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 1997 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 2010 is $96.40 unless your income is above a certain level or you first signed up for Medicare within the last couple of years, and then your 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 a Medicare supplement private health insurance policy 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 Medicare Part C also called Medicare Advantage plan.
Part C Medicare Advantage plans were started in 2003 as part of the Medicare Modernization Act, the same Act that created the Medicare Part D prescription drug coverage. The Medicare Advantage program is essentially a repackaging of the Medicare+Choice program which has been around since 1997.
With Medicare Part C Advantage plans, you have the private insurance versions of Medicare Parts A and B. If you have signed up for a Medicare Part C Advantage plan, you are no longer covered by Medicare Parts A and B, even if you have your red, white and blue Medicare card that says you do. Your Medicare coverage is now governed by the private health insurance contract you entered into with the insurance company.
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 plans are often times preferred provider organizations (PPOs). If you incur non-provider or out of network medical expenses, you may have higher co-pays or no coverage at all.
Because many Medicare Part C Advantage plans have less covered medical expenses than Medicare Parts A and B and also because many have higher co-pays and deductibles, they were addressed in the Obamacare healthcare legislation. Starting in 2011, Medicare Part C Advantage plans are prohibited from charging higher cost-sharing requirements than original Medicare for certain covered services such as chemotherapy, dialysis and skilled nursing care
In addition, the federal subsidies paid to insurance companies who sponsor Medicare Part C Advantage plans were cut with the Obamacare healthcare legislation. As a result, it is reported that many insurance companies are increasing cost sharing requirements where they can. Some insurance companies are even getting out of the Part C Advantage plan business altogether.
Even though many Medicare Part C programs may 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. Often, you will have higher out-of-pocket costs with a Medicare Part C Advantage plan than with original Medicare Parts A and B.
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. As we discussed in another column, you can compare these plans on the wwwMyMedicare.gov. website. Many Part C Advantage plans include the Medicare Part D prescription coverage as part of their 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 November 21, 2010 in The Times Herald newspaper, Port Huron, Michigan as: With Medicare, you need to know your ABCs