If you’re approaching your 65th birthday, you’ve probably begun contemplating your options for enrolling in Medicare. You’re required to sign up for Original Medicare, Part A and Part B, or you might incur late enrollment penalties. But what many seniors don’t realize is that only signing up for Original Medicare might not be the best option for them—in fact, it could be detrimental!
There are other options beyond Medicare Parts A and B that can provide you the benefits you deserve. Understanding all of your options can help you make the right choice when it comes to protecting your health.
What is Original Medicare?
Original Medicare is the most basic form of Medicare you are eligible for when you turn 65. It includes Medicare Part A, which covers hospital stays, and Medicare Part B, which covers outpatient doctor and medical services.
Seniors who have begun receiving their Social Security benefits prior to turning 65 may automatically be enrolled in Medicare Parts A and B. Those who have not will need to sign up or delay their enrollment during an Initial Enrollment Period (IEP). Because these are the two main aspects of Medicare that are typically discussed, many seniors opt to sign up for Original Medicare when they need to without thinking twice.
However, understanding Original Medicare and what, exactly, it covers, is important for many reasons. One reason is to know what gaps in coverage you might encounter. For example, Medicare Parts A and B do not include prescription drug coverage. You’ll need to enroll in Medicare Part D to get coverage for prescribed medications you take.
Here’s a more thorough breakdown of Original Medicare and its costs.
Medicare Part A covers hospital stays, skilled nursing, hospice and some home health services. This aspect of Medicare is premium free for most seniors. If you paid Medicare taxes for 10 or more years in the United States, you do not have to pay a monthly premium for Part A.
However, this does not mean that Medicare Part A covers all expenses for you. There are still deductibles, coinsurance and copayments required by Part A. These are incurred within a “benefit period,” which begins the day you are admitted to the hospital or a skilled nursing facility. The benefit period ends when you have not been in the hospital or skilled nursing facility for 60 days in a row. If you are admitted again after those 60 days, a new benefit period begins.
In 2020, the deductible for each benefit period is $1,408. If you are admitted to the hospital, Medicare Part A covers the costs for the first 60 days you are inpatient. If you are in the hospital for longer than 60 days, you must pay coinsurance of $352 per day, up to your 90th day.
After 90 days, you can use up to 60 “lifetime reserve days” and pay coinsurance of $704 per day. If you’re in the hospital for longer than 150 days, you are responsible for 100 percent of the medical costs until you are discharged.
If 60 days pass, and you are admitted into the hospital again, the process begins anew. You’ll owe the deductible again, as well as coinsurance for days 61-90 in the hospital.
Medicare Part B covers your outpatient medical or doctor’s visits, including preventative care, outpatient procedures, mental health services and some medical equipment.
Part B is not premium free. As soon as your Part B coverage begins, you’ll owe a standard monthly premium. For 2020, the standard premium is $144.60 (but this might be higher based on your income).
On top of the monthly premium, you will also be responsible for a yearly deductible, coinsurance and copayments. The annual deductible for 2020 is $198. After your deductible is met, you’ll typically pay 20 percent for Medicare-approved services.
There is no out-of-pocket maximum for Medicare Part B. You will have to continue to pay 20 percent for all covered medical services every year.
Original Medicare does not cover everything
As you can see, Original Medicare offers some coverage for hospital and outpatient services. However, the cost sharing element of Original Medicare has the potential to be extremely high. If you suffer from an ailment that leaves you hospitalized for more than 60 days in a single benefit period, you could receive a bill for tens of thousands of dollars, even after Medicare Part A pays for its share of the coverage.
Additionally, paying 20 percent coinsurance for care covered by Medicare Part B might not seem like a lot at first. But those costs can add up significantly over time—especially if you need diagnostics and treatment for a severe or chronic condition like cancer.
These costs have the potential to be financially devastating for most seniors covered by Original Medicare. Think about how much you can afford to pay in a given year. Even if you can afford a single expensive medical bill, it may affect your financial stability in the long term.
On top of the potentially dangerous cost sharing that comes with Original Medicare, signing up for Parts A and B alone can also leave you without many benefits you’re expecting or accustomed to. Original Medicare does not cover many services you might need, including dental care, vision services and glasses and hearing aids. The costs for these services and devices can be in the thousands. Paying for these things out of pocket can add up significantly over the years.
Options beyond Original Medicare
It’s clear that Original Medicare leaves many gaps—both in terms of cost sharing and benefits—in the average senior’s healthcare plan. Fortunately, seniors have numerous options for bridging those gaps and expanding their coverage. The two main options for supplementing your Medicare plan are enrolling in Medicare Part C, also known as a Medicare Advantage plan, or enrolling in a Medicare Supplement plan, or Medigap.
A Medicare Advantage plan is a private insurance plan that covers all benefits under Medicare Parts A and B, as well as additional benefits like vision, dental, hearing and prescription drug coverage. The benefits included will vary based on the plan you choose.
By using a more traditional health insurance model, such as a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO), Medicare Advantage plans offer you traditionally low monthly premiums (in addition to your Part B premium) and expanded benefits. You’ll still be responsible for a plan deductible, copayments and coinsurance, but your plan will have an annual out-of-pocket maximum that reduces your financial exposure if you get sick.
Medigap plans work in tandem with your Medicare Parts A and B. These plans are designed to fill the cost sharing gaps of Original Medicare. They do not offer additional benefits. Your Medigap plan will charge a monthly premium in addition to your Part B premium.
Depending on which of the 10 available Medigap plans you select, your plan will cover some or all of your Medicare Part A and Part B deductibles, coinsurance and copayments. This coverage may help to reduce your out-of-pocket costs and financial exposure.
Why choose more than Original Medicare?
If you’re only covered by Medicare Parts A and B, you may be subject to disastrous financial exposure if you develop severe medical needs. If you experience significant health decline and, like many seniors, know that you are unable to cover the out-of-pocket costs for Original Medicare, then Original Medicare alone might not be the right choice for you.
Choosing to add a Medigap plan or enroll in Medicare Advantage plan may help minimize or eliminate severe financial exposure from high-cost medical needs. These options may help you retain greater control over your monthly premiums and annual out-of-pocket expenses. And, they can potentially help you access even more healthcare benefits in the process.
Are you interested in exploring your Medicare options beyond Original Medicare Parts A and B? SeniorCare Benefits represents a range plans that can expand your coverage. To learn more, please call us at 1-888-230-0269 so one our agents can assist you today.
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