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Medicare Part A, B, C & D

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The A, B, C, & D of Medicare

Breaking down the basics & what each part covers.

 

Provided by M. Zachary Zinser

 

Whether your 65th birthday is on the horizon or decades away, you should understand the parts of Medicare – what they cover, and where they come from.

 

Parts A & B: Original Medicare. America created a national health insurance program for seniors in 1965 with two components. Part A is hospital insurance. It provides coverage for inpatient stays at medical facilities. It can also help cover the costs of hospice care, home health care and nursing home care – but not for long, and only under certain parameters.1

 

Seniors are frequently warned that Medicare will only pay for a maximum of 100 days of nursing home care (provided certain conditions are met). Part A is the part that does so. Under current rules, you pay $0 for days 1-20 of skilled nursing facility (SNF) care under Part A. During days 21-100, a $152 daily coinsurance payment may be required of you.3

 

If you stop receiving SNF care for 30 days, you need a new 3-day hospital stay to qualify for further nursing home care under Part A. If you can go 60 days in a row without SNF care, the clock resets: you are once again eligible for up to 100 days of SNF benefits via Part A.3

 

If you have had Medicare taxes withheld from your paycheck for at least 40 calendar quarters during your lifetime, you will get Part A coverage for free.1

 

Part B is medical insurance and helps pick up some of the tab for outpatient care, physician services, expenses for durable medical equipment (scooters, wheelchairs), and other medical services such as lab tests and varieties of health screenings.1,2

 

Part B isn’t free. You pay monthly premiums to get it and a yearly deductible (plus 20% of costs). The premiums vary according to the Medicare recipient’s income level; in 2014, most Medicare recipients pay $104.90 a month for their Part B coverage. The current yearly deductible is $147. Some people automatically get Part B, but others have to sign up for it.2,4

 

Part C: Medicare Advantage plans.Insurance companies offer these Medicare-approved plans. Part C plans offer seniors all the benefits of Part A and Part B and a great deal more: most feature prescription drug coverage and many include hearing, vision, dental, and fitness benefits. To enroll in a Part C plan, you need have Part A and Part B coverage in place. To keep up your Part C coverage, you must keep up your payment of Part B premiums as well as your Part C premiums.2

 

To say not all Part C plans are alike is an understatement.Provider networks, premiums, copays, coinsurance, and out-of-pocket spending limits can all vary widely, so shopping around is wise. During Medicare’s annual Open Enrollment Period (Oct. 15 – Dec. 7), seniors can choose to switch out of Original Medicare to a Part C plan or vice versa, although any such move is much wiser with a Medigap policy already in place.5

 

How does a Medigap plan differ from a Part C plan? Medigap plans (also called Medicare Supplement plans) emerged to address the gaps in Part A and Part B coverage.  If you have Part A and Part B already in place, a Medigap policy can pick up some copayments, coinsurance and deductibles for you. Some Medigap policies can even help you pay for medical care outside the United States. You have to pay Part B premiums in addition to Medigap plan premiums to keep a Medigap policy in effect.6

 

Medigap plans now look like poor cousins of Part C plans. In fact, seniors haven’t been able to buy a Medigap policy offering prescription drug coverage since 2005.6

 

Part D: prescription drug plans. While Part C plans commonly offer prescription drug coverage, insurers also sell Part D plans as a standalone product to those with Original Medicare. As per Medigap and Part C coverage, you need to keep paying Part B premiums in addition to premiums for the drug plan to keep Part D coverage going.1,2

 

Every Part D plan has a formulary, a list of medications covered under the plan. Most Part D plans rank approved drugs into tiers by cost. The good news is that Medicare’s website will determine the best Part D plan for you. Go to medicare.gov/find-a-plan to start your search; enter your medications and the website will do the legwork for you.7

 

