Medicare 101 | Common Medicare Products & Terminology

Video: Medicare 101 | Common Medicare Products & Terms.

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Hi there. Steve Thurmond here with Medigap Tennessee. Your source for Medicare Supplemental, Medicare Advantage, Prescription Drug and Dental plans in Tennessee + 30 other states.

I just want to go over some of the most common terms and definitions surrounding Medicare and its various secondary products. You can consider this a very brief Medicare 101 educational source to reference if you get confused while trying to make decisions regarding your Medicare options.

In order to keep this video as short as possible, this will by no means be an in-depth or comprehensive list of all things Medicare related, so just give us a call if you have more in-depth questions or specific situations or scenarious you’d like answers to.

With that being said…let’s get started.

1.) Original Medicare (Parts A & B):

Medicare is a health care insurance program offered directly through the federal government since 1966. It is sometimes called Traditional Medicare or Fee-for-Service Medicare and is often referred to as your “primary” coverage. Under original Medicare, the government pays directly for the health care services you receive. Original Medicare consists of

Part A (Hospital Benefits) and Part B (Medical Benefits). Part A covers inpatient care at a hospital, skilled nursing facility and hospice. Part A also covers services like lab tests, surgery, doctor visits, and home health care.

Part B covers doctor and other health care providers’ services, outpatient care, durable medical equipment, home health care, and some preventive services.

Between Medicare Parts A & B, original Medicare covers 80% of your hospital and medical bills and you are responsible for the other 20%. You are qualified for full Medicare benefits on the first day of your 65th birthday month or older if you meet the following requirements:

You are a U.S. citizen or a permanent legal resident who has lived in the United States for at least five years; and you or your spouse has worked long enough to be eligible for Social Security or railroad retirement benefits — that usually means you have earned 40 work credits or have about about 10 years of recorded work history while paying into Social Security.

You may also qualify if you or your spouse is a government employee or retiree who has not paid into Social Security but has paid Medicare payroll taxes while working.

While Medicare Part A (Hospital coverage) doesn’t usually have a monthly premium, the Part B (Medical coverage) has a monthly premium that can fluxuate from year to year. At this time the part B Medicare premium is $121.80 per month for most individuals that are currently aging into Medicare, however this premium can be more for those in higher income brackets or lower for those that qualify for different state subsidies.

If you elect to take Social Security benefits at age 65 (or earlier) your Medicare Part B premium will be deducted from your monthly social security check before it hits your bank account. Those in this scenario will have a Medicare Claim number on their card that consists of their Social Security number with the letter “A” at the end. Those who elect to defer Social Security payments till sometime after 65 will have a Medicare Claim number on their card that consists of their Social Security number with the letter “T” at the end.

There are other claim number suffixes as well for those that collect Social Security or Medicare from a deceased spouse or parent.

Some individuals may qualify for Medicare BEFORE the age of 65 if certain disability or medical conditions apply such as end stage renal disease or Lou Gherics disease: If you think you meet one of these requirements, the easiest thing to do is to call the Social Security Administration or go into your local SS office and see if you qualify for Medicare before the age of 65.

Original Medicare is a wonderful benefit for seniors and the vast majority of doctors and hospitals accept Original Medicare as payment so you should have no problem whatsoever finding services in most any market you live in the United States. Since over 95% of doctors accept Original Medicare, you don’t have to worry about networks either. The only thing you need to worry about is whether the doctor you want to see is accepting new patients. If they’re accepting new patients, you can almost guarantee they accept original Medicare as payment, but it’s always good idea to ask beforehand.

Also ask if they accept Medicare Assignment as payment. Doctors that do accept Medicare assignment will not charge you any extra fees for services or procedures. Doctors that DON’T accept Medicare Assignment can charge in excess of up to 15% above and beyond what medicare covers and those extra fees will land squarely in your lap if you don’t have the right Medicare Supplemental plan to cover them.

2.) Medicare Supplemental Plans – Also called Medigap Plans:

Remember, original Medicare covers 80% of your bills…you are responsible for the other 20% and any excess fees your doctor may charge. Those costs can add up quickly, especially if you have a life threatening situation or land in the hospital for even a short stay. You can easily run up a $100,000 hospital bill in which you would be responsible for $20,000 if you had JUST original Medicare. For that missing 20%, that Original Medicare doesn’t cover, you want a Medicare Supplemental plan.

