Avoiding Common Medicare Mistakes – Part 2

Last week, we talked about enrollment periods and what happens if you fail to enroll at a specified time.  This week, we will discuss the different types of Medicare.   

There is confusion with original Medicare and Medicare Advantage plans.  When you are eligible for Medicare, you have a choice which is dependent upon your health care needs, insurance your doctors accept (yes, not all doctors accept Medicare), where you live, whether you travel often and your financial situation. 

Original Medicare is the traditional program offered directly through the federal government. It comprises Part A, which covers hospital costs, and Part B, which covers doctor visits and other outpatient services. The vast majority of doctors in the country take this insurance. To help pay for your out-of-pocket costs, you can buy a Medigap policy, which has its own separate monthly premium. Original Medicare does not include Part D (prescription drug coverage), so you must sign up for a stand-alone Part D plan if you do not have other drug coverage. Original Medicare does not have a limit on your annual out-of-pocket costs.

Medicare Advantage is a private insurance alternative to original Medicare. These plans provide Part A, Part B and usually Part D benefits. They may also offer certain benefits that original Medicare does not cover, such as dental or vision care, and they may also have different costs and rules than original Medicare. For example, a Medicare Advantage plan can require you to get a referral from a primary care physician before it will cover care from a specialist. And, Medicare Advantage plans generally have a network of providers in your geographic area and may not cover care if you see an out-of-network provider (except in emergencies). Medicare Advantage plans have an annual out-of-pocket limit, and you cannot buy a Medigap policy when you are enrolled in Medicare Advantage.

Medigap insurance is supplemental health insurance that works with original Medicare.  Without a Medigap policy, you will have to pay part or some of the out-of-pocket costs not covered by Medicare.  These include Part A hospital deductible or the 20 percent coinsurance in Part B.  There are many different Medigap plans, the premiums for which vary from company to company.

What happens if you don’t buy a Medigap policy during your open enrollment period?  If you suffer from any preexisting conditions, you cannot be denied coverage and you must be offered a plan at the best available rate.  Buying a plan outside of this window could result in your being refused a policy or being denied coverage for existing health problems.  (Some states have rules governing Medigap policies, so if you made this mistake, check with your State Health Insurance Assistance Program at www.shiptacenter.org for more information. 

Even though you have Medicare, you may be required to pay substantial out-of-pocket costs.  You have monthly Medicare premiums for each Medicare Part B and D coverages.  If you are receiving Social Security, these premiums will be deducted from your monthly benefits.  If you enroll in a Medicare Advantage (MA) plan or a Part D plan, you may also owe a monthly premium, depending on the plan you select.  You may have a deductible before Medicare begins payment.  Often times, Medigap policies will cover Medicare deductibles.  You may have a copayment for services.  NOTE:  If you have original Medicare, make certain your health care provider accepts Medicare and takes the assignment – meaning that the provider is willing to accept the amount on Medicare’s fee schedule.  If the provider is not participating in Medicare, they could charge up to 15 percent more than Medicare’s approved rate. 

What happens if you choose a Medicare Advantage plan that doesn’t include your health care providers?  We are all familiar with networks in medical insurances.  So, you need to be familiar with in-network providers and facilities or out-of-network providers.  You need to be diligent with checking with your providers if you decide to enroll in a Medicare Advantage plan as to what the cost of services will be for out-of-network services. 

CONTINUED NEXT WEEK.

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Kay Sowa

About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Financial Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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