Ask The Medicare Specialist

What do Medicare Parts A and B cost and cover? What are the choices in Medicare Plans? Do they differ as far as coverage, premiums and out of pocket expenses, access to doctors and hospitals, and how claims are approved and paid?

Medicare Part A has no cost while Part B is currently $185/month. However, some people will pay more for B based on their income. A single person who makes over $106,000 annually and married couples earning more than $212,000 are charged a higher amount. This tax is known as IRMAA and can add over $400 per month to the standard premium.

Part A covers two services: Inpatient hospitalizations and a stay in a Skilled Nursing Facility (SNF). Those who have Medicare only and no other coverage are responsible to pay $1,676 for any hospital admission up to 60 consecutive days. An odd aspect of Medicare is someone who stayed one day in the hospital is charged the same $1,676 as the person who was there for 10, 20, or 60. After 60 consecutive days, additional costs are billed on a per day basis. Days 61 through 90 are $419/day and days 91 through 150, $838. It’s quite rare for someone to spend 100 or more days as an inpatient, let alone 60, but it does happen. I’ve had two clients I know of, and I’m sure a few others I didn’t, who spent 120 days in the hospital. With Medicare only, we’re talking about a total cost upwards of $40,000.

A SNF is a short-term nursing home. I often refer to it as inpatient rehab that’s needed after lengthy hospital stay, a bad stroke, a serious injury, etc. The care given is designed to nurse a patient back to health so they can go home and be independent again. Medicare pays 100% of the cost for the first 20 days. Days 21- 100 have a liability of $209 per day.

Part B covers outpatient procedures and services such as: doctor visits; testing like blood work, X-Rays and CT scans; outpatient surgeries such as cataract, a torn rotator cuff, a colonoscopy; chemo and radiation therapy; emergency room visits; medical equipment and supplies such as oxygen, C-Pap machines, and diabetic supplies; and more. Anything covered under Part B is paid for by Medicare at 80%, putting the beneficiary on the hook for the other 20%.

There is no limit to what those who have Original Medicare only can be billed. I already gave an example of how much a lengthy hospitalization can cost. There are also other Part B services that could result in tens of thousands of dollars in bills which is why nearly everyone on Medicare gets either a Supplement or Advantage Plan, the two choices that cap out-of-pocket expenses.

Supplements, also known as Medigap, are secondary to Medicare and designed to pay the portion of the bills that Part A and B doesn’t pick up. Those with Supplements show two cards at a doctor or hospital, their red, white, and blue Original Medicare card and another provided by the Medigap company.

Advantage Plans (aka Part C) are HMO’s or PPO’s and pay in place of Medicare. If you choose an Advantage Plan, you won’t show your Original Medicare card at a doctor or hospital because once enrolled Medicare stops covering any portion your medical bills. What Medicare does instead is pay an approved private insurance company of your choice approximately $1,000 per month to become your one and only insurance company, to take on the burden of providing a health insurance benefit package and pay all covered claims minus your cost sharing in the form of deductibles, co-pays, or coinsurance (percentage of the total bill).

Which brings us to a couple of the biggest differences between Supplement and Advantage Plans: premiums and out of pocket responsibility. Supplements generally cost more than Advantage Plans and start between $75 and $100/month. However, plans we recommend eliminate almost all medical bills. Supplements generally need to be piggy backed with a separate Part D prescription drug plan. The most common have an additional premium of $0 to $15/month.

The most popular Advantage Plans are less expensive. However, those who choose HMOs or PPOs are exposed to higher out of pocket medical costs, up to $9,350 per year. Bills can range from $10 for blood work; $40 for a specialist visit; $100 for a trip to the emergency room; $200 for an MRI, CT scan, or outpatient surgery; a few hundred for a hospital stay; to thousands for Chemotherapy, other infused or injected drugs, or a lengthy stay in a SNF. Almost all Advantage Plans include Part D, so the purchase of an additional prescription plan isn’t necessary.

How claims are approved and paid also differs. Supplement insurance companies have no say in what’s covered. If Medicare pays, the insurance company must pay their share, no questions asked. Medicare lets the treating physician decide what’s medically necessary so there’s no prior authorizations needed. In addition, it’s almost unheard of for Medicare to deny a covered service.

Medicare Advantage Plan insurance companies make the determination of what’s medically necessary and require prior authorizations before outpatient surgeries, MRI’s and CT scans, home health care, and a couple other services can be provided or completed. Although not a common practice, claims can be denied, and insurance companies can decide that additional days in the hospital or Skilled Nursing Facility (SNF) aren’t appropriate and refuse to pay. There can also be instances where prior to a surgery, MRI, or CT scan being approved, injection or physical therapy may be required causing additional delays in getting care.

Supplements must cover any services that Medicare approves, and Advantage Plans are required to cover the same services as Original Medicare and as good or better than Parts A and B.

Medicare Advantage Plans provide ancillary benefits that can be very generous and valuable. These “extras,” as they’re referred to are the number one reason the number of people on Advantage Plans now outnumber those on Supplements. Regulations restrict me from naming what ancillary benefits are provided, but they’re goods and services almost everyone uses regularly. Neither Original Medicare nor Supplements offer them.

Yet another difference is access to medical providers. Those on Supplements can go to every full-service hospital in the country and virtually every doctor. Again, Advantage Plans are HMOs or PPOs and use networks. With an HMO, the insurance company will not pay for services at an out of network provider except in an emergency. You can go out of network with a PPO if the provider agrees to accept the insurance. However, costs for the same services outside of the network can be much higher.

In the coming weeks, I will get more in depth regarding the differences as well as the pros and cons of Supplement versus Advantage Plans.

If you have questions about this column or any other Medicare topic or would like to set up an appointment for a no-cost consultation, please give us a call or email me personally, aaron@getyourbestplan.com.

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