It’s a plan that covers the gap Original Medicare doesn’t cover…hence the name Medigap… or supplements original Medicare…hence the name Medicare Supplemental plan.

Like Soda and Pop, Medigap and Medicare Supplement are the exact same thing, just different words for the same product. Medigap or Medicare supplemental plans are premium based plans, offered by private insurance companies, that cover the other 20% original Medicare doesn’t cover and some Medigap plans also cover any of those Part B excess charges I mentioned previously. Even though these are private plans, they are very much regulated and beholden to rules and guidelines set by CMS (the center for Medicare and Medicaid services).

By law, a Medigap plan has to cover everything that original Medicare covers, so if original Medicare covers 80% of a bill, the Supplemental plan will pick up the other 20% no questions asked. Conversly, if your medical service or procedure is NOT coverage by original Medicare, then the Medigap plan will NOT cover the service or procedure either. The rule of thumb is, if Medicare Covers the procedure, hospital stay, surgery, etc…your Medigap plan will pick up that other 20%.

This also means that you don’t have to worry if your doctor will accept the Medigap plan you choose. If they accept original Medicare as payment, they will also accept the Supplemental plan you have as payment for the other 20% no matter which company it’s from.

Now, that being said, there are 10 different Supplemental plans available with differing levels of coverage and deductibles, and depending on your market, there are about 20-50 different Medicare Supplemental companies to choose from.

The 10 different plans Medicare Supplemental plans available are Plans A, B, C, D, F*, G, K, L, M, and N and technically an 11th plan called “high deductible plan F”. Try not to confuse the different Supplemental PLAN letters with Medicare PARTS A, B, C, or D as they are very different things. These are medigap plan letters, not Medicare Part letters.

This is where things can get confusing and this is where we can help you out, so listen closely…

Not all companies offer all 10 different Medigap plans, but all 10 Medigap plans are standardized by CMS. That means that when you’re comparing the same plan from two or three different companies, the level of coverage will be exactly the same from all the companies that offer that specific plan letter. For instance, when coverage is concerned, a supplemental Plan F from company A is identical in coverage to a Supplemental plan F from company B, C, D, etc. down the line… because all 10 different Medigap plans are standardized across all companies.

The same goes with plan G, plan N or any other of the ten Medigap plans available to you. What ISN’T standardized is the price for these plans and this is why shopping and comparison is crucial. This is what we help you do…shop and compare…just give us a call.

Choosing a medicare supplemental plan from the wrong company can literally cost you thousands in extra premium over the life of the policy when it doesn’t have to. There are also very specific timeframes and windows to be mindful of when choosing a Medigap plan. If you miss a proper enrollment window it could be very costly for both your health and your wallet long term.

Give us a call and we’ll explain these timeframes and the 10 different plans available to you in detail.

3.) Prescription Drug Plans (Part D):

If you notice above…neither original Medicare nor Medigap plans cover presciption drugs. Original Medicare covers Hospital (Part A) and Medical (Part B) and your Medigap plan picks up the other 20% not covered by Original Medicare, but neither cover your medications (Part D, as in drugs), which, for some people, can be the most costly part of their yearly medical expenses.

If you choose to go with original Medicare and add a Medigap plan, you’ll also need to pick up a stand alone Prescription Drug plan (Part D) to offset the costs of your medications each year. There are multiple prescription drug plans available from many different carriers. You don’t want to simply pick one out of hat as that mistake can be very costly at the end of the year. The various companies you have to choose from all have different drug formularies and different costs for their medications, so you really want to go with a plan that covers YOUR specific medications at the lowest estimated annual out of pocket cost.

The easiest way to do this is to simply give us a call and we’ll help you compile your drug list and show you the options available to you at the lowest estimated annual out of pocket cost specific to the drugs you’re taking. You’ll also need to be mindful of when to enroll into your drug plan. It’s best to enroll into a drug plan as soon as you’re eligible for original Medicare as waiting can cause what’s called an “LEP” or Late Enrollment Penalty.

There are also specific times during the year that you can change or disenroll from your drug plan. Add to that the confusing deductible, coverage gap (also called the “donut hole) and catostrophic coverage scenarios and we’d have an entirely new video to spend an hour on.

Just give us a call and we’ll explain these timelines, the areas of coverage and show you the best options available to you in your market and specific to your medication needs.

