MEDICARE OVERVIEW

Medicare insurance agents must stay informed on the most current Medicare rules and regulations which are managed by CMS (Center for Medicare/Medicaid Services) and change annually. For this reason, I've compiled some information you may find valuable in your quest to obtain the best possible coverage that meets your unique needs.  

Part "A" covers inpatient hospital care, skilled nursing facility care, hospice, and home health care. Part A has a zero-dollar premium for individuals or their spouses (including a deceased spouse) who paid a qualifying amount of Medicare taxes during their working years (generally 10 years/40 quarters), however, most covered medical services require an annual deductible, and coinsurance or copayments. 

The 2024 annual deductible for Part A is $1,632 per benefit period.  After this deductible is met, you typically pay a share of service costs. For example, for inpatient hospital care and skilled nursing, after the Part A deductible has been met, days 1-60 in the facility are paid for by Medicare, but you will pay a flat amount for days 61-90, and an even higher flat rate for 60 lifetime reserve days that are allotted to you. Once the lifetime reserve days are used up, you may pay 100% for the costs of hospital services. There’s no limitation on what you’ll pay out-of-pocket in a year unless you have other coverage like Medicaid, or a Medicare Advantage or Supplemental plan. As long as you qualify for zero monthly premium Part A coverage, there is no penalty for late enrollment (unlike Part B!). 

Part "B" generally covers doctor visits/screenings, physician's services, lab services, outpatient care, home health services (if not covered by Part A), medical supplies (durable medical equipment), ambulance services, limited outpatient prescription drugs, and some preventive services. Part B requires a monthly premium and is automatically deducted from your benefit payment if you are receiving benefits from Social Security, the Railroad Retirement Board, or the Office of Personnel Management. Most recipients will pay the standard monthly premium of $174.70 (for 2024). The premium is based on your adjusted gross income reported from your IRS tax return from "2 years prior", and therefore may be higher if your income is deemed substantial.  The 2024 annual deductible for Part B is $240. Once this deductible is met, cost sharing kicks in and you will typically pay a "20%" co-insurance of the Medicare-approved amount for covered services and medical equipment. Generally, there is no co-insurance for most preventive services as long as they are received from a Medicare approved provider.   There is a late enrollment penalty of up to 10% for individuals who do NOT sign up for Part B when they first become eligible, therefore it is critical to sign up timely to avoid this lifelong penalty which is added to your monthly Part B premium. 

With Original Medicare, a participant can receive services from any facility or doctor in the country who accepts Medicare. Approximately 92% of hospitals and medical doctors accept Medicare!

Original Medicare does NOT provide prescription drug coverage (unless administered in a hospital/doctor's office). It also does not provide benefits for hearing, vision, dental.

A Medicare Advantage (MA) Plan (or Medicare Advantage Prescription Drug / MAPD plan), also called Medicare part C, is offered by private insurance companies who contract with (and are partially funded by) Medicare. Part C combines hospital (Part A), doctor (Part B) and usually includes prescription drug coverage (Part D).  These plans are an alternative to Original Medicare as they replace Parts A and B and are managed by private insurance carriers.   Advantage plans may also include other benefits not offered through original Medicare such as vision, hearing, health wellness programs, telehealth, and dental coverages. 

MA plans are meant to expand and simplify your Medicare coverage, all with low to NO monthly premium cost.  These plans offer the convenience of having all of your Medicare benefits administered through a single plan (coordinated care).    You can sign up for an Advantage Plan if your eligible for Medicare Part A and after you've enrolled in Medicare Part B.

Medicare Advantage plans have a more restricted provider network, which varies by plan and insurance carrier. For example, a Medicare Advantage HMO plan uses a provider network you must utilize to receive benefits, meaning you can only see doctors or hospitals who are contracted with your plan. If you live in an urban area this may not be an issue for you as provider networks are larger, as opposed to those living in rural areas where there are fewer provider options.  A PPO plan by contrast, allows you to utilize providers who are both "in" and "out" of the plans network, however, you will likely pay a higher co-pay and coinsurance when using non-network providers.   

