A look at Medicare – America’s federal health insurance program – and Medicare Advantage Plans.
Medicare, The United States health insurance program created in 1965, is for people age 65 or older, people under age 65 with certain disabilities, and people any age with End-Stage Renal Disease. Medicare is run by CMS, The Centers for Medicare and Medicaid Services.
Medicare was originally signed into law on July 30th, by President Lyndon B. Johnson. President Harry S. Truman was the very first Medicare beneficiary, and President Johnson presented him with the first Medicare card.
Making Sense of Medicare Plans
Original Medicare had two parts: Part A – Hospital Insurance and Part B – Medical Insurance (Doctors). Original Medicare did not provide prescription drug coverage, except for a very few special cases. Medicare Part D did not go into effect until January 1, 2006 made possible by the passage of the Medicare Prescription Drug, Improvement and Modernization Act of 2003.
Medicare Advantage Plans provide a way for beneficiaries to receive their A, B, and D benefits. Medicare Advantage Plans are sometimes referred to as Part C – which delivers A, B, and D in one comprehensive plan.
- Part A (Hospital)
- Part B (Medical)
- Part C (Medicare Advantage Plans – like HMO’s and PPO’s)
- Part D (Medicare Prescription Drug Coverage)
About three quarters of Medicare’s 44 million beneficiaries do not have a Medicare Advantage Plan, and are enrolled in what is now known as “original” Medicare; consisting of Part A (hospitalization) and Part B (Doctor Visits, Outpatient Care). As long as you or a spouse has worked for 10 or more years and has paid into Medicare via payroll deduction, there is no charge for Part A. The cost for Part B is $96.40 per month for those receiving benefits in 2009 or earlier. Beneficiaries new to Medicare in 2010 have premiums beginning at $110.50 per month. All single beneficiaries with earnings more than $85,000 a year and couples with incomes above $170,000 pay higher premiums.
Neither Part A or B pays for all of a covered person’s medical costs due to deductibles and coinsurance, which means the covered individual must pay out of pocket. For example, for each benefit period, a beneficiary will pay a Part A deductible of $1,100 for a hospital stay of 1-60 days. Under Part B, Original Medicare, a beneficiary must meet a yearly deductible of $155 and are required to pay 20% of the Medicare-approved amount for all services covered by Part B. Beneficiaries are also required to pay an excess charge of 15% for services rendered by non-participating Medicare providers. All of these costs can amount to thousands of dollars, draining a beneficiary of his/her savings, or worse yet, leaving a beneficiary with no means to pay for rising medical costs and expensive prescription drugs.
So Why Are Medicare Advantage Plans Special?
The passage of the Balanced Budget Act of 1997 allowed Medicare beneficiaries the option to receive their Medicare benefits through private health insurance plans, instead of through the original Medicare plan (Parts A and B). Originally, these plans were known as “Medicare + Choice” or “Part C” plans; however these plans did not include prescription drug coverage. Then, in 2003, President George W. Bush passed the Medicare Prescription Drug, Improvement, and Modernization Act. This allowed “Medicare + Choice” to add prescription drug coverage and became known as “Medicare Advantage” (MA) plans.
Medicare Advantage Plans, offered by private insurance companies, receive a payment from the government for each enrollee, and use a portion of these payments to offer supplemental benefits, thereby limiting a beneficiary’s out of pocket expenses. For example, some Medicare Advantage plans provide insurance against catastrophic costs over $5,000.00. These plans can also reduce or eliminate out of pocket expenses, (remember, neither Part A nor Part B pays for all of a covered person’s medical costs). Through Medicare Advantage Plans, the part B co-insurance and annual deductible can be reduced to $0. Medicare Advantage Plans can offer dental coverage, vision coverage, and other coverage and service not covered by Parts A or B.
Medicare Advantage plans are required to offer coverage that meets or exceeds the standards set by the original Medicare program. Many Medicare Advantage Plans include Part D, prescription drug benefits, and are known as Medicare Advantage Prescription Drug plans, or MAPD’s.
