Medicare Spends Its Way Out Of Trouble: 20032010
The 2003 Medicare Modernization and Improvement Act established a larger role for private health plans in Medicare largely based on a shift away from a focus on cost containment and regulation and toward the accommodation of private interests and an ideological preference for market-based solutions that stemmed from the Republican control of both the executive and legislative branches of government . The MMA enacted the most significant changes to the Medicare program since its inception, and the emphasis of these reforms was the use of private plansincluding, we note parenthetically, in Part D. The generosity afforded to private plans via the MMA was in large part an attempt by the Bush administration and Congress to increase the private sector’s role in Medicare.
The MMA also created two more Part C plans: regional PPO plans and Special Needs Plans . Regional PPOs are like local PPO plans except that they cover regions comprising a whole state or several states . Regional PPOs were created mainly to give rural beneficiaries better access to a broader set of private plans. SNPs were created for Medicare beneficiaries who also were eligible for Medicaid and other vulnerable populations and were intended to provide the focused, specialized care particularly suited to these populations.
Medicare Part A B C And D: What You Need To Know
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Medicare Parts A, B, C, and D are the four distinct types of coverage available to eligible individuals. Each Medicare part covers different healthcare-related costs. While Medicare Part A and Medicare Part B are administered by the Centers for Medicare and Medicaid Services , Medicare Part C and Medicare Part D are managed by private insurance companies.
Medicare is similar to the health insurance coverage youve probably had with an employer or an individual policy. It can cover doctor visits, inpatient and outpatient hospital care, prescription drugs, and lab tests. Depending on the plan you choose, your Medicare plan can also cover dental and vision, if you like.
Heres a brief overview of each of the parts of Medicare.
Medicare Part C Eligibility
Medicare Part C, also called Medicare Advantage, is an insurance option for people who are eligible for Medicare. These plans are offered through private insurance companies.
You dont need to buy a Medicare Part C plan. Its an alternative to original Medicare that offers additional items and services. Some of these include prescription drugs, dental, vision, and many others.
To be eligible for a Medicare Part C plan:
- You must be enrolled in original Medicare .
- You must live in the service area of a Medicare Advantage insurance provider thats offering the coverage/price you want and thats accepting new users during your enrollment period.
To enroll in original Medicare , in general, you must qualify by:
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Pitfalls Of Medicare Advantage Plans
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A Medicare Advantage Plan, also called a Part C or an MA Plan, may sound enticing. It combines Medicare Part A , Medicare Part B , and usually Medicare Part D into one plan. These plans cover all Medicare services, and some offer extra coverage for vision, hearing, and dental. They are offered by private companies approved by Medicare.
Still, while many offer low premiumssometimes as low as $0 per monththe devil is in the details. You will find that many plans unexpectedly won’t cover certain expenses when you get sickresulting in unforeseen out-of-pocket costs for youand what they pay can differ depending upon your overall health. Here’s a look at some of the disadvantages of Medicare Advantage Plans.
Rules For Medicare Advantage Plans
Medicare pays a fixed amount for your care each month to the companies offering Medicare Advantage Plans. These companies must follow rules set by Medicare.
Each Medicare Advantage Plan can charge different
. They can also have different rules for how you get services, like:
- Whether you need areferralto see a specialist
- If you have to go to doctors, facilities, or suppliers that belong to the plan for non-emergency or non-urgent care
These rules can change each year.
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Medicare Advantage : How It Works
Medicare Advantage plans have recently become one of the more popular options among Medicare beneficiaries, accounting for about one third of Medicare coverage in 2019. Over the last ten years, the number of Medicare Advantage beneficiaries has nearly doubled. But what makes Medicare Advantage so appealing and, more importantly, should you take the leap?
Other Types Of Medicare Advantage Plans
If you want more freedom in health care providers or payment options, there are two other types of Medicare Advantage plans to consider.
Private Fee-For-Service plans
PFFS plans may or may not have a doctor/provider network, but cover any doctor or provider who accepts Medicare. If the plan doesn’t include prescription drug coverage, you can also enroll in a stand-alone Part D plan separately.
Medical Savings Account plans
MSA plans combine a high-deductible health plan with a special savings account. Medicare deposits funds that are withdrawn tax free to pay for qualified health care services. You can see any doctor or provider you choose. MSA plans don’t cover prescription drugs, but you can enroll in a stand-alone Part D plan separately.
Not all plans are available in all areas.
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How Do Medicare Advantage Plans Work
A Medicare Advantage is another way to get your Medicare Part A and Part B coverage. Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by Medicare-approved private companies that must follow rules set by Medicare. If you join a Medicare Advantage Plan, you’ll still have Medicare but you’ll get most of your Part A and Part B coverage from your Medicare Advantage Plan, not Original Medicare.
These “bundled” plans include
, and usually Medicare drug coverage .
