Everyone who has Medicare, or is soon to take the plunge into it, hopefully understands that Parts A, B and D can be delivered to you in different ways.
The starting point always is understanding that, roughly speaking, Part A covers inpatient care, Part B services and equipment (like doctor visits, tests, diabetes supplies), and Part D prescription drugs.
Keeping in mind that Medicare has deductibles and some form of co-pay or co-insurance for a fair amount of what it offers, you really have to give some thought as to how you’re going to cover some or all of the out-of-pocket expenses.
Your first order of business is to figure out if you want to sign up for each part separately or find a plan that delivers all the parts in one fell swoop. Most people receive Part A premium-free, having paid payroll taxes for 40 quarters or being able to use the work history of a close family member. They then pay a premium (usually deducted from their Social Security checks) for Part B. These two parts are sometimes referred to as Original Medicare. They can choose to pay the 20% of charges that Medicare doesn’t cover or purchase a supplemental insurance plan – Medigap – to cover their out-of-pocket expenses to a greater or lesser extent. In addition, they have to purchase a stand-alone Part D plan for prescription drugs.
Alternatively, you can purchase a health insurance plan that delivers Parts A, B, D, a lot of the out-of-pocket expenses, and possibly some extras that Medicare doesn’t cover. These Medicare Advantage Plans (e.g., HMOs, PPOs, etc.) are also called Part C plans.
Which way do you go – Original or with a Medicare Advantage Plan?
Here are some things to consider.
1. Coordination with your current plan. If you are still working, do you have employer coverage? Will you have retiree coverage from a union or employer? Do you have VA, TRICARE, FEHB, or COBRA? Find out (often from your HR department) how complete this coverage is and whether you need to sign up for Part A and/or B in order to get it.
2. An Advantage plan may restrict you to networks of providers and require referrals from a primary doctor. You’ll have to see whether your practitioners, hospitals, facilities and pharmacies take the Advantage plan you’re considering and, if not, whether you want to change to a new set of providers who do.
3. The prescription drugs you currently take are a major factor in whether you get a stand-alone Part D plan or an Advantage plan with a drug component. Are the medications you take on the plan’s formulary? (That’s the list of drugs offered by the company.) Are there restrictions requiring prior authorization, quantity limits, or step therapy (a coverage rule requiring that you try a similar, lower cost drugs before the plan will cover the prescribed drug)?
4. You will want to weigh the costs. Look into the deductibles, co-pays, co-insurances, and premiums. Remember that all Medigap plans have premiums, while some companies offer Advantage plans with no premium at all.
5. If you’re a snowbird or visit a relative out of state for part of the year, you might want to go with Original Medicare, as you can get services from anyone who accepts Medicare. Some Advantage plans allow you to get services out of network, so you need to explore what they offer on a case-by-case basis in the geographic area to which you’ll be traveling.
6. Advantage plans do throw in some extra things not covered by Original Medicare. These include hearing, vision and dental components, fitness programs (such as free membership at a fitness center in your area) and coverage outside the USA.