Here’s what you should consider when picking a plan
By Deborah Jeanne Sergeant
The various “parts” of Medicare may seem confusing. Learning a few principles about how they work can make it much easier to understand.
Vicki M. James, Medicare broker with Medicare Easy in Rochester, calls Medicare “baseline health insurance. There’s no maximum out-of-pocket for parts A and B. With the Advantage plan, there’s a maximum $7,550 annual out-of-pocket for 2022.”
What is covered by the various parts of Medicare can be challenging to sort out.
“Parts A and B are original Medicare,” said Lizz Ortolani, president of Ortolani Services in Irondequoit, who is licensed in life, accident and health and certified in Medicare and in the New York State Marketplace.
She said that Medicare is for people 65 and older or those receiving disability benefits for two years or more. Most people pay about $150 per month, depending upon income.
“There are penalties for not signing up while eligible, but exceptions for people still working who are covered by a qualifying healthcare plan,” Ortolani said.
Some eligible people also skip signing up for Medicare because they do not have chronic health issues or take prescription drugs. But they face consequences later if they sign up late.
“Those penalties are steep, and they are for life,” said Tina Scahill, independent insurance broker at Ahrens Benefits Company in Rochester. “So, it’s really important for people to get help if they need it.”
Parts A and B cover 80% of the costs for care. Part A covers hospice and hospitalizations. For nursing home care, it pays for 20 days. After that, patients owe a co-insurance of $185.50 a day up until 100 days.
Part B covers out-patient services after an annual deductible of $203 for things such as doctor’s visits, laboratory tests, x-rays, diagnostic tests, therapy and other services. It also pays towards durable medical goods.
Private insurance companies administer Part C for the government. Part C is also called a supplement plan, Medigap or Medicare Advantage, which pays what A and B do not cover.
“It’s a combination of the other parts,” Scahill said. “It’s Part A, plus Part B, plus extra benefits and usually plus Part D. All of those combine to make a Medicare Advantage Plan. The advantages are they’re low cost. They often give you better medical coverage than original Medicare by itself. They give extra benefits such as hearing exams, hearing aids, vision exams, eyeglasses allowance, dental, transportation, a free or low-cost fitness membership and an over-the-counter benefit. All the plans differ, so you won’t find all those benefits through every plan.”
Usually, about $1,000 per month is subsidized and the insured picks up the remaining cost.
Parts A, B and sometimes C do not cover prescriptions. Part D is the prescription drug program, which is offered through a private insurance company.
“Every company who has a drug plan has a formulary,” Scahill said. “That is the list of medications that they cover and then they also put the medications on five different tiers. It’s really important when choosing drug coverage to check out the companies’ formulary. Companies will vary in how they cover a drug. One company may put a medication on tier one making it very inexpensive, and another will put the same drug on a tier three or tier four. That changes the cost significantly.”
Scahill warns clients to watch out for the coverage gap, known colloquially as the “doughnut hole.” When the retail cost of medication reaches a certain amount ($4,130 in 2021), the medication becomes more expensive.
“That coverage gap applies to most insurance plans,” she said. “There are only a few that will cover you completely in the coverage gap and there are less and less of them.”
She recommends that clients carefully consider their Part D insurance coverage and look at Elderly Pharmaceutical Insurance Coverage (EPIC), a senior program that helps minimize the cost of medications for income-eligible seniors.
While going for the most expensive Advantage Plan or what someone else likes seems like the best option, Scahill said that’s not always best. She advises clients to carefully examine their healthcare needs to determine what plan suits them.
A Medicare expert can provide help in figuring out the best plan.
“Primarily what we do is help them navigate the system,” said Fran Pullano, owner Pullano & Company, an independent health insurance office in Pittsford. “The problem is you hear, ‘You can buy Medicare for zero cost’ on TV, but it’s not. What happens is Medicare sets aside money for each person eligible for their Part A and B. What you’re doing is telling Medicare–the government—to give this money to a private insurer because you’re going to get coverage through them and if there are additional benefits, you might get charged above that $0 cost.”
She encourages people to work with an independent agent who receives a flat amount regardless of the plan chosen, whether a basic or not. Clients pay nothing for their consultation.