Unlike traditional Medicare, Medicare Advantage Plans encourage preventative care and wellness. Medicare Advantage beneficiaries receive additional coverage and benefits not enjoyed by traditional Medicare beneficiaries.
However, not all Medicare Advantage Plans work the same way, so it’s important to find out the rules before joining.
Who Can Join?
You can join the plan if you live in the plan’s service area, you have Medicare Part A and Part B, and you don’t have End-Stage Renal Disease (ESRD). When you join a Medicare Advantage Plan, you are still in Medicare and receive all of your Part A and Part B coverage. There are some Medicare Advantage Plans that cost $0 because Medicare (the government) is paying money to the private insurance company each month on your behalf. It is important to check with your doctor and hospital to find out if they accept the plan before joining.
How and When Can I Join?
In most cases, you can join a Medicare Advantage Plan only at certain times during the year. You can join when you first become eligible for Medicare (3 months before you turn 65 to 3 months after the month you turn age 65) and between November 15 – December 31 each year, or starting in January 2011, an individual who enrolls in a Medicare Advantage plan may return to original Medicare and a Part D plan during the first 45 days of the year. Fall enrollment in 2011 will be October 15th – December 7th. In most cases, you must stay enrolled for that calendar year starting the date your coverage begins, except for certain situations such as; moving out of your plan’s service area or if you qualify for “extra help.”
When you join a Medicare Advantage Plan you should have handy your Medicare Card, as you will need to provide your Medicare number and the date your Part A and/or Part B coverage started.
For those eligible for Medicare, you must choose one of two paths; the traditional “original” Medicare plan, or a federally subsidized Medicare Advantage Plan. Many who do opt for the traditional Medicare also purchase a “Medigap” policy and a separate prescription drug policy (Part D) to patch the holes in their coverage. Medicare Advantage Plans give you the option of receiving Medicare benefits through a private health plan. Under most circumstances, Medicare Advantage Plans will save you money while increasing your coverage.
When shopping for a plan, it is important to compare premiums, co payments and deductibles. Take a look at how much you’d have to contribute toward services such as hospital stays and skilled nursing care. Does the Medicare Advantage Plan provide extra coverage you want that Original Medicare doesn’t cover? Be sure to talk to your benefits administrator to see how your other coverage or health insurance works with Medicare. To speak with a licensed representative and find out more about original Medicare and Medicare Advantage Plans, contact AMAC, The Association of Mature American Citizens at 1-888-AMAC-006 or 631-589-6675. AMAC is here to help.
- In 2003, Medicare accounted for almost 13% of the entire federal budget.
- Medicare and Medicaid, including State funding, pay 33 cents of every dollar spent on health care in the US.
- Currently there are 3.9 workers paying taxes into Medicare for every older American receiving service.
- The annual cost to taxpayers of Medicare fraud is estimated to be over $ 60 billion.
MEDICARE ADVANTAGE PLAN INFORMATION
- You will still pay your Part B premium
- You will usually pay a co-pay for services you get
- You don’t need to buy a Medigap or Medicare Supplement Policy
- Wellness benefits (annual physicals) are usually included in the plan
- There may be extra benefits like vision, dental, and hearing
- Some plans have a network of doctors
- Some plans include Part D – drug plan benefit. (You won’t need a separate Part D plan)
- There are out of pocket maximums for the plan
- Lower co-payments and deductibles than Original Medicare (without a Medicare Supplement).
TYPES OF MEDICARE ADVANTAGE PLANS
- HMO – Health Maintenance Organization
- PPO – Preferred Provider Organization
- PFFS – Private Fee For Service
WHERE CAN I GET MORE INFORMATION
- 1-800-MEDICARE (1-800-633-4227)
- The Association of Mature American Citizens at 631.589.6675
For information regarding the Medicare Part D Prescription Drug Plan, visit the Official U.S. Government Site for People with Medicare by clicking on the link below: