If you are over the age of 65, you usually will have a red, white and blue Medicare card. However, do you understand the alphabet soup of Medicare Parts A, B, C and D?
The original Medicare, and prior to 2003 the only Medicare, is Parts A and B. Original Medicare is a government run health care program for seniors and certain disabled individuals.
If you are receiving Social Security or Railroad Retirement Benefits, you typically are eligible to be enrolled in Medicare Part A at no additional charge. If you are not eligible for premium-free Part A, you can buy it during certain enrollment periods.
Part A mostly covers hospitalizations, certain home health services following a hospital stay, hospice care and rehabilitative skilled nursing care.
When you are enrolled in Part A, you generally are also enrolled in Part B, but at a cost to you. The monthly premium for Part B paid by most people in 2009 is $96.40 unless your income is above a certain level, and then the monthly premium is more.
Part B usually covers medically necessary services or supplies for the diagnosis or treatment of your medical condition and certain preventative services. These may include doctors visits, emergency room visits, durable medical equipment, diagnostics and home health services.
If you have Medicare Parts A and B, there are many medical expenses that are not covered. These include deductibles, co-pays, custodial long-term care and many listed non-covered services and procedures. Because of these non-covered expenses, you generally can buy Medicare supplement or Medigap private insurance that will cover some of these expenses that are not covered by Medicare Parts A and B.
Medicare Parts A and B have been around a long time. Medical care providers know what they are going to be reimbursed for Medicare. Starting in 2003, if you are eligible for Medicare Parts A and B, you can opt out of the Original Medicare Parts A and B and have those combined into a Medicare Part C program also called Medicare Advantage Plans.
Basically, Medicare Part C is a privatized medical insurance that replaces Medicare Parts A and B. If you have a Medicare Part C Advantage Plan, you do not have Medicare Parts A and B, even if you have a Medicare card that says you do.
There are numerous Medicare Part C Advantage Plans around and coverages vary from state to state, county to county and plan to plan, even within the same insurance carrier. Medicare Part C programs are often times preferred provider organizations. If you incur non-provider or out of network medical expenses, you may have higher co-pays or no coverage at all.
Most Part C programs generally have less covered medical expenses than Medicare Parts A and B and usually have higher co-pays and deductibles. I have not heard of any Part C Advantage Plan that has at least as good of coverages as Original Medicare Parts A and B.
Even though these Medicare Part C programs cover less than Original Medicare Parts A and B, you cannot purchase a Medicare supplement or Medigap insurance policy to pay for non-covered medical expenses. So typically you would have higher out-of-pocket costs with a Medicare Part C Advantage Plan than with Original Medicare Parts A and B.
So why would you want to enroll in a Medicare Part C program with less coverage than Original Medicare Parts A and B that you are replacing? The answer is, you would not, unless you are required to do so because you are a member of some sort of retiree group which forces you into a Medicare Part C Advantage Program.
Starting in 2006, if you are eligible for Medicare Parts A and B, you are also eligible for a Medicare Part D prescription drug plan for an additional monthly premium paid to a private insurance company. There are numerous Part D prescription drug plans from which to choose and which have varying premiums, deductibles, co-pays and coverages. You can compare these plans on the federal government website. Many Part C Advantage Programs include the Medicare Part D prescription coverage as part of their program and plan.
If you are eligible to enroll in Parts A, B, C or D and have not done so, there are only certain times of the year within which you can enroll in these programs. You may be able to get special help with your Medicare premiums if your income and/or assets are below a certain level.
In addition, if you do not enroll in Medicare Parts A, B or D when you are initially eligible, there is a penalty premium that you would have to pay when you eventually do enroll in these programs. In order to minimize your premiums, you may want to enroll in Medicare Parts A, B and D as soon as you are eligible.
By: Matthew M. Wallace, CPA JD
Published edited May 3, 2009 in The Times Herald newspaper, Port Huron, Michigan as: Sorting alphabet soup of Medicare