What Is Medicare Part C Coverage For Inpatient Care
Under Original Medicare, inpatient care is generally covered by Medicare Part A. Medicare Part C covers the same benefits as Medicare Part A including:
- Inpatient care in a hospital
- Inpatient skilled nursing facility care
Medicare Part C also covers:
- Home health care
Medicare Part C may have different cost sharing amounts for inpatient care and home health care than Original Medicare has. With Medicare Advantage, your hospice care benefits will still be covered by Original Medicare.
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Does Everyone Automatically Get Medicare Part B
Medicare will enroll you in Part B automatically. Your Medicare card will be mailed to you about 3 months before your 65th birthday. If you’re not getting disability benefits and Medicare when you turn 65, you’ll need to call or visit your local Social Security office, or call Social Security at 1-800-772-1213.
How To Enroll In Medicare Advantage
Signing up for Medicare is an important step to saving money on your health insurance every year. With Medicare Advantage, you can still get plans for zero or little cost per month, but they are sold through private health insurance companies. You can enroll in Medicare Advantage during your initial eligibility period for Medicare as well as during Open Enrollment Periods . The following section discusses how to sign up and what to understand about these enrollment periods.
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Switching Back To Original Medicare
While you can save money with a Medicare Advantage Plan when you are healthy, if you get sick in the middle of the year, you are stuck with whatever costs you incur. If you decide that the Medicare Advantage Plan isn’t for you, you have the right under federal law to purchase any Medigap plan if you switch to Original Medicare within 12 months of the date that you joined a Medicare Advantage Plan for the first time.
You may also switch from your Medicare Advantage Plan to Original Medicare during the annual Open Enrollment Period or if you qualify for a Special Enrollment Period. However, you may not be able to purchase a Medigap policy . If you are able to do so, it may cost more than it would have when you first enrolled in Medicare.
Keep in mind that an employer only needs to provide Medigap insurance if you meet specific requirements regarding underwriting . The wait time for Medigap coverage can be avoided if you have what is called a “guaranteed issue right.”
A thorough breakdown of what is considered a “guaranteed issue right,” where an insurance company can’t refuse to sell you a Medigap policy, can be found on the Medicare website.
Most Medigap policies are issue-age rated policies or attained-age rated policies. This means that when you sign up later in life, you will pay more per month than if you had started with the Medigap policy at age 65. You may be able to find a policy that has no age rating, but those are rare.
What Is The Difference Between Part C And Part D Medicare
Medicare Part C is an alternative to original Medicare. It must offer the same basic benefits as original Medicare, but some plans also offer additional benefits, such as vision and dental care. Medicare Part D, on the other hand, is a plan that people can enroll in to receive prescription drug coverage.
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I Have Medicare Part A And Part B Ive Heard About Part C And Part D But I Dont Know What Those Are Do I Need To Sign Up For Those During The Medicare Open Enrollment Period
Medicare Part C plans, also known as Medicare Advantage plans, are private health insurance plans, mainly HMOs and PPOs, for people enrolled in Medicare. If you enroll in a Medicare Advantage plan, you still have Medicare, but you get all of your Medicare-covered benefits through a private plan. Most Medicare Advantage plans also cover prescription drugs and may cover other services, such as vision, dental, and hearing benefits. If you have Part A and Part B already, and are covered under the traditional Medicare program, you do not need to sign up for a Medicare Advantage plan during Open Enrollment unless you want to get your Medicare benefits through a private plan.
Medicare Part D is the Medicare prescription drug benefit which is offered by private stand-alone prescription drug plans, sometimes called PDPs, and Medicare Advantage plans that cover drugs. If you are covered under traditional Medicare and you want drug coverage, you can enroll in a stand-alone drug plan during the Medicare Open Enrollment period. If you did not sign up for a Part D plan when you got your Part A and Part B coverage and you do not have another source of drug coverage that is at least as good as Part D coverage, be aware that you may be charged a late enrollment penalty. Once you are enrolled in a Part D plan, you can switch drug plans during the Medicare Open Enrollment period.
Should I Get A Medicare Part C Plan
Enrollment in Medicare Part C plans has been growing, largely because Advantage plans offer more benefits than standard Medicare plans. Medicare Advantage plans usually arent the best option for low-income recipients because they can often qualify for other Medicare savings programs. Medicare Advantage also isnt generally necessary if youre still receiving employer-sponsored coverage.
Pros of Medicare Part C
-
Provides coverage for services Original Medicare does not, like vision or dental
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Usually offers prescription drug coverage
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Caps out-of-pocket expenses, unlike traditional Medicare
Cons of Medicare Part C
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Likely have to pay two premiums, one for Medicare Part B and one for your Advantage Plan
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Many types of individual plans, each with their own rules on the coverage and costs for using out-of-network providers
-
Your network of available health care providers is smaller than with Original Medicare plans
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Not all in-network providers are necessarily accepting new patients
-
Cant be used in conjunction with employer-sponsored health care benefits that supplement Original Medicare
Senior Editor & Personal Finance Expert
Derek is a former senior editor and personal finance expert at Policygenius, where he specialized in financial data, taxes, estate planning, and investing. Previously, he was a staff writer at SmartAsset.
