Updated 6 hours 19 minutes ago
Oct 24, 2019
Demystifying Medicare
Medicare annual enrollment period has begun. Here’s what you need to know before you shop
The “silver tsunami” of aging baby boomers is putting a record number of seniors on Medicare – and many have questions about what the government-funded health care program and private supplemental plans cover.
“The process of shopping for a Medicare plan can be confusing and daunting for seniors,” said Ken Arruda, executive director of Medicare markets at the not-for-profit health plan Blue Cross Blue Shield of Massachusetts. “Whether you’ve had Medicare coverage for many years, are new to Medicare or are helping friends or family members enroll in the program, being armed with some basic information can make it a lot smoother.”
According to the Centers for Medicare & Medicaid Services, the Medicare population is expected to increase to more than 80 million beneficiaries in 2030, up from 54 million in 2015.
The Medicare annual enrollment period, when seniors can shop for certain types of Medicare plans for a Jan. 1 effective date, runs from Oct. 15 through Dec. 7. Arruda recently shared tips for seniors and their families.
What is Medicare and what does it cover?
Most people know that Medicare is a public health care program, funded by the government, workers and employers, and available to people at age 65 or who have qualifying disabilities. But contrary to popular belief, the program was not intended to cover all health care services at no cost. Rather, it provides a core set of basic medical benefits to cover inpatient (e.g., hospital) and about 80% of outpatient (e.g., doctor’s office) care. Medicare members face out-of-pocket expenses, such as deductibles – the amount you pay for covered health care services before your insurance plan kicks in. Medicare members also may have to pay coinsurance, or a percentage of costs, for some services – for instance, with 20% coinsurance, you may owe $200 for a $1,000 medical bill.
What are the ABCDs of Medicare?
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Medicare Part A |
Covers basic inpatient hospital services. For most people, there is no premium but there is a deductible ($1,364 per benefit period in 2019) and some coinsurance for extended inpatient hospital and skilled nursing facility stays. |
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Medicare Part B |
Covers doctor visits. There is a monthly premium that is usually deducted from your monthly Social Security check, a deductible ($185 in 2019) and, typically, coinsurance of 20% for most services. No coinsurance or deductible is charged for an annual wellness visit or for preventive services such as a mammogram or prostate cancer screening. |
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Medicare Supplement or “Medigap” plans |
Help cover the out-of-pocket deductibles and co-insurance associated with Medicare Part A and Part B. Medigap provides supplemental coverage for people who do not have supplemental employer- or union-sponsored retiree coverage or Medicaid, because their incomes and assets are too high to qualify. A quarter of beneficiaries in traditional Medicare had a private, supplemental Medigap policy in 2015, paying for it via monthly premiums, which help keep health costs predictable. Medicare Supplement plans are available through private health plans, such as Blue Cross Blue Shield of Massachusetts. |
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Part C or Medicare Advantage plans |
Are offered through private plans like Blue Cross and cover all of the benefits of Part A and B and then some. These plans provide greater care coordination and additional benefits like dental, vision and hearing coverage. They can also include Part D prescription drug coverage. Enrollment in Medicare Advantage plans has grown over time, with more than 20 million beneficiaries enrolled in Medicare Advantage in 2018, approximately a third of all Medicare beneficiaries. |
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Part D plans |
Help pay for drug costs and are offered through private plans like Blue Cross. Plans vary in their costs and covered drugs. Enrollees pay monthly premiums and some of the cost for prescriptions. In 2018, 43 million people on Medicare were enrolled in a prescription drug plan. |
When you initially become eligible for Medicare, you can pick any plan; after that, there are certain times during the year when you can make changes to your plan. Generally, beneficiaries can purchase Medicare Supplement plans at any time of the year, while Medicare Advantage and Part D plans can be purchased during the annual enrollment period.
How do the ABCDs work together?
In general, Medicare beneficiaries can:
- Get Parts A and B and choose a supplemental plan that fills in the gaps in coverage (Medigap), as well as adding a Part D prescription drug plan.
- OR choose a Part C (Medicare Advantage) plan, which provides Part A, B and D benefits along with additional benefits.
When are you eligible for Medicare?
During your working years, you pay a portion of your income (and your employers make a similar contribution) to help finance Part A. Generally, people are eligible for Part A when they turn 65.
Most people must enroll in Part B at age 65 unless they or their spouse decide to continue working. When they do enroll in Part B, an amount is deducted from their monthly Social Security check. For most people, the deduction was about $135.50 in 2019, but it can be more for those with higher incomes.
How do you choose between a Medigap or Medicare Advantage plan?
Generally, Medigap plans are a better fit for people who want predictable out-of-pocket monthly expenses and a wide range of choices for medical care. They’re also good for people who don’t mind paying a bit more in monthly premiums as well as paying for additional plans to cover prescription drugs, vision and hearing. These plans are also popular with “snow bird” retirees who spend the winters in warm-weather locations because they allow you to get care from any doctor who participates with Medicare nationwide.
Medicare Advantage plans tend to be a better and less expensive option for people who value health care coordination by their own primary care physician and are willing to stay within one network of care providers. These plans are also a good option for people who want prescription drugs and routine services like hearing, vision and dental covered under one plan.
How do you shop for a plan?
Anyone who retires at age 65 or later and gets coverage from their employer should check with their workplace about their options.
Those without employer-sponsored coverage should first decide which of the two Medicare options (Medigap or Medicare Advantage) they’re leaning toward. Within the two options, there are a variety of health plans with a range of benefits and price points.
To find out more, you can call or visit the websites of private carriers, but often it can be easier to chat with an independent expert. Here are two resources that can help you find the plan that’s right for you:
- The Centers for Medicare and Medicaid Services, 1-800-MEDICARE (1-800-633-4227), 24 hours a day, seven days a week. TTY users call 1-877-486-2048.
- Serving the Health Information Needs of Everyone (SHINE), 1-800-243-4636.
“While choosing the right Medicare plan can take some time and thought,” Arruda says, “understanding the basics can help you feel more empowered to shop and find a plan that works for you.”
This story describes the experience of most Medicare beneficiaries. To learn more about your specific Medicare benefits, visit www.ssa.gov/benefits/Medicare/.
PHOTO OF KEN ARRUDA BY FAITH NINIVAGGI