What’s Part A, Part B,
Part C and Part D and what do they cover? What are Medicare Advantage plans?
And how about the deadlines involved? There’s a lot to understand during this
critical time.
by: Neale Godfrey, Financial Literacy Expert November
21, 2020
Medicare
season 2020 is probably going to go down as the most confusing Medicare season
in U.S. history. I’ve been inundated with correspondence from people
asking for guidance. The Open Enrollment period ends on Dec. 7, so you
still have some time to examine what is best for you.
You
are hearing a lot about Medicare Advantage plans
(Part C) these days. Although they came on the scene in 1997, they now account
for one-third of the Medicare market.
In 2020, 24.1 million people out of 67.7 million Medicare beneficiaries overall
are enrolled in Medicare Advantage plans.
I
think that the increase has been fueled by the messages that are broadcast via
multiple media channels. This media blast is supported by companies selling
Medicare Advantage Plans. You, as the consumer, have to look at each of
these closely, because benefits can vary for each plan.
A Simple Look at Medicare
Simple and Medicare don’t
seem like words that go together, but I’ll try.
There
are several different parts of
Medicare:
Part A
This
is provided by the federal government. It helps pay for inpatient
hospital stays, skilled nursing facilities (but not most long-term care), home
health care, hospice and some other costs. There is a deductible for each new
hospital or nursing home stay. This is important because if you are
rehospitalized within 60 days, you don’t need to pay another deductible.
Part B
This
is also provided by the federal government. It pays for doctors,
outpatient care, physical and occupational therapy, lab work, mental health
services, etc. There is a deductible that will apply. It’s important to note
that you pay a Part B premium if you want this coverage. You will then
have Part A and B. If you want an Advantage Plan you have to have both
Part A and B.
The
standard monthly premium for
Part B is $144.60 for 2020 (rising to $148.50 in 2021). The annual deductible
for Part B is $198 in 2020 and will be $203 in 2021.
Together,
Medicare Part A and Part B are called Original Medicare. Those who have Original
Medicare can buy additional coverage called a Medigap policy from
a private company. These policies help pay health care costs not covered by
Original Medicare, such as co-payments, deductibles and health care when you
travel outside the U.S. But they typically don’t pay for everything,
including long-term care, dental, vision and prescription drugs.
Part C
Part
C is supplied by private health insurance company plans and includes all of
your Medicare-covered benefits in Part A and B. Basically, Part C plans
are the Medicare Advantage Plans.
Part
C can also include the prescription drug coverage provided by Part D. The
plans and their costs vary and generally offer extra benefits beyond
Medicare.
Again,
it’s time to pause and really examine all of the benefits offered by the
Advantage Plans before signing up. Weigh all of the benefits and costs
and really think about what you may need in the future. Keep in mind that
these plans typically require you to use doctors in their networks and service
areas, and you can’t buy a Medigap plan to cover any costs the Advantage Plan
does not.
Part D
The
prescription drug coverage offered in Medicare Part D is bought through private
health insurance company plans. There can be either stand-alone
prescription drug plans, or these can be included in Medicare Advantage plans.
Who is eligible for Medicare?
If
you are turning 65, it’s time to find out about your Medicare benefits. Social
Security will notify you about your Medicare benefits when you turn 65 and sign
you up if you are currently receiving Social Security benefits. But don’t
wait until the last minute to find out about the plan that is right for you.
You get a seven-month window to
enroll. Sign up online via socialsecurity.gov
or by calling Social Security at 800-772-1213 or visiting a Social Security
office and making an appointment to speak to a professional.
You
can decline Part B coverage when you are first eligible, but there’s a catch:
If you change your mind and want to sign up later, there will be penalties. If
you sign up for Medicare during your
initial enrollment window this will ensure that you have coverage in place and
can use it when you need it. I don’t want to scare you, but if you don’t
sign up on time, you can risk paying lifelong surcharges on your Part B
premiums. It could be a 10% increase in the monthly premium for each
12-month period that you were eligible to enroll but didn’t.
It’s
important to note that you can sign up for Medicare even if you already have
other health coverage. If you are working and have health insurance, you don’t
have to sign up for Medicare right away, but you can use Medicare as a
secondary insurance. Just do it!
I
am a proponent of working with a professional insurance agent who specializes
in Medicare supplemental programs to help explain your options, costs and
benefits. It’s not easy.
The Medicare Down-Low
I
reached out to speak with Linda Goodwin, a Medicare expert and author of the
booklet Solving the Puzzle of Medicare (available
at www.myhelpsolutions.com). I asked
Goodwin to explain some of the scary TV ads airing during Open
Enrollment.
Goodwin
said: “The ads on television are delivering a message to those new
to Medicare that Part C Medicare Advantage is superior to Original
Medicare. The other thing that often happens is when you call Medicare
for more information you may start to receive calls from Advantage Plan
companies trying to sell their plans. Is this a coincidence, or has your
information been supplied by Medicare to other companies?
“It
is important to note that when you are first eligible for Medicare and a
Medicare insurance supplement you are guaranteed coverage and cannot be denied
coverage for a period of three months before your 65th birthday and three
months after your birth month.”
So, What Should Your Takeaway Be?
·
If you are about to
celebrate your 65th birthday, sign up for Medicare.
·
Don’t listen to the
ads in the media. Do your own research to make the right decision for yourself.
·
Seek professional help
to know your options, costs and benefits.
·
If you have an
Advantage Plan for less than a year and want to return to Original Medicare,
you can. You are eligible for this during the Medicare Advantage Open
Enrollment Period (OEP) from Jan. 1 through March 31.
·
Plan a big 65th
socially distanced birthday party!
This
article was written by and presents the views of our contributing adviser, not
the Kiplinger editorial staff. You can check adviser records with the SEC or
with FINRA.
About The AuthorNeale Godfrey, Financial Literacy Expert President
& CEO, Children's Financial Network Inc.
Neale
Godfrey is a New York Times #1 best-selling author of 27 books, which empower
families (and their kids and grandkids) to take charge of their financial
lives. Godfrey started her journey with The Chase Manhattan Bank, joining as
one of the first female executives, and later became president of The First
Women's Bank and founder of The First Children's Bank. Neale pioneered the
topic of "kids and money," which took off after her 13 appearances on
"The Oprah Winfrey Show." www.nealegodfrey.com
No comments:
Post a Comment