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What Types Of Medicare Advantage Plans Are Available
There are various kinds of Medicare Advantage plans, such as HMO, PPO, and Private Fee-for-Service plans. HMOs and PPOs each have certain characteristics, whether they are part of a Medicare plan or part of a regular health plan.
For example, an HMO plan typically comes with lower costs but requires you to see providers within a network and get referrals before you see a specialist. A PPO plan typically costs more, but offers more flexible options for seeing providers and may not require any referrals to see specialists.
What Is Medicare Advantage
Medicare Advantage, or Medicare Part C, is a type of Medicare plan that uses private health insurance to cover all the services youâd receive under Medicare Parts A and B. Anyone who is eligible for original Medicare Parts A and B is eligible for the Medicare Advantage programs in their area.
People who choose Medicare Advantage plans may enjoyâ¦
-
One stop shopping: Dental care, prescription drugs, vision care, and other important benefits may all be included in your Medicare Advantage Plan.
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Potential savings: Medicare Advantage Plans have out-of-pocket limits on costs associated with your care, while original Medicare does not.
-
Long-term care services: While original Medicare doesnât cover long-term care like meal delivery and specialized home care, many Medicare Advantage plans do.
There are four main types of Medicare Advantage plans, which you can choose based on your needs: Health Maintenance Organization Plans , Preferred Provider Organization Plans , Private Fee-for-Service Plans , Special Needs Plans . Home Point of Service Plans , and Medicare Medical Savings Account Plans are also less-common types of Medicare Advantage plans.
Though often confused with Medicare Supplement plans, Medicare Advantage plans are run by private insurers and function like traditional health insurance. You cannot have both Medigap and Medicare Advantage at the same time, so itâs up to you to figure out which type of plan works best for your needs.
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Changes To Medicare Advantage Under Obamacare
In 2014, the Affordable Care Act changed the healthcare system in America and also changed small parts of Medicare. The only real change that most people noticed is that now Medicare and Medicare Advantage plans must include preventive care and cannot reject anyone for pre-existing conditions.
There was also an initial drop in the number of Medicare Advantage plans being offered. An Avalere Health analysis found a 5 percent drop in the availability of Medicare Advantage plans. In addition, the variety of plan types also dropped, with more Medicare Advantage providers offering only HMO policies instead of PPO, PFFS and Special Needs Plans.
For the 2020 enrollment season, Medicare Advantage customers saw an increase in plan options nationwide, with a total of over 5,000 Advantage plans on the market according to state data that we analyzed from the Centers for Medicare and Medicaid Services.
The donut hole, which is a coverage gap in Medicare, has also been eliminated thanks to measures put into place under the Affordable Care Act. Now, once you reach your drug plans initial coverage limit , youll pay 25 percent of the cost of your medications until you reach the catastrophic limit on the other side.
Medicare Part D: Prescription Drugs
Prescription drug coverage, known as Part D, is also administered by private insurance companies. Part D is optional and is normally included in any Medicare Advantage plan. Depending on your plan, you may have to meet a yearly deductible before your plan begins covering your eligible drug costs. Some Part D plans have a co-pay.
Medicare prescription drug plans have a coverage gapa temporary limit on what the drug plan will cover. The coverage gap is often called the “doughnut hole,” and this gap kicks in after you and your plan have spent a certain amount in combined costs. For example, in 2022 the donut hole occurs once you and your insurer combined have spent $4,430 on prescriptions.
Once you have paid $7,050 in out-of-pocket costs for covered drugs, you have reached the level of “catastrophic coverage,” for 2022 in out-of-pocket costs for covered drugs. This means you are out of the prescription drug “donut hole” and your prescription drug coverage begins paying for most of your drug expenses again.
Many states have insurance options that will close the coverage gap, but these may require paying an additional premium.
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Medicare Part B: Doctors And Tests
Medicare Part B covers a long list of medical services including doctor’s visits, medical equipment, outpatient care, outpatient procedures, purchase of blood, mammograms, cardiac rehabilitation, and cancer treatment.
You’re not required to enroll in Part B if you have “” from another source, such as an employer or spouse’s employer. If you don’t enroll and you don’t have creditable coverage from another source, you may have to pay a penalty if you enroll later.
You pay a monthly premium for Part B. In 2022, the standard cost is $170.10, up from $148.50 in 2021. If you’re on Social Security, this may be deducted from your monthly payment.
The annual deductible for Part B is $233 in 2022. Once you meet the deductible, you pay 20% of the Medicare-approved cost of the service, provided your healthcare provider accepts Medicare assignment. But beware: There is no cap on your 20% out-of-pocket expense.
For example, if your medical bills for a certain year were $100,000, you could be responsible for up to $20,000 of those charges, plus the charges incurred under Part A and D umbrellas. There is no lifetime maximum.
Kathryn B. Hauer, MBA, CFP®, EA, a financial advisor with Wilson David Investment Advisors in Aiken, S.C., and author of Financial Advice for Blue Collar America, explains:
On the other hand, you pay nothing for most preventive services, such as diabetes screenings and flu shots, if you receive those services from a provider who accepts Medicare assignment.
