Once Step #1 is completed, it is time to move to Step #2. You may ask “Why do we even have Step #2? Doesn’t Original Medicare cover everything”? The answer is, that it DOES NOT, and leaving the gaps uncovered can be costly and impose potential future lifetime penalties. As you already know Original Medicare has two parts, A and B, and each of them covers different areas of your healthcare. Here are a few things you should know about Original Medicare:
Part A is your hospital coverage
Part A covers hospitalization and hospice charges, but it has a $1600 deductible per a 60-day benefit period, and it usually does not cover doctors’ charges in the hospital. Part A usually has no monthly premium.
Part B is your medical coverage
Part B covers 80% of doctors’ charges during hospitalization, e.g., surgeon’s or anesthesiologist’s fees, and most outpatient services such as annual doctor visits, and diagnostic or preventative tests. Part B has a $226 annual deductible and since it covers only 80% of the costs, patients are responsible for the remaining 20%. Part B has an income-based premium, which in 2023 costs most Medicare beneficiaries $164.90 per month.
It is helpful to know that Original Medicare DOES NOT cover:
1. Part A’s (Hospital) Deductible – $1600/60 days
2. Part B’s (Medical) Deductible – $226/year
3. Part B’s 20% coinsurance is unlimited
4. Prescription medications
5. Dental services
6. Vision services
7. Hearing services
As you can see, Original Medicare does not cover everything. If you get sick or hospitalized, or even if you need to run some outpatient tests you could be responsible for large portions of the bills. It also does not cover your prescription medications and other ancillary services such as dental or vision.
To protect yourself from potentially high costs and to obtain coverage for your medications and other services you will need to reach out to the Private Insurance Sector, which is Step #2. This is where you will decide on your insurance coverage above and beyond Original Medicare. And this is where our agents’ experience and knowledge can truly help.
Unlike Step #1, which has no variations, Step #2 usually offers a wide variety of options, networks, plans, benefits, and additional services. Choosing what is best for you can be difficult, and if not done properly, can cost a lot of money causing unnecessary gaps in your health coverage.
How does it work?
There are two very distinctive ways (OPTIONS) you can choose to cover Original Medicare’s gaps. Each of these OPTIONS has its own unique costs, advantages, and potential drawbacks. The below picture outlines your options.
OPTION 1: to your Original Medicare you can add additional plans, which are: Medicare Supplement (Medigap)\ and/or standalone Prescription Drug Plan (Part D)
OPTION 2: you can enroll in a Medicare Advantage Plan, also known as Part C with or without embedded Prescription Drug Plan – Part D and often additional benefits such as vision, dental or hearing services.
In OPTION 1, Original Medicare, Part A, and B pay for your health-care bills as primary insurance, while the Medicare Supplement plan becomes a secondary payer, covering cost-sharing expenses mandated by Medicare. Neither Part A, Part B nor a Medicare Supplement covers your medications, therefore you need to get a separate Prescription Drug Plan, known as Part D.
OPTION 2 simplifies your health insurance coverage as it combines different parts of your healthcare into one simple plan. When you enroll in a Medicare Advantage plan, it becomes your primary payer. You are still in the Medicare program, but you will get your benefits through your Medicare Advantage plan, run by a private insurance company, which has a contract with the federal government through an agency known as CMS (Centers for Medicare & Medicaid Services.)
Choosing plans among both options can be confusing and lengthy. To give you a glimpse of the complexity, imagine that in Step #2, in most states Medicare recipients can choose between 10 different Medicare Supplements plans, 20 Prescription Drug plans, and in major metropolitan areas between more than 50 Medicare Advantage plans offered by multiple insurance companies.
Choosing the right plan is the most demanding and challenging process. However, with our agents’ free-of-charge assistance, it becomes easy.