Medicare’s annual Open Enrollment Period starts Monday, October 15. As you prepare for the barrage of information that will be hitting your physical and email mailboxes, it is worth reviewing some of the plan terminology you will be seeing.
Original Medicare consists of insurance for hospital stays (now known as Part A) and insurance for healthcare visits (now known as Part B). After you meet your deductible, Medicare will pay a portion of the bill, leaving you with a coinsurance amount. The coinsurance is usually a percentage of the total bill. Original Medicare does not include prescription drug coverage (now known as Part D).
Medicare Advantage (also known as Part C) is an alternative to Original Medicare. Medicare Advantage plans are offered by private insurance companies that have been approved by Medicare. Medicare Advantage plans work more like traditional insurance; there are plans that work as health maintenance organizations (HMOs); preferred provider organization (PPOs), which require you to use an in-network provider for the best prices and fee-for-service plans, which pay a fixed fee regardless of which provider you use.
Many Medicare Advantage plans offer dental, vision, and hearing aid coverage, which Original Medicare does not.
All Medicare Advantage plans can require you to pay a portion of your bill. Most Medicare Advantage plans include prescription drug coverage, but not all.
ADDITIONS TO ORIGINAL MEDICARE
Medigap plans (also known as Medicare supplemental plans) cover many of the charges that a beneficiary would be responsible for, such as deductibles, coinsurance, and copayments. Medigap is only available in conjunction with Original Medicare, not with Medicare Advantage.
In all states but Massachusetts, Minnesota, or Wisconsin, which have their own Medigap plans, Medigap plans offer ten different sets of benefits and costs, regardless of where you live. If you thought Medicare Parts A through D were enough to keep straight, Medigap offers another serving of alphabet soup: plans are also coded by letter, and include A through D (not to be confused with Medicare plans A through D), F, G, and K through N. You can compare Medigap plans by clicking here.
Medigap plans are subject to medical underwriting, so if you have pre-existing conditions, you might be charged a higher premium or be denied coverage altogether. If you’re currently healthy, it might be worthwhile to enroll in a Medigap plan before you develop a disqualifying condition.
Prescription Drug Coverage (also known as Part D) varies widely. Part D plans categorize medications by “formularies” and “tiers.” If you take many medications, you will need to compare Part D plans carefully to make sure you get the best bang for your buck.