5.) Medicare Advantage Plans – also called Medicare Part C:

Medicare Advantag plans ARE NOT Medicare Supplemental plans. They are NOT Medigap Plans. They ARE NOT secondary insurance plans. Many people confuse this and refer to their Advantage plan as secondary coverage, but this is not the case. Medicare Advantage plans are Managed Care insurance plans administered by Private Insurance Companies and they REPLACE original Medicare as your primary coverage.

When you have a Medicare Advantage Plan, for all intents and purposes, you DO NOT have original Medicare as your primary coverage. Now, that doesn’t mean you can never go back to original Medicare as your primary coverage, it just means that the Medicare Advantage plan handles all of your claims and becomes your primary coverage for as long as you choose to have the Advantage Plan.

You CANNOT have both original Medicare and a Medicare Advantage plan as primary coverage at the same time, you can only have one or the other.

There are pros and cons to having a Medicare Advantage plan, but the truth is, original Medicare with an added Medigap plan and a stand alone prescription drug plan is the best coverage your money can buy and I would encourage you to go that route if you don’t like gambling with your health and finances. That being said, Medicare Advantage plans are a good second option for those in lower income brackets that simply cannot afford a Medicare Supplemental plan to go with their original Medicare.

The upside to Medicare Advantage plans is that many of them don’t cost any additional monthly premium as in, zero premium plans. Some plans offer extra benefits like free gym memberships via SilverSneaker or Silver & Fit. Some plans offer preventative dental and extra allowances each year for glasses or contacts. Also, all Medicare Advantage plans have what’s called a “Maximum out of Pocket”. That means that no matter what happens throughout the year, the most you’ll pay out of your pocket currently is $6700 for the year in medical expenses in a worst case scenario.

That certainly beats being on the hook for 20% in a catostrophic situation if you had JUST original Medicare, but the other way of looking at is, you’re putting yourself at risk every year for up to $6700 out of pocket when you could have 100% coverage with Original Medicare and a Medigap plan and assume significantly less financial risk.

Furthermore, all Advantage Plans have networks to deal with, a lot require referrals to see specialists, there are ongoing co-pays and coinsurance costs that add up to that Maximum Out of Pocket figure and they are, in general, much more of a headache to deal with.

Again, Medicare Advantage Plans are a better solution than having JUST original medicare, but not near as good as having original Medicare with a Medigap plan. Unless a Medicare Supplemental plan is out of the question for you, I would avoid Medicare Advantage plans altogether. The one exception to this rule is if you have Medicare AND Medicaid. In that case, there are Medicare Advantage plans called “Special Needs Plans” that are very robust with many extra benefits, no maximum out of pocket costs, no premiums and a lot of helpful extras, so if you have Medicare AND some form of Medicaid (such as TennCare or the pink QMB card), give us a call and we can explain the Special Needs Plan options to you at length.

That brings us to our last common term…

6.) Medicaid: People often confuse Medicare and Medicaid.

Remember, Medicare is health coverage directly from the Federal Goverment for those 65 years or older (typically)…while MEDICAID is a jointly funded, Federal & State health insurance program for low-income and needy individuals. It can also cover children, the aged, blind, and/or disabled and other people who are eligible to receive federally assisted income maintenance payments such as SSI (Supplemental Security Income).

All 50 states have Medicaid, but you’ll often hear them called by different nicknames that vary from state to state. In TN, Medicaid is called TNCare. In Gerogia it’s called PeachCare. In KY it’s called Coventry Care. It’s CaliCare in California and so on.

The easiest way to remember the difference between Medicare and Medicaid is. Medicare is from The Federal Goverment and Medicaid is from your state. Medicare=Federal coverage for those 65 plus that collect Social Security benefits. Medicaid=State coverage for Low Income Individuals, their children and those with specific disabilities.

To find out if you qualify or to apply for Medicaid just give your local state Medicaid department a call by doing a simple web search. In Tennessee, the organizaton that now handles TennCare is called Tennesee Health Connections and I’ve listed the number in the transcript below this video.

I hope this video has helped you make sense of the many terms you’ll be hearing as you make decisions regarding your healthcare.

If you’re still confused just give us a call and we’ll take as much time with you as you need and you can ask as many questions as you’d like. We are THE source for Medicare Supplemental, Medicare Advantage, Prescription drug and Dental plans in Tennessee + 30 other states.

Remember, Medicare doesn’t cover everything…so call us today at 1-800-431-5431 and let us help you zap the gap.

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