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Understanding the ABCs of Medicare

Medicare A, B, C, D, what does it mean?

Medicare A is given to you at no cost if you or your spouse paid sufficient Medicare payroll taxes while working, typically measured by 40 credits, or approximately 10 years work. It is recommended that even if you delay your Part B, you should still start your Medicare A if you are eligible. Medicare A helps pay for hospital inpatient care, skilled nursing facilities, home health services and hospice care as long as certain conditions are met. 

Medicare B, also referred to as “Part B,” helps pay for doctors’ services both in and out of the hospital, including outpatient care like lab work and radiology services. It also covers some medical equipment and supplies, such as wheelchairs and oxygen. Medicare B has a premium that is held from your Social Security income. Premiums for new enrollees in 2016 are $121.80. If you cancel your Medicare B or decide to enroll at a later date, you will have to pay a 10 percent premium penalty, per year, for every year you were eligible but did not take it.

You have a seven month initial enrollment period to sign up for Medicare, which includes the month you turn 65. Essentially, enrollees have three months before and months after turning 65.

If you have “creditable coverage insurance” beyond age 65 from an employer or union group for which you or your spouse are actively working, Medicare B can be delayed without a penalty. Once you are no longer covered, you have an eight month special enrollment period to enroll Part B. This starts the month employment ends or the month you are no longer covered by the employer or union health plan, whichever comes first. If you miss the eight month enrollment window, you will only be able to sign up from January through March.

It is recommended that even if you delay your Part B, you should still start your Medicare A if you have paid in enough quarters. 

Medicare C is a Medicare Advantage Plan, also known as an “MA Plan.” A Medicare Advantage Plan is a health plan option that is ran by private companies. Most MA Plans have a network.

The two main types of MA Plans are HMOs health maintenance organizations, or HMO’s, and preferred provider organizations, or PPOs. HMOs have a primary care physician. If you need specialty care, you may have to be referred by this physician before your insurance will pay. You pick a primary care physician from a list of providers or one will be appointed for you.

PPOs don’t require a primary care physician, but you will have a network of preferred providers. If you go out of the network with either of these types, you will usually pay a higher cost. MA Plans basically take the place of your Medicare. There are only a few things that Medicare will pay for if you are enrolled in a MA Plan.

Medicare D is a Medicare approved drug plan that help pay for your prescriptions. These are run by private companies, and their premiums will vary. Some have deductibles, but all have copays. Each company has a formulary of approved drugs. You need to review your plan every year during “open enrollment” as premiums and formularies can change. Open enrollment is from October 15 through December 7, with an effective date of January 1.

The last thing you need to know about is a Medicare Supplement, also called “Medigap Plan.” Supplement plans are designed to help fill the gaps that Medicare doesn’t pay and pay after Medicare. There are 10 standard Medicare Supplement Plans, but insurers may not sell every plan. Review what each plan covers and choose what best fits your needs. You have guaranteed coverage during your open enrollment period of six months, which starts the first day of your birth month. Supplement premium cost can vary by your age, where you live, the company selling the plan and a host of other variables. 

Two things you need to know about supplements are the differences between “Issued Age” and “Attained Age.” Issued age premiums are based on the age when insurance was purchased, and doesn’t go up as you get older. Attained age premiums are based on users’ current age, but can go up as they get older. Attained age premium may cost less at age 65 but may cost more over a lifetime. 

Customers should shop around, starting about three months before turning 65 and compare a minimum of three companies. 

I advise you not to enroll in anything except Medicare through Social Security Administration until you are sure you are getting what best fits your needs.

If you have more questions or need more help on any of these subjects check with your state’s “insurance department.” Ask for the Medicare Assistance Program and see if they have buying guides in your state. Go to www.medicare.gov. There is a lot of information available that may help you in your decision process. As a service of the CPN Health Services, I am also available for any questions you may have. You can call me at 405-273-5236 or email me at sscott@potawatomi.org.