Approximately 40% of Medicare eligible Nevadans choose to enroll in Advantage plans. These plans are typically best for seniors on a budget due to the low/no monthly premium they offer, or others who are generally healthy and do not require extensive medical care.  There are many different Advantage plans available, and plans vary across regions. Some plans available in one area of the state may not be available in other areas. Most HMO Advantage plans require a referral to see a specialist, unlike Original Medicare and Supplemental (Medigap) Plans which do not require a referral.  Medicare Advantage plans also have a built in out-of-pocket maximum which establishes an annual limit on the participant's out-of-pocket costs.  Once the beneficiary has spent a certain amount in medical costs for the plan year out of their own pocket, the plan will cover 100% of all covered Part A and Part B medical costs for the remainder of the plan year.  This limit protects the recipient from excessive costs in the event they need extensive medical care or expensive medical treatments.   If you are in a PPO plan which also covers services you receive from out-of-network providers, your plan will set two annual limits on your out-of-pocket costs: one limit is for "in-network" costs and the other is for combined in-network and out-of-network costs.   

Medicare Advantage plans are available to all Medicare eligible seniors 65+, Medicare eligible disabled individuals of any age, and those with End State Renal Disease (kidney failure). MA plans may also be purchased by military Veterans and military retirees to supplement their VA and/or Tricare for Life benefits, giving them a wider range of coverage options and additional benefits. Dual Special Needs MA plans are offered for those who are eligible for both Medicaid and Medicare and meet qualifying criteria. Chronic Special Needs MA plans may be available for those who have a qualifying chronic condition(s) such as Diabetes, Chronic heart failure, or Emphysema, to name a few. 

Within the first 12 months of enrolling in an Advantage Plan upon initial eligibility, you are allowed to switch at any time to a Medicare Supplement Plan (Medigap) without having to answer health-related questions and undergo the health underwriting process. The option to make this change is considered your "trial right."  

During the annual open enrollment/annual election period which takes place each year from Oct. 15th to Dec. 7th, you can join a MA plan, change MA plans, or drop a MA plan and return to original Medicare, including purchasing a stand-alone Medicare Part D drug prescription plan.  Changes made during this period will take effect on Jan. 1st of the new year.   Medicare Advantage Plan participants may also switch to another MA plan or drop their current MA plan and return to original Medicare, including purchasing a Medicare Part D drug prescription plan, from Jan. 1st to March 31st each year during the MA Open Enrollment period.  The new coverage will begin on the first day of the next month following plan approval. 

If you move out of the state or to a different coverage area within the same state, you are entitled to a Special Election Period for the purpose of changing to a different MA plan, as MA plans are specific to the geographic region you reside in. 

Medicare Part "D" is an "optional" Prescription Drug Coverage (PDP) plan provided by a private insurance company who contracts with Medicare. These plans require a monthly premium.  PDPs have co-pays and deductibles which vary across plans. PDPs are also subject to small rate increases annually.  If you choose to not enroll in Part D upon turning age 65 or when you first become eligible, you'll likely pay a late enrollment penalty if you decide to join at a later date, unless you maintained other creditable prescription drug coverage, such as through an employer-based plan. This penalty is life-long for as long as you have Part D coverage and is assessed based upon on the length of time you were not covered by Part D or another credible drug plan upon initial eligibility.   

You must have either Medicare Part A and/or Part B coverage to enroll in a Prescription Drug plan. Each year, you can opt to join, change, or drop a Medicare drug plan during the Medicare Annual Election Period (Oct. 15th-Dec. 7th).    If you are still working past age 65, you can choose to enroll in Part D when you retire and/or lose your job and your employer’s drug coverage (or if you lose other creditable drug coverage) via a Medicare "Special Enrollment Period." Moving from an area in which your Part D plan operates to an area in which it doesn’t also gives you a chance to re-enroll in a Part D plan without penalty.   

