The ABC(D)s of Medicare
By Frank Fernández/Capital Blue Cross
If you (or someone you know) are nearing retirement, you’re likely trying to sort out the alphabet soup that is Medicare. Understanding how Medicare works can help you make the best choices for your situation.
Let’s start with the basics. Medicare has four parts:
Part A covers in-patient hospital care, skilled nursing care, home healthcare, and hospice care. There is typically no monthly premium if you’re eligible.
Part B covers doctor’s visits, preventive services, urgent and emergency services, medical equipment and supplies, X-rays and outpatient care. Part B typically has a monthly premium. You pay an annual deductible and 20% coinsurance.
Part C (Medicare Advantage) plans, offered privately through health insurance companies, must cover everything Parts A and B cover, and most include Part D prescription drug coverage. They also can include additional services like, vision, dental, over-the-counter items, and fitness. They typically have a low or no-cost premium. If you choose a Medicare Advantage plan, you still have to pay your Part B monthly premium.
Medicare Advantage plans include:
Preferred Provider Organization (PPO) – PPO plans provide you with the flexibility to obtain care wherever you are since they include in-network and out-of-network coverage. However, it may cost more to get care from out-of-network providers except for emergency/urgent care.
Health Maintenance Organization (HMO) – You select a primary care physician (PCP) who will assist you with coordinating your care. HMO plans require you to use network providers for your care to be covered (except for emergency/urgent care).
Part D (prescription drug coverage) offers insurance for prescription medications. Part D benefits, and the premium, could be included in a Part C plan. Part D plans can have a deductible, copayments or coinsurance amounts due each time a prescription is filled at a pharmacy. Prescription coverage is offered separately for those who have Parts A and B, but typically is included with Part C plans.
Medigap, or Medicare Supplement is extra coverage you can purchase to cover the costs original Medicare (Parts A and B) doesn’t cover (i.e., the remaining 20%). You cannot have a Medicare Supplement policy if you have Medicare Advantage plan.
Once you know the different parts and options, the next step is putting together coverage that suits your health and wellness needs. For this, it’s helpful to make a list of things you want from your policy and any questions you have, such as:
- What type of policy do I want?
- Is my doctor in the network?
- How large is the network?
- What’s my budget?
- What other benefits do I want/need? (Be specific and list everything, like hearing aids, certain dental services, eyeglasses, etc.)
- Are prescription drugs covered? And are my prescriptions available as lower-cost generics?
Next, add a column for each plan you’re considering, and answer the questions from your list. This will help you assess what each plan offers and costs. An important reminder at this point: carefully consider the bottom line. A plan offering a zero or low monthly premium and higher out-of-pocket costs may end up costing more over time than a plan with a slightly higher monthly premium but lower out-of-pocket costs.
Be sure to enroll in Medicare Parts A and B three months before you turn 65. This will ensure benefits begin on your birthday and you’ll have your Medicare coverage when you need it. You may be eligible to get Medicare earlier than age 65 if you have a disability, end-stage renal disease (ESRD), or ALS (also called Lou Gehrig’s disease).
Frank Fernández leads Capital BlueCross’ government programs, including Medicare, the federal health insurance marketplace and the Children’s Health Insurance Program. He has more than two decades of experience in management and executive-level positions in the healthcare industry, with an emphasis on the growth and expansion of Medicare and Medicaid products. He has focused much of his career on health equity and improving access to care, and his expertise around these issues led Fernández to be included as a speaker at a White House Conference on Aging in 2015.