Table of Contents
Questions to Consider When Applying for Medicare Coverage

TABLE OF CONTENTS

I. The Basics of Medicare

Original Medicare

Original Medicare is split into three major parts: A, B, and D. Medicare Part C is the name for the private supplements many seniors buy to combine these benefits. Part C is also called Medicare Advantage, and there are several types of plans from which to choose. Medicare parts are separated according to what they cover:

  • Medicare Part A: Part A is the basic coverage plan for inpatient care. This part pays the cost for hospitalization, including hospice care and time spent in drug and alcohol rehab. A good rule of thumb is that if you are sleeping overnight in a facility, it’s probably paid for under Part A. Part A also pays for medications administered during your stay, such as surgical anesthesia.
  • Medicare Part B: Part B is the Medicare outpatient benefit. This part pays for ambulance rides, medical office visits, specialist care, and various medical supplies. If you visit a doctor or nurse practitioner, are transported for medical purposes or use medical supplies, including bandages and artificial limbs, the cost is probably covered by Part B. Part B also frequently pays for drugs administered at the doctor’s office, such as flu shots and IV antibiotics.
  • Medicare Part D: Part D is the Medicare prescription medication benefit. This part of Medicare pays for the medications your doctor prescribes, which you then pick up from the pharmacy and take at home. It can also cover some of the extra charges for prescription delivery, as well as a few other minor expenses related to your medications. Part D does not pay for over-the-counter medication, such as Motrin or Sudafed.

Medicare Supplement Plans

Medicare supplement plans help to cover unpaid costs for Medicare-approved services. This is why they are often called Medigap policies. Unlike Parts A, B, and D, Medigap benefits are generally provided by private insurance companies. Some Medicare beneficiaries buy these supplement plans to fill the gaps between their Original Medicare options and then use them as coinsurance.

If you opt for a Medigap policy, you still have Original Medicare. Part A is likely to be provided at no monthly cost, and Parts B and D can cost you a monthly premium and whatever your annual share of costs total. There are also coverage limits for these parts, which is when most Medigap policies step in to pay the difference. Seniors with limited income and assets can use Medicaid as their Medigap policy, and various low-income programs exist that can help you manage the cost of prescriptions and other outside expenses.

Medicare Advantage

Medicare Advantage plans are sometimes referred to as Part C. They are distinct from Medigap supplements in that they are exclusively provided by private insurers, and they entirely replace your Original Medicare policies, rather than supplementing them. If you sign up for a Medicare Advantage plan, you have to receive all of your Medicare benefits through that plan. You are not allowed to carry both Medicare Advantage and Original Medicare/Medigap at the same time, except for brief periods during the transition from one to the other.

By law, every Medicare Advantage plan must provide the same coverage you could have received from both Parts A and B. To pay for this coverage, your Medicare Advantage provider sends an invoice to the federal Medicare program, which then pays much of your insurance premium for you. Monthly premiums are charged on a group rate basis, and they are based on how expensive health care is in your area, so premium prices vary considerably across the nation. Because Medicare invoices sometimes pay more to the insurer than coverage in your state costs, some people pay $0 a month for Medicare Advantage. The national average premium is $29 a month, though enrolled seniors still have to pay their Part B premium, which averages $144 a month.

About one in three Americans receiving Medicare choose a Medicare Advantage plan to deliver their benefits. There are several reasons for this.

  • Simplicity. Compared to the a la carte system of Original Medicare, Medicare Advantage can be a much simpler way to receive your benefits. Instead of having what amounts to four health insurance plans (A, B, D, and a supplement), many Medicare Advantage plans cover most or all of the benefits you need.
  • Extra benefits. Some Medicare Advantage plans cover more than the basic benefits of Original Medicare. For example, many Medicare Advantage plans include vision coverage and dental benefits. Original Medicare does not pay for either of these options, though you might have a supplement that does offer them, such as Medicaid.
  • Flexibility. Medicare Advantage plans offer a great deal more flexibility in how you receive care than you have with Original Medicare. Most Medicare Advantage plans are organized as HMOs, which means as much of your care as possible is delivered within an established provider network. Other plans are PPOs, which are less stringent about where you can go out of network.

