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Original Medicare (Parts A & B)
Medicare is a federal health insurance program. Original Medicare eligibility begins with an individual aging in (turning 65), or after 24 months on disability (regardless of age) for a qualifying ailment. Original Medicare has four separate parts; A, B, C, and D. Part A will be the hospital coverage. Part B will be the doctors’ coverage. Part C is Medicare Advantage, or “Managed Care” (i.e. HMOs, PPOs, PFFS, and SNP). Part D is your Rx coverage, or Prescription Drug Plans (PDP). Some of these parts work together, some do not. Be sure to understand which plans/parts work together, and which ones do not.
Many think that Original Medicare covers all of their medical bills, unfortunately this is not the case. Original Medicare covers only about 80% at the doctors and hospital and doesn’t cover any medications from a pharmacy. We recommend to all of our clients that have Original Medicare to also buy Medicare Supplement (Medigap) and Part D plan. The Medicare Supplements (Medigap) will cover a large portion and in some cases all of the 20% not covered by Parts A & B. The Part D plan will help cover your prescription drug.
Medicare Supplement (Medigap)
Medicare Supplements are also known as Medigap insurance. You must have Medicare Parts A and B to have a Medicare Supplement plan. Don’t over complicate a simple statement, Medicare Supplements supplement Medicare. So if Medicare covers a procedure, then your supplement will take care of the difference based on the level of coverage that you chose. While Medicare generally covers about 80% of one’s medical needs, that still leaves 20% on the table to be paid by the individual. There are ten standardized plan options to choose from, based on the level of coverage you are willing to afford.
Prescription Drugs (Part D)
Part D is provided only through private insurance companies that have legal agreements with the government; it is never provided directly from the government. If you want Part D, you must choose Part D coverage that works with your Medicare health benefits in your service area. If you have Original Medicare, choose a stand-alone Part D plan to help cover your medication costs. Enrollment for these plans is typically between Oct. 15th through Dec. 7th of each year, or Annual Enrollment Period (AEP). Those that are new to Medicare and just enrolled into Medicare Part B have a 7 month window to buy a plan, 3 months before, the month of and 3 months after their Part B effective date.
If a Part D plan is not picked up when eligible and you do not have credible drug coverage you could be penalized 1% each month (compounding) you could have had the plan, and didn’t. This penalty will be paid separately to Medicare if you enroll in a Part D plan in the future.
Medicare Advantage (Part C)
A type of Medicare health plan offered by private companies that contract with Medicare to provide you with all your Part A and Part B benefits. If you’re enrolled in a Medicare Advantage plan, Medicare services are solely covered through the private company and aren’t paid for under Original Medicare.
Medicare Advantage comprises a variety of private health plans, most often HMO’s (Health Maintenance Organization) and PPO’s (Preferred Provider Organization). Every plan must cover all the same benefits that traditional Medicare covers. With Medicare Advantage plans, they can charge different co-payments, co-insurance, deductibles and max out of pockets depending on the plan and carrier and or plan. Since these type of plans work has HMO’s & PPO’s there are networks of hospitals and doctors. Many of the insurance companies that offer these plans charge a monthly premium in addition to the Part B premium, in most cases the Medicare Advantage plan premiums are much more affordable then Medicare Supplement (Medigap) plans but the out of pocket expenses are much higher. We have Medicare plans comparison charts also available to you!