Part C & Part D plans are assigned ratings. Medicare annually rates these plans (one star being worst, five stars being best) according to member satisfaction, provider network(s) and quality of coverage. As you search for a plan at medicare.gov, you also have a chance to check out the rankings.8

 

M. Zachary Zinser may be reached at 502-245-6674 or zach@zinserbenefitservice.com.

http://www.zinserbenefitservice.com

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

     

1 – dailyfinance.com/2013/05/14/medicare-explained-part-a-b-c-d/ [5/14/13]

2 – info.tuftsmedicarepreferred.org/medicare-matters-blog/bid/74844/Medicare-Part-A-B-C-and-D-What-does-it-all-mean [10/1/13]

3 – medicare.gov/coverage/skilled-nursing-facility-care.html [9/17/14]

4 – medicare.gov/your-medicare-costs/part-b-costs/part-b-costs.html [9/17/14]

5 – medicare.gov/sign-up-change-plans/when-can-i-join-a-health-or-drug-plan/when-can-i-join-a-health-or-drug-plan.html#collapse-3192 [9/17/14]

6 – medicare.gov/supplement-other-insurance/medigap/whats-medigap.html [9/17/14]

7 – medicare.gov/part-d/coverage/part-d-coverage.html [9/17/14]

8 – medicare.gov/sign-up-change-plans/when-can-i-join-a-health-or-drug-plan/five-star-enrollment/5-star-enrollment-period.html [9/17/14]

 

3 Common Medicare Questions

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This is always a popular topic; it seems we get calls about this weekly.  Here are three common questions.  

1 – When Should I Apply?

Medicare eligibility begins when a person turns 65, or has a qualifying disability.  

Applicants should start applying for Part A of Medicare the three months prior to a client’s 65th birthday, as well as that month, and three months after.  However, if you’re already receiving Social Security, you will automatically be enrolled.  

2 – Do I Need Part B?

When to apply for Part B is a bit more complicated.  Late enrollment into Part B may result in paying a higher premium.    

If you don’t have employer group coverage, then you should apply during your seven-month initial enrollment period.

If you are covered under a group health plan, you may qualify for a special enrollment period.  If this is the case, you can delay enrolling in Pat B until your group health coverage is terminated, and avoid the late enrollment penalty.   

The eight month special period starts the month after the end of either employment or the group health insurance coverage based on that employment – whichever happens first.  

Please remember, COBRA coverage doesn’t qualify as employer coverage, and won’t allow you to escape the penalty for delayed enrollment.  

Another thing to keep in mind is that some employers (mostly small) may require Part B coverage to be integrated with their existing insurance plans.  Large employers may not have this requirement.  

3 – Supplement or Advantage Plan?  

Medicare Supplement policies provide additional benefits that can reduce out-of-pocket costs when combined with Parts A & B.  They’re provided by private insurance companies and require additional premium payments.  These typically exclude prescription benefits, so for this reason you may want to pick up a Part D plan.  

Advantage plans combine Medicare Part A, B and sometimes D.  These policies bundle coverage into a single Medicare approved health plan offered by a private insurance company. These plans tend to feel more like traditional employer health plans.  

I hope this helps!

Qualifying for a Subsidy May Make You Ineligible for an HSA Plan

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If someone buys a Health Savings Account (HSA) plan, federal law requires that health plan to have a deductible of at least $1,250 per individual and $2,500 per family.  

If you select a Silver level HSA plan on the exchange, if you receive special discounts, those discounts may make you ineligible for the HSA.

These special discounts will decrease the deductible and out-of-pocket costs.  Sometimes a subsidy can decrease these amounts enough to drop them below the federal government’s minimum deductible threshold for HSA eligibility.  If this happens, you will become ineligible for the HSA feature, but automatically enrolled in the base plan without the HSA component.  Unfortunately at this time there is no notification from the Exchange to alert the customer to this problem.  

If this happens to you, just realize you can keep your plan, but not the HSA feature.  

If you want the HSA feature, you will have to wait until the next open enrollment period to select a qualified plan.  

