When people turn 65, they often look forward to gaining Medicare coverage and having access to a huge, nationwide network of participating providers. However, choosing your supplemental coverage can be tricky. Since there are so many choices, we sometimes find that Medicare beneficiaries don’t understand their coverage or the difference between a traditional Medigap plan and the newer Medicare Advantage plans.
Since durable medical equipment might be covered differently depending on which insurance plan you choose, let’s look at how these two types of insurance work.
Original Medicare plus a Medigap Plan
Medicare has two original parts that cover inpatient hospital benefits and outpatient medical care. While these parts make up the foundation of your healthcare coverage, it’s important to realize that Medicare doesn’t cover everything. You will be responsible for some cost-sharing as you go along and access various medical services.
Both Medicare Part A and Part B have a deductible, coinsurance, and copays that you will be required to pay. Under Part A hospital benefits, you are responsible for a $1340 deductible whenever you enter the hospital under a new benefit period. You will also pay expensive daily copays if your inpatient stay lasts longer than 60 days.
Likewise, under Part B, you owe an annual deductible of $183 in 2018. Thereafter, Medicare pays 80% of your costs and you must pay the other 20%.
For many years, Medicare beneficiaries have purchased Medigap plans to help them fill in these gaps. There are 10 standardized Medigap plans available in most states. Each plan covers a different set of benefits. You can choose a really comprehensive plan like Plan G which will cover everything but the Part B deductible, or you might choose a plan with lower premiums because you take on more cost-sharing on your end.
When you use your benefits, your provider bills Medicare and Medicare pays its share. It then forwards the remainder of your bill on to your Medigap company to pay its share.
One of the best features of Medigap plans is that you can see any provider in the nation that takes Medicare. This gives you access to nearly 900,000 providers, and it doesn’t matter which insurance company you purchase your Medigap plan from. Medigap plans are also guaranteed renewable as long as you are paying your premiums. The insurance company can never drop you for health conditions.
Furthermore, the benefits of your Medigap plan do not change from year to year like they would on a Medicare Advantage plan.
If you have a need for durable medical equipment such as cane or walker, this will fall under Medicare Part B. Medicare will pay 80% after you satisfy your deductible. Most Medigap plans will pay the other 20% for you. It’s important that you use a DME vendor who is approved by Medicare.
Medicare Advantage Plans
Medigap plans provide great coverage and are considered quite comprehensive. You pay a little more for this coverage, but you have greater flexibility. However, some people choose to get their Medicare benefits through a private insurance company instead of through Medicare. These plans are called Medicare Advantage plans or Part C plans.
Medicare Advantage plans came into the marketplace in the 1990s. These private plans are provided by a wide variety of insurance carriers. All plans must cover the same Medicare Part A and B services but your cost-sharing for these items are specified by the plan.
Most Medicare Advantage plans have lower premiums than Medigap plans, but that’s because you agree to play by the plan’s rules. Most plans will have a much smaller network than Medicare. Networks usually operate in your local area. Some networks may be HMO-style, which means you’ll need to choose a primary care physician and see him first before you see a specialist.
Whenever you access a healthcare service, you will pay a copay or coinsurance. Your Medicare insurance broker can review the plan’s Summary of Benefits with you before you enroll so that you will know what kind of copays you can expect to pay for various medical services that you may use frequently.
One thing that many people like about Medicare Advantage plans is that most of them also include Part D coverage. This allows you to have just on insurance card instead of your Medigap card and a separate Part D card.
However, since the networks are smaller than Medicare’s network, it’s very important that you check with all your healthcare providers to see if they are in the network before you enroll. This means your doctors but also your favorite hospital, lab center, and DME providers. Many DME providers may not be in network for your Medicare Advantage plan and you need to know that before you enroll in one.
Medicare Advantage plans also change their benefits each year, so its important that you review your renewal letter each fall and make sure you are okay with the upcoming year’s costs and benefits.
In closing, what’s important is that Medicare gives you choices for how you get your coverage. Some people prefer the predictability of costs under a Medigap plan, while others may prefer lower premiums up front and more copays as they use the services. Whichever plan you choose, just be sure you fully understand how the plan works so that there are no surprises later on.
Editor’s Note: This article was provided by Danielle Kunkle at BoomerBenefits.com. I received no compensation for this article.