II. Questions

Before you choose your coverage details, it helps to ask yourself some basic questions about what you need. The way you answer those questions should inform the way you organize your Medicare benefits.

Which benefits will be included in my Medicare coverage?

Original Medicare pays for hospitalization, outpatient services, and prescription drugs. You may carry a supplement, or Medigap policy, that covers some of the unpaid costs but does not provide extra covered services. Medicaid may provide extra services for Original Medicare recipients, but it is generally limited to low-income beneficiaries. Also, Medicaid has the right to recover costs from your estate when you pass.

If you opt into Medicare Advantage, you should still have all of the benefits of Original Medicare Parts A and B, plus whatever extra services your chosen plan covers. Medicare Advantage plans can be very attractive for seniors who need basic coverage but who also want vision, medication and/or dental services for which Original Medicare doesn’t automatically pay.

What will the costs be for my Medicare coverage?

If you have contributed to the Medicare system for at least 10 working years or 40 quarters, your Part A coverage is provided with no monthly premium. Part A does have a deductible that in 2020 stands at $1,408 for the year. Coinsurance costs after that can become complicated, so it’s best to ask an intake worker about the details of your Part A coverage.

Part B carries a monthly deductible of $144.60, which may be higher depending on your income. It also includes a $198 deductible, after which Part B pays 80% of your Medicare-approved outpatient costs.

Parts C and D costs vary by a wide margin. Prices for these plans, and for Medigap supplements, depend largely on the area of the country in which you live and the details of the coverage you choose. If you have very limited income, you might be eligible for Extra Help, which covers some or all of your out-of-pocket prescription medication costs and is estimated to be worth up to $5,000 a year.

Will my current health care providers, facilities, and pharmacies be included in my Medicare coverage?

Your current providers, facilities, and pharmacies can remain as your first choice if they accept your new Medicare plan. Fortunately, most health care providers in the United States accept Original Medicare, although they do not all accept the same supplement plans. If you carry Medicare Advantage, it is possible that your current providers are in-network, but it is always best to check with all of your providers and your Medicare Advantage agent before you commit to a plan.

Will I need a referral to see a specialist?

Original Medicare beneficiaries generally do not need a referral to see a specialist but can simply schedule an appointment. Medicare is usually able to pay for the visit if the specialist accepts Medicare. Different Medicare Advantage plans have different rules, which you should confirm before you sign up. As a rule, HMO-style Advantage plans allow fairly easy access to in-network specialist care, but situations can become complicated outside of a network or overseas.

Will I need prescription medication coverage?

If you opt for Original Medicare, your main prescription medication benefit is Part D. This can be added to by the supplement you choose. You do not automatically receive Part D benefits when you sign up for Medicare, but you are expected to sign up at least three months before your previous coverage lapses. Many Medicare Advantage plans include at least some prescription medication coverage.

Will I need vision coverage?

Original Medicare does not pay for vision services. If you want vision coverage, you may have to either sign up for a Medicare Advantage plan or pay for extra coverage in your supplement.

Will I need dental coverage?

Original Medicare does not pay for dental services. If you want dental coverage, you may have to either sign up for a Medicare Advantage plan or pay for extra coverage in your supplement.

Will my coverage be in effect if I travel out of state?

Original Medicare is accepted nationwide by every Medicare-authorized provider. Medicare Advantage plans, and some supplements, can be regional. Most plans have some provision for paying medical costs obtained while traveling, especially if it is an emergency.

What is the quality rating of the Medicare coverage I’m considering?

Medicare Advantage plans are rated on a five-star scale. These ratings are determined by a combination of member satisfaction surveys, plan coverage, and responsiveness to feedback. If the plan you’re considering has five stars, Medicare rates the care as excellent.