social Security and Medicare.

                        

Social Security and Medicare rules can be complex. To help maximize benefits, it pays to understand your options.


 

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Medicare Basics

Established in 1965 as Title XVIII of the Social Security Act, Medicare was intended to ensure a basic level of health care for older people by paying some of the costs of some health care services. Medicare was, and continues to be, based on a private health insurance model, requiring deductibles and copayments by the insured, and it pays only a portion of the cost of certain services.

All Americans become eligible for Medicare when they turn 65. Non-citizens over 65 are also eligible for Medicare if they are legal residents and have lived in the U.S. continuously for over five years. Permanently disabled individuals under 65 may also be eligible for Medicare, after they have received Social Security disability benefits for at least 24 months. Individuals qualify for Medicare without regard to their health history or preexisting conditions, and there is no income or asset test.

Medicare is the primary insurer for people over 65. Unless a person is still working and covered by an employer-sponsored group health plan that covers 20 or more employees, all people over 65 must sign up for Medicare if they want health insurance. In the United States today, all health insurance plans, except employer-sponsored group plans that cover at least 20 employees, are secondary to Medicare. Retirees over 65 therefore have no choice but to enroll in Medicare, pay the required premiums, and obtain health care services under the Medicare system. It is possible to obtain additional insurance to cover the gaps Medicare does not cover. But first, people need to understand and enroll in basic Medicare.

 

Part A, which covers hospitalization, skilled nursing, home health care, and hospice, is free to everyone who has paid the Medicare payroll tax for at least 40 quarters (10 years). Their spouses, ex-spouses, and survivors are also eligible for free Part A. People over 65 with fewer than 40 quarters may obtain Part A by paying a monthly premium.

 

Part B, which covers physicians’ services, diagnostic X-rays, lab tests, and certain preventive services, is available to everyone who is eligible for Medicare. Monthly premiums are $104.90 per month in 2014, plus an extra surcharge if modified adjusted gross income (MAGI) is over $85,000 for single individuals and married people filing separate returns, or $170,000 for married couples. MAGI for Medicare is adjusted gross income (AGI) plus tax exempt interest.

 

Part D, which was authorized by the Medicare Modernization Act of 2003 and launched in 2006, is Medicare’s prescription drug benefit. It is delivered through private insurance companies that contract with Medicare. Everyone eligible for Medicare is eligible for Part D. No one can be denied coverage as long as they sign up within a specified time period. Unlike Parts A and B, signing up for Part D involves some choices. Medicare’s basic plan design for Part D is only a starting point. Insurance companies are free to expand the benefits, and most do, at varying prices. So the challenge for individuals turning 65 is choosing a prescription drug plan that offers the coverage they need, considering the particular medications they take, at the right price. Monthly premiums range from $15 to $130, with the average being about $40.

Since 2011, there has been an income-related monthly adjustment for Part D, and is paid to Medicare in addition to the premium paid to the health insurer offering the prescription drug coverage.

Going without Part D really isn’t an option, even if clients aren’t currently taking any medications, because if they think they will ever need prescription drug coverage in the future, they would otherwise be forced to pay late enrollment penalties to sign up at that time. Medicare itself does not charge a premium for Part D, other than the income-related adjustment, and there are inexpensive plans available, which can be changed annually. Clients who start out not needing to take prescription drugs can sign up for the least expensive plan and then change to a more comprehensive plan in the future. As long as they maintain drug coverage, with a gap of no more than 63 days, they cannot be denied coverage by an insurance company.

Medicare Advantage plans, often called Part C, are health plans offered by private insurers in an all-inclusive format. These plans deliver all of the services under Parts A and B and usually Part D, as well as additional insurance that covers some of the gaps not covered by Medicare. Insurers receive a per-capita payment from Medicare for each beneficiary based roughly on the cost of care in that area, and may charge their members premiums as well. Individuals must enroll in Parts A and B before enrolling in a Medicare Advantage plan and pay Part B premiums to Medicare in addition to any premiums charged by the insurer. The idea behind Medicare Advantage plans is that they may offer additional benefits by providing preventive services and more efficient delivery of care. About 25% of all Medicare beneficiaries enroll in a Medicare Advantage plan. Monthly premiums average about $40. Many enrollees pay zero premiums, attesting to the efficiency and cost-consciousness of Medicare Advantage plans. However, premiums can change from year to year, and there is no assurance that a particular plan may not raise its premiums in the future.

Medicare supplement policies, often called “Medigap” plans, are additional policies that may be taken out after a person has signed up for Parts A and B (original Medicare), and found drug coverage through a standalone prescription drug plan. Before the Medicare Modernization Act added prescription drug coverage to Medicare, the main purpose of Medigap plans was to cover prescription drugs. Now, nearly all Medigap plans have dropped their prescription drug coverage but still offer a variety of ways to cover Medicare gaps. Medigap policies are standardized as to benefits, but premiums vary considerably from region to region and company to company. A study by the Employee Benefit Research Institute found a wide variation in annual premiums, ranging from a low of $948 in Oregon to a high of $14,604 in Indiana for the exact same policy (Plan F). One of the tasks Savvy Medicare advisors may be charged with (should you choose to accept it) is helping clients find the right supplemental policy for the right price and avoid being overcharged by insurers that somehow get people to pay astronomical amounts for insurance policies that are no different from the less costly ones.

 

For more information about our Medicare services, please feel free to contact us, without obligation.