A Basic Understanding of Medicare, Medigap, Medicare Supplement and Advantage Plans
With so much talk going on in Washington about health care, specifically Medicare, many Americans are confused by the various A, B, C’s (and D’s) of the system. Let’s take a simple look at each of the main parts of Medicare, to help you better understand the options available to you once you turn 65.
Medicare is a federal health insurance program designed for people who are 65 and older and for people with certain disabilities. There are four parts of Medicare which provide medical and prescription drug coverage:
Hospital Insurance (Part A)
Medicare Part A includes care in hospitals as inpatient, critical access hospitals (these are small facilities that give limited outpatient and inpatient services to people in rural areas), skilled nursing facilities, hospice care and some home health care. If you are entitled to Part A, there is no monthly or annual insurance premium charge. There may be a charge for most health care services.
Medical Insurance (Part B)
Medicare Part B pays for doctor’s services, outpatient hospital care and some other medical services that Part A doesn’t cover, such as the services of physical and occupational therapists as well as some home health care. Part B helps pay for these covered services and supplies when they are medically necessary. If you are enrolled in Part B, you must pay a monthly premium, which is typically deducted directly from your Social Security check.
Medicare Advantage Plans (Part C)
Under Medicare Part C, the federal government contracts with private insurance companies to administer Medicare benefits through Medicare Advantage plans. Participation in a Medicare Advantage plan is optional and available to Medicare beneficiaries who have Medicare Part A and B. With Medicare Part C, you generally pay lower co-payments and get additional benefits such as coverage for extra days in the hospital, though this will vary depending upon the plan.
Prescription Drug Coverage (Part D)
In addition to hospital and doctor insurance, you also have the option to purchase Prescription Drug Coverage (Part D), which helps you cover your prescription costs. This prescription drug benefit is voluntary, but if you don’t enroll when you first become eligible, you may have to pay a late enrollment penalty if you choose to sign up at a later date. You can get Part D coverage by itself or as part of a Medicare Advantage Plan.
Medicare Supplements (also known as Medigap)
Original Medicare pays for many, but not all, health care services and supplies. A Medigap policy, sold by private insurance companies, can help pay some of the health care costs (“gaps”) that Original Medicare doesn’t cover, like copayments, coinsurance, and deductibles. Some Medigap policies also offer coverage for services that Medicare doesn’t cover, like medical care when you travel outside the U.S.
If you have Original Medicare and you buy a Medigap plan, both plans will pay their share of Medicare approved amounts for covered health care costs. Medicare doesn’t pay any of the costs for a Medigap policy.
Every Medigap policy must follow Federal and state laws designed to protect you, and it must be clearly identified as “Medicare Supplement Insurance.” Medigap insurance companies can sell you only a “standardized” Medigap policy identified in most states by letters (A through L). Each standardized Medigap policy must offer the same basic coverage, no matter which insurance company sells it. Cost is usually the only difference between Medigap policies sold by different insurance companies.
Please feel free to visit our website at www.MedigapAdvisors.com to learn more about Medicare Supplement and Medicare Advantage Plans. You can also get a free online Medicare Supplement insurance quote.