Sometimes the P words can get a little confusing. When adding to all the talk of deductibles and copays and all the things that go with making good insurance decisions, it can be a little overwhelming. Let’s talk about which is which. The Parts of Medicare are the actual divisions of the Medicare program. Medicare plans are the supplemental plans offered by insurance companies.
The Parts of Medicare
When talking about the parts of Medicare, it is in reference to how the Medicare program is divided into the separate parts, or divisions. Medicare is divided into 4 parts – Part A, Part B, Part C, and Part D.
- Helps cover inpatient care in hospitals
- Helps cover skilled nursing facility, hospice, and home health care
- Helps cover doctors’ and other health care providers’ services, outpatient care, durable medical equipment, and home health care
- Helps cover some preventive services to help maintain your health and to keep certain illnesses from getting worse
Medicare Part C (also known as Medicare Advantage)
- Medicare Advantage is a Medicare replacement program
- Offers health plan options run by Medicare-approved private insurance companies, not by Medicare
- You give up your rights to Medicare and give them to an HMO or PPO to make your coverage decisions for you
- Medicare Advantage Plans are a way to get the benefits and services covered under Part A and Part B
- Most Medicare Advantage Plans cover Medicare prescription drug coverage (Part D)
- Some Medicare Advantage Plans may include extra benefits for an extra cost
- Helps cover the cost of prescription drugs
- May help lower your prescription drug costs and help protect against higher costs in the future
- Run by Medicare-approved private insurance companies
Who Pays For What?
Parts A and B are funded by the Medicare program. There are some gaps in the coverage from Medicare, which is why it is important to get a supplemental coverage plan for Medicare – whether it is through employer group coverage or individual plans that you purchase.
Parts C and D – although completely controlled and governed by the Medicare program – provide care through private insurance companies like UnitedHealthcare, Humana, or Aetna. With a Part C plan, Medicare pays the insurance company to provide the coverage for you. The plan you choose pays all the bills. Each of the plans provided by individual insurance companies comes with its own copays and deductibles that you pay when you receive medical care. You should be sure you know what your share of the cost will be when services are rendered as each plan is different. The downside is that each plan has its own network of providers, so if you have a doctor you work with that you like, make sure to find a program that he or she participates in. There could also be limitations if you travel outside the coverage area for your plan.
Under Part D – the Medicare Prescription Drug Plan – you pay a premium to the insurance company for your coverage. Then you also pay a copay any time you fill a prescription.
Medicare Plans Explained
The Medicare supplement plans (Plans A-N) are individual insurance plans offered by the insurance companies. Congress established these plans and every company that sells them must sell the exact plan as regulated by Medicare. The plans are identical from company to company.
There are 10 different plans available for insurance companies to sell. The only difference in a Plan F policy from one company compared to a Plan F policy from another company is the price, the underwriting involved, and the agent assisting you. A Plan F from Mutual of Omaha is identical to a Plan F from UnitedHealthcare. In the Medicare and You book which is printed and distributed by Medicare each year, it says (in 2016 it is on page 100), “Different insurance companies may charge different premiums for the same exact policy.” They have different premiums, but the coverage is exactly the same. Sometimes the premium difference can be more than $150 per month!
The companies will base their rates on the underwriting required to be approved. A cheaper plan may be harder to get into if you have any health issues. Other companies may cost more but may accept more applicants including those with pre-existing conditions. Here is a chart that shows the different plans that the companies have to abide by. All companies must offer Plan A and either Plan C or Plan F. Other than that, they can choose what to offer their customers.
You Have Choices
There are many choices with Plans A-N. These plans have a monthly or annual premium with the insurance company. Plan F is the most popular Medicare Supplement plan and has been for many years. With Plan F, you pay the monthly premium and all of your medical care is covered (with the exception of prescription drugs which require a separate Part D drug plan from the insurance company, if you so desire).
The premium is higher on these plans than a Medicare Advantage plan, but with a Plan F there are no additional co-pays or deductibles to pay for any Medicare-approved services – just a monthly premium which makes it easier to budget and maintain medical costs. Many Medicare Advantage plans have out of pocket limits of $6,700 per year. One major health issue and you could be paying big bills. You don’t have that exposure with a Medicare supplement plan, plus you can go to any doctor or hospital that accepts Medicare without worrying about networks. You can call 1-888-228-6119 to have your questions answered. There is no charge for our service.
Keith Murray is an independent agent and the owner of Integrity Senior Solutions Inc. He has over 20 years of experience working with Seniors to meet their insurance and financial needs.