PDPs can better manage your prescription expenses. Certain eligibility requirements apply. Different plans include different prescription drugs in their drug formulary (drug list). and therefore vary in associated costs.   Drugs covered by each Part D plan are assigned a Tier Level of 1-5 and are listed in the plan's drug formulary. Generic drugs are generally found in Tiers 1 and 2, non-generic drugs in Tiers 3-4, and specialty drugs in Tier 5.   Plan co-pays depend on the Tier level the drug is currently assigned to. Know that formularies are subject to change as drugs are added or removed which may drive prescription costs up or down. Insurers are required to notify a plan participant at least 60 days prior to a change in the plan's drug formulary effective date.   If any of the drugs you are taking are removed from the formulary, your plan should continue to cover the drug for you until the end of the calendar year unless there are safety issues or there is a generic form of your drug available.   

PDPs may be essential depending on your current health needs. Even if you don't take any medications yet, it is worthwhile to buy an inexpensive PDP ($0-$20/month) when you first become eligible to avoid having to pay a monthly penalty in the future should you later need drug coverage. 

Most, but not all Medicare Advantage Plans offer drug coverage. Having an MA plan with drug coverage is a way to avoid having or paying for separate Part D coverage. Current Medigap/Supplemental Plans do not offer drug coverage, nor does Original Medicare! 

Supplemental Plans, also called Medigap, supplement Original Medicare (Parts A and B) coverage and help fill in the gaping holes (copayments, co-insurance, deductibles and the unlimited lifetime cost sharing amounts that severely limit the protection afforded by Original Medicare) in your Medicare Part A and B coverage so there are fewer surprise expenses.   These plans make it easier to predict your out-of-pocket costs. Some Supplemental plans also help pay for costs Original Medicare doesn't cover, such as Part B excess charges, additional nursing home coverage, and/or emergency medical coverage while traveling outside of the U.S.   

Since 2006, Supplemental Plans no longer cover daily prescription drugs taken at home. If you have a Supplement plan and need prescription drug coverage, you will want to enroll in a stand-alone Medicare Prescription Drug Plan (Part D).      

A great benefit of Supplemental Plans is that you can see any healthcare provider or hospital who accepts Medicare, unlike Advantage Plans which have a more limited provider network.  *You cannot be enrolled in both a Supplemental and an Advantage plan simultaneously.   

There are 10-12 different Medigap insurance plans available in Nevada and California.  You must be at least 65 and enrolled in a Part B plan to enroll in one of these plans. These plans are sold by private medical companies, however, plans benefits are regulated by the Federal Government. Generally, the lower the plan deductible, the higher the monthly premium will be.  Monthly premiums generally range from $50-$250/month depending on coverage, personal health data including your age, and your residence location.   

After you sign up for Original Medicare and your Part B becomes effective, you have 6 months to purchase a Medigap plan without discrimination, meaning enrollment is guaranteed and you are not required to answer any health-related questions or be penalized for any preexisting health conditions you may have.    If you sign up for Medigap at a later date, a medical questionaire is required and you may pay a much higher premium cost or be denied coverage altogether. If you are still working at age 65 (and have credible group health coverage) and retire after age 65, you are eligible for a Special Enrollment Period of 63 days, beginning on your effective retirement/termination date, to enroll in a Supplemental Plan without discrimination. In Nevada and California, effective January 2022, a senior may change Supplemental Plans or insurance carriers annually within 60 days of the first day of their birth month without having to answer any medical questions or go through the underwriting process, UNLESS they change to a plan with "better" coverage than their existing plan.   

Monthly premiums will generally increase yearly (sometimes twice per year) due to age, medical inflation (rising costs to provide healthcare to Medicare enrollees) and increased use of the health care system.  Fortunately, once your enrolled, these plans are guaranteed renewable and will provide the same level of benefits forever regardless of your health status, as long as your premiums are paid on time of course!