As we have discussed before, so many of our clients come to us confused about the maze of issues surrounding Medicare. When clients come to us, we always try to give a clear and concise overview of Medicare so that our clients can make informed decisions about their choices when they become eligible for Medicare coverage.
In order to simplify the discussion, we always start our overview with the four parts of Medicare. These four parts should not be confused with the letters that represent Medicare Supplement coverages. Personally, I really wish that the supplement coverage plans would change to a different product identification system because many of our clients get confused by the similar terminology, but just keep in mind that the four parts of Medicare are not the same as the letters in supplement plans.
Original Medicare, which was created in 1965 under the Johnson administration, had two parts, part A and part B. Those two parts are still the main parts of the Medicare program today. Part A covers hospital expenses including inpatient hospital care, skilled nursing care, (not including custodial or long-term care) hospice care and some home health care. Part B covers physician expenses, outpatient care, some home health care, durable medical equipment and mental health services.
Part A has a $1,364 front end deductible for inpatient hospital care and then you will have varying copayments after 60 days of care. Part A also has copayments on skilled nursing care after the first 20 days.
Part B has a $185 front end deductible and 20% coinsurance on all services after the deductible. The coinsurance can add up very quickly and that is why most people purchase a Medicare Supplement or Medicare Advantage plan. (We will discuss Medicare Supplement plans in a future blog, stay tuned)
Part A is no cost for people who have worked at least 40 quarters (10 years) and paid Medicare (FICA) taxes. Part B is generally $135.50 per month for 2019. If you earn more than $85,000 as an individual or more than $170,000 as a couple who files a joint tax return, then you will pay more than $135.50 per month. This additional amount is called the “income related Medicare adjustment amount” or “IRMAA.”
Part D, prescription drug coverage, was started in 2003 under the Bush administration. Part D can only be purchased through a private company that has been certified and approved by Medicare. Part D plans can be purchased as a standalone plan known as a PDP (Prescription Drug Plan) or can be part of a Medicare Advantage plan that is an MAPD (Medicare Advantage Prescript Drug Plan).
Part D plans can have a front-end deductible of up to $415, but not all plans have a deductible. Most plans have 5 tiers of benefits, tier 1 being the lowest copay and tier 5 being the highest copay. Part D prescription drug plans also have what is known as the “donut hole.” The donut hole occurs when an individual incurs $3,820 of total prescription drug costs in a given benefit year including what both the plan covers and the beneficiary’s deductibles and copays. Once a beneficiary hits $3,820, their copays go up to 37% for generic drugs and 25% for brand name drugs. When the beneficiary’s total out of pocket costs reaches $5,100, the copays go down to the greater of 5% of the cost of the drug or $3.40 for a generic or $8.50 for a brand drug.
Confused yet? If so, I don’t blame you. The Drug benefit is the most confusing given the donut hole and tiering of benefits. Then, to make it even a little more confusing, most plans have both preferred and standard pharmacies. Most plans charge a lower copay if you use a preferred pharmacy rather than if you use a standard pharmacy. Just one more thing for you to remember when accessing your prescription drug benefit. But the good news is that most plans also have a mail order service so your drugs can be delivered directly to your home, and usually at the best price for a 90-day supply of your medication.
The last part of Medicare is Part C, which is no longer called part C. Are you with me so far?
Part C is now called Medicare Advantage and it is your Part A, Part B, and most times Part D, all wrapped up into one plan. You can only get Medicare Advantage from a private insurer. And while you are still part of the Medicare program and must still pay your part B premium, you receive all your benefits from the private plan. Many of the Medicare Advantage plans also offer additional benefits like fitness memberships, dental, vision, hearing etc.
There are numerous private Medicare Advantage plans. We always advise our clients to make sure that the physicians you use are in the plan’s network. We also always check to make sure that the medications you take are on the plan’s formulary (list of covered drugs). Once you know those two pieces of information, then you can look at best benefits and monthly premium cost.
Okay, so if this is all “really confusing,” we have a suggestion, call us at MPC Insurance Group. Our service is no cost and we will find the right plan for you based on your personal situation including the doctors you use, the medicines you take, whether you travel a lot or if you have a lot of special health care needs.
Thanks again for reading our blog and be sure to contact us at 717-980-3201 if you have any questions or would like to schedule an appointment.
Also be sure to visit our website at www.mpcins.com.