Medicare 101

By Diane Leveton, CLTC

When your 65th birthday rolls around, all of a sudden you are on EVERYONE’S mailing list! How do you decipher all the advertising and find out the real information? Welcome to your Medicare 101 class.

Nine out of 10 Medicare beneficiaries have private Medicare Supplement insurance to help bridge the gap between Medicare’s coverage and out-of-pocket spending. 1 Switching from an employer health plan to Medicare can be an adjustment for many retirees. Under Medicare, it’s your responsibility to pay for annual deductibles, copayments, coinsurance and for all services and supplies that aren’t covered. These costs add up quickly, which is why so many retirees find Medicare supplement insurance attractive. It offers additional health coverage, it reduces out-of-pocket costs and it’s guaranteed renewable—which means as long as you pay the premiums on time, your insurance can’t be cancelled.

The open enrollment period for Medicare supplement insurance is three months before and three months after the month of your birthday. There is also an open enrollment period of 60 days after leaving a group health plan after age 65. If you have health concerns, it is important to sign up during these enrollment periods.

Medicare Basics

There are four main parts to Medicare.

♦ Part A is the hospital coverage.
This coverage is free if you are eligible for Medicare. After a deductible ($992 in 2007) it covers the first 60 days of care. After 60 days, there are daily copays until you hit day 150, after which you are responsible for all costs.

♦ Part B is your doctor coverage.
It covers doctor’s costs in the hospital, clinics and in outpatient surgeries. When you receive your Medicare card, you will get both parts A and B unless you request to drop Part B. There is a monthly charge for this coverage which is taken out of your social security benefits. Unless you want to pay surgeons’ fees out of pocket, it is highly recommended to take this coverage also.

♦ Part C is the supplemental plans.
This is either Medigap plans or Medicare Advantage plans. We will look at these separately below.

♦ Part D is the prescription drug coverage.
This began in 2006. You may have an independent coverage as with Medigap plans or it may be bundled with your Medicare Advantage plan. You may also have comparable coverage through the VA, or your retirement plan. It will have a separate cost although it may be hidden within the total cost of an Medicare Advantage plan.

Supplemental Plans

There are two main types of Medicare supplement insurance plans: Medigap and Medicare Advantage.

♦ Medigap Plans.
Medigap Plans are standardized plans designed by Medicare and are labeled Plans A—L. Plan A is the basic plan; Plan J provides the most comprehensive coverage. The advantage of Medigap plans are that they can be used anywhere in the country, you choose which doctors to see, and you have almost no deductibles or copays (except in plans K, L).

♦ Medicare Advantage Plans.
Medicare Advantage Plans are managed health care plans—you must use doctors that are signed up with the plan and practice within the region that the plan operates. All other care is on an emergency basis or at higher copays. Some plans however may include some dental and/or vision coverage, usually limited to preventivecare.

To help you decide what type of plan will suit you best, consult an insurance professional that handles multiple types of plans. For more information on Medicare Supplement Insurance and a copy of Medicare’s handbook Choosing a Medigap Policy: A Guide to Health Insurance for People With Medicare, call the National Medicare Hotline at 1-800-MEDICARE (1-800-633-4227) or TTY/TDD 1-877-486-2048.

Diane Leveton, CLTC is a licensed insurance agent at Bankers Life and Casualty Company’s Portland, Oregon office. Neither Bankers Life and Casualty Company nor any of its agents are in any manner affiliated with or sponsored by the U.S. Government or the Federal Medicare Program.

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