SEP. 25, 2020
In our first blog of this Medicare series, I had introduced you to Medicare through the real-life stories I had experienced through my family. As you may recall, we discovered that my mom faced many more challenges in making her Medicare choices than her dad, my Grandpa Sam, who had a traditional pension and health care plan offered through his employer.
Today, I am sharing key insights into Medicare coverage options as well as questions for you to consider asking when it comes time to make Medicare enrollment decisions with your clients.
Medicare can be complicated – so it’s important your clients understand it as well as they can before they make an enrollment decision. They likely should plan to have a thorough discussion with a Medicare Broker who can help them understand their specific options and make better-informed choices. What follows is a breakdown of Medicare options that can help your clients prepare to have those important discussions.
Two primary options for Medicare coverage exist
There are generally two primary options for Medicare coverage: Original Medicare or Medicare Advantage. Both options may have costs including monthly premiums, deductibles, co-payments, and co-insurance.
Original Medicare consists of two parts administered by the federal government:
- Part A covers hospitalization (that is, inpatient care)
- Part B is for doctor visits (which is outpatient care)
In addition, there are two elective parts that are provided by private health insurers:
- Part D, which provides prescription drug coverage
- Medigap, which is optional supplemental insurance that pays for the out-of-pocket costs associated with Parts A and B.
Medicare Advantage, also known as Part C, is offered through private health insurance from providers approved by the federal government. These are usually health maintenance organizations (HMOs) or preferred provider organizations (PPOs).
Medicare Advantage plans are an alternative to Original Medicare and Medigap plans. There are many Medicare Advantage plans in the marketplace, and they are required to cover everything that Original Medicare Parts A and B cover. Most Advantage plans also offer coverage for prescription drugs.
Some Medicare Advantage plans may offer coverage of services not covered by Original Medicare, such as hearing, dental, and vision care. These “extras” are some of the most popular features of Medicare Advantage plans. Co-payments vary by service, and, in many cases, these co-pays may be lower than the 20% co-insurance of Original Medicare.
Choosing the best Medicare option depends on a few key factors
So how does a person choose which coverage option is best for them? Original Medicare? Medicare Advantage? Well, it probably comes as no surprise to know that the answer is the dreaded “it depends.” It depends on a few key factors including; what you plan to do in retirement, your financial resources, and your personal health.
Here are some starter questions for your clients to ask before joining a Medicare Advantage Plan:
- What is the geographic service area for the plan?
- Do I have any coverage for care received outside the service area?
- Who can I choose as my Primary Care Provider (PCP)?
- Does my doctor need to get approval from the plan to order tests or admit me to a hospital?
- Do I need a referral from my PCP to see a specialist?
Where Advantage plans are purchased in lieu of Original Medicare, Medigap plans are add-on coverage for Original Medicare plans. Medigap is private insurance that supplements Original Medicare and helps cover out-of-pocket costs such as deductibles, co-payments and co-insurance required under Parts A and B.
There are ten different Medigap plans, though only eight are available to people new to Medicare. These plans are offered by a variety of insurance companies. Like Medicare parts, Medigap plans have letters for names but they should not be confused with Medicare Parts A, B, D or C. Medigap plans may vary by provider, but the various letter plan coverages are consistent from provider to provider.
There is a guaranteed issue right for Medigap plans for up to six months after enrolling in Original Medicare, for 63 days after loss of other coverage, or within 12 months of trying out a Medicare Advantage plan. That means that even if you have a pre-existing condition, you cannot be denied Medigap coverage during these eligibility windows. If you wait longer, however, you could be charged more or denied coverage altogether.
If your clients choose to enroll in Original Medicare, here are some questions they can ask a Medicare Broker before purchasing a Medigap policy:
- What is the Medigap policy’s monthly premium?
- How are the premiums priced? There are three categories: community-rated, issue-age-rated, attained-age-rated
- Is this premium based on my health status, sex, smoking status, marital status or anything else?
- Does the policy impose a pre-existing condition waiting period?
- How long is the waiting period before my coverage begins?
- How does my plan work if I travel out of state? Out of the country?
- If applicable, how will my enrollment in a Medicare Advantage plan affect my current employer-provided (or retiree) coverage?
Medicare Part D
Medicare prescription drug coverage (Part D) helps pay for both brand-name and generic drugs. Medicare drug plans are offered by insurance companies and other private companies approved by Medicare.
Medicare prescription drug coverage is available two ways:
- Stand-alone plans, offered in conjunction with Original Medicare, or
- Part of a Medicare Advantage Plan please a
Anyone who has enrolled in Original Medicare, Medicare Part A (Hospital Insurance), or Medicare Part B (Medical Insurance), or both Part A and Part B, or who purchases a Medicare Advantage plan, is eligible to purchase a Medicare prescription drug plan.
At a minimum, plans must provide a standard level of coverage. However, they may offer more coverage and additional drugs for a higher monthly premium. Costs will vary depending on the plan.
Most Medicare drug plans have their own list of what drugs are covered, called a formulary. Plans include both brand-name prescription drugs and generic drug coverage. All Medicare drug plans generally must cover at least two drugs per drug category, but plans can choose which drugs covered by Part D they will offer. Your local pharmacist could be helpful when trying to figure out which prescription plans offer the best coverage for the least amount of cost.
Here are some helpful questions for clients to ask a Medicare Broker and pharmacist before purchasing a Medigap policy:
- When can I enroll in a prescription plan?
- What happens if I chose to enroll at a later time?
- Which of my prescribed drugs does this plan cover?
- How much will I have to pay out of pocket?
- Is there a lower cost generic option available?
- How/when can I switch my Prescription plan?
- What happens if my plan no longer covers my medication?
- What happens if I am prescribed a new medication not on my plan’s formulary?
We know that planning for health care in retirement is one of your client’s top concerns. The Nationwide Retirement Institute® is in the business of providing you with the insights, education, and planning resources you need to help you and your clients make informed, confident choices and help turn their concerns into a plan.