Some of this information was taken from an email I received from Anthem. Please consult with your tax advisor, and your insurance broker for your specific situation.   

Updated Enrollment Numbers

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I read in some online publications today that President Obama’s administration finally released some enrollment numbers of citizens enrolling in medical insurance plans for January 2014. I have my own questions about these numbers.

Some of this information is taken from articles across the Web, but most of it is from Ezra Klein’s blog, which is linked here:

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/14/the-death-of-obamacares-death-spiral/

There are 2.2 million Americans that signed up for private insurance. Of these 2.2 million, roughly 25% are the desired age group of 18-34. According to Ezra Klein’s blog, the Obama Administration, along with others, wants 38%.

The next set of numbers show that 55% of the sign ups were between the ages of 45-64.

These numbers don’t include the state exchanges of Minnesota, Oregon and Nevada.

The most popular metallic level plans are the silver level, with 60% of enrollees selecting these.

Most of the people enrolled haven’t paid yet. In my opinion this is a big deal. If you sign up and don’t pay, you don’t have insurance. As of right now these numbers are just citizens that have signed up, not paid.

Lastly, no Medicaid numbers have been released yet. These should come later this month.

A question I have about these numbers, are they reflective of what the insurance companies thought they would get, which in turn directly impacts the premiums that they charge.

Of course there are two sides to each argument, one side stating that a “modest” increase of 2.4% could be in store for next year. The other side states that if more young and healthy individuals don’t sign up, then it could be much higher.

Only time will tell…

Some questions that come to mind –

  • How many were they expecting?
  • What did each insurance company expect to get?

Understanding ObamaCare

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Here is some information to help you navigate Obamacare.

1 – Does your current health insurance plan need to change?

If you have a grandfathered plan your going to be able to keep your plan (as long as the health insurance company you have your grandfathered plan with allows you to do so).

If you have what they call a “transitional plan” you’ll be able to keep that plan until your renewal date in 2014.  Once your renewal date hits in 2014, you will then be required to buy a plan that meets all of the essential health benefits.

If you buy a plan with an effective date of January 1, 2014, that plan will meet requirements.

2 – How will you pay for your health insurance in 2014?

Depending on your household income, you may be able to qualify for payment assistance that make insurance more affordable.  The only way you can obtain assistance, is if you purchase your plan from either the state or federal exchange.  If you buy a plan “off exchange” you will not received payment assistance or special discounts.

3 – What is the difference between on and off exchange plans?

In my opinion, the only reason you would go to either the state or federal marketplace (the government prefers this word, but it’s the fancy word for exchange) is if you qualify for payment assistance.  If your income is over the assistance limit, then going off exchange is the way to go.  I say this because you won’t have to prove your income, and answer all of the questions that the state and federal government require from you.

For example, here in Kentucky, Humana offers some plans that aren’t available on the state exchange.  These plans have a more comprehensive network, then the current on exchange plans have.

4 – What type of plans are available?

Networks, co-payments, deductibles, and out of pockets differ between all the carriers.  You must decide for yourself what is most important to you, and then work with an agent or broker (Zinser Benefit Service, Inc. would be one) who should be able to guide you to the right plan.

5 – When can you buy coverage?

The new open enrollment period for a January 1, 2014 effective date started in Oct 2013 and ends on December 23rd 2013.  Once this date passes, you’ll have dates similar all the way up through March of 2014.  If you miss during this time, you will have to have a qualifying event in order to enroll in a plan during 2014.  A qualifying event would be any of the following:

  • Loss of essential health coverage
  • Change of family structure – gain or become a dependent because of a marriage, death, birth, or adoption of a child
  • Change of citizenship status
  • Government error
  • Change in subsidy eligibility – so if you make more money or lose some of your income, this could trigger a qualifying event
  • Move to a new coverage area – state, county, etc.

This is just a brief overview.  I hope it helps!

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