Medicare Reset: Part 1
Question:
Question: Can you please explain how Original Medicare Parts A and B work by themselves and what is covered?
Answer:
Answer: It’s hard to believe it’s already August, which means the Medicare Annual Enrollment Period (AEP) is around the corner. Pre-AEP starts October 1st and this is the date the new Medicare Advantage and Part D prescription plan benefits are made available to the public. From October 15th to December 7th is the only time when any change to any Medicare plan lineup can be made and applications submitted for a January 1st effective date.
I’m anticipating significant changes to Medicare Advantage Plans and Part D prescription benefits including much higher hospital co-pays, larger drug deductibles, as well as the reduction or elimination of popular ancillary benefits like comprehensive dental coverage and OTC allowances. There’s also many who will have their Advantage Plans eliminated for 2027. In addition, because Supplements, aka Medigap policies, have had historically high premium increases the last two years, many people currently on Medigap policies are going to want to consider moving to an Advantage Plan HMO or PPO.
Therefore, I’m anticipating the 2027 AEP is going to be one of the busiest in the last 10 years with more people needing, or being forced, to change Advantage Plans or their Part D prescription coverage, or make the transition from a Medigap policy to an Advantage Plan.
In order to make a wise decision, people must be educated and understand virtually every aspect of Medicare. To assist in this, over the next 8 to 10 weeks, starting today, I’m going to run what I’m calling the “Medicare Reset Series” with the goal of properly preparing those currently on Medicare for the upcoming Medicare Enrollment Period (AEP) so they can make the best decision on what plan or plans will best fit their needs and budget in 2027.
Answer: Knowing what Original Medicare Parts A and B cost and cover is the foundation of comprehending the two choices people have, Supplements (Medigap) and Advantage Plans, to help pay for what Medicare doesn’t pick up.
In order to best explain this, I want everyone, those on Advantage Plans and Supplements, to pretend you weren’t enrolled in either and the only insurance you had was Medicare Parts A and B.
If that were the case the following explains how Medicare alone, your white card with the red and blue stripes, would cover you.
Medicare Part A is provided at no cost and covers inpatient hospitalizations and Skilled Nursing stays.
Medicare Part A pays the entire cost of any hospitalization that lasts from 1 to 60 days with the exception of $1,706, which is the patient’s responsibility. In the event there’s a hospital stay that lasts longer than 60 consecutive days, the cost to the Medicare recipient reverts to a per day fee. From days 61-90, the cost is $434 per day and if that stay extends past 90 days, the fee increases to $868 per day. Although it’s uncommon for someone to be in the hospital over 90 days, it does happen. A 150 consecutive day stay for someone who has Medicare only results in a bill of over $60,000! This potential exposure to a giant bill is why people rarely choose to go with Original Medicare only and buy a Supplement or Advantage Plan to protect themselves.
Medicare Part A also covers a stay in a Skilled Nursing Facility (SNF). A Skilled Nursing Facility is a short-term nursing home that is designed to treat and rehabilitate people who have had a bad accident, lengthy hospitalization, stroke, etc., with the goal of nursing them back to health so they can go home and be independent again. Medicare covers the first 20 days in a SNF at no cost while days 21 through 100 have a patient responsibility of $217 per day.
Medicare Part B costs $202.90 per month and is labeled “Medical” coverage. Part B covers outpatient procedures and services such as: physician office visits; testing such as X-rays, MRI’s CT scans; outpatient surgical procedures like a torn rotator cuff or cataract; durable medical equipment such as oxygen, a wheelchair, or CPAP machine and supplies; chemotherapy and radiation; ambulance services, emergency room visits, etc. Part B services are paid for at 80% by Medicare, leaving the beneficiary responsible for the other 20%.
Chemotherapy alone can be $10,000 or more per session and it’s common for people to be prescribed 10 or more sessions. In this case, the 20% Medicare doesn’t pay could add up to tens of thousands of dollars. Again, this is why people enroll in Supplements or Advantage Plans. Both protect against huge bills such as this.
Original Medicare DOES NOT COVER PRESCRIPTION MEDICATIONS! Those who ride with Medicare only are responsible for all costs of prescription drugs! Prescription drug coverage for those on Medicare is known as Part D and can be obtained from what is known as a Stand-Alone Part D plan, a separate insurance policy that covers prescription meds only. Stand Alone Part D plans are what those who choose Supplements (Medigap) purchase. Part D can also come embedded in an Advantage Plan HMO or PPO.
6 Gaps in Medicare
What I have gone over here today are what I consider the 6 gaps in Medicare. In summary, they are:
Part A Hospital costs:
- Stays lasting 1-60 days: $1,736
- Stays lasting 61-90 days: $434 per day
- Stays lasting 91-150 days: $868 per day
Part A Skilled Nursing Facility costs:
- Stays lasting 21-100 days: $217 per day
Part B Medical costs: 20% of the billable amount to Medicare covered benefits.
Prescription drug costs: Not covered by Original Medicare. Those who don’t get Part D drug coverage will incur all expenses for prescription medications.
Part 2 of the “Medicare Reset” series will discuss how Supplements and Advantage Plans work as well as their many differences, pros and cons, risk and rewards of both types of plans.
With questions or to make an appointment for a no cost consultation please give our office a call at 724-603-3403 or email me personally, Aaron@GetYourBestPlan.com.