Understanding Medicare
WHAT IS MEDICARE?
Medicare is a federal health benefits program designed to cover a variety of medical expenses for seniors age 65 or older and individuals under 65 years old with certain disabilities. This insurance is administered and regulated by the Centers for Medicare & Medicaid Services (CMS), a division of the U.S. Department of Health & Human Services (HHS). While Original Medicare coverage is provided by the federal government, other options are administered by private third-party carriers with the insurance agent being critical to the sales model.
The basics of selling Medicare begins with understanding the different parts of Medicare, what’s covered by each plan type, and how to help your clients understand the best fit for them.
Medicare is categorized into four parts: Medicare Parts A, B, C, and D. Parts A and B are federal programs provided by the government. These are also referred to as Original Medicare. Parts A and B (Original Medicare) are federal programs which are paid into during the customers’ working years.
Given Original Medicare has out-of-pocket costs, the government allows private insurers to offer plans to complement and/or replace Original Medicare. These plans offer benefits covered under Original Medicare and extra benefits not covered by Parts A or B. Private insurers offer the following:
- Part C – Medicare Advantage Plans
- Part D – Prescription Drug Coverage
- Medicare Supplement Insurance (Medigap Plans)
Medicare Plans Sold by Third Party Carriers
There are several types of Medicare plans which either replace or supplement Medicare Parts A and B (‘Original Medicare’). Understanding the basics of each type of Medicare plan and the benefits they offer recipients is the first step toward successfully being able to sell Medicare plans to your clients.
PART C – MEDICARE ADVANTAGE PLANS
Medicare Advantage Plans are approved by Medicare but are private health insurance plans administered by independent insurance carriers. Your clients must be enrolled in Medicare Part A and Part B in order to qualify for a Medicare
Advantage Plan. They will continue to pay the monthly Part B premium while they’re enrolled.
Medicare Advantage Plans cover all Medicare services (Part A and Part B), and offer additional benefits not covered by Original Medicare.
One substantial benefit of Medicare Advantage plans is out-of-pocket costs are capped as opposed to Original Medicare. Currently, Medicare Advantage plans have a mandated maximum out-of-pocket of $6,700 (although many plans are less), meaning customers won’t pay more than that amount out of pocket for medical services covered under their plan. Original Medicare doesn’t
have this cap so the Medicare Advantage plans provide the comfort of a stop loss. Additionally, many Medicare Advantage plans have copays for doctor visits, surgeries and hospital stays which mitigate the likelihood of a customer reaching the maximum out of pocket.
Plans vary by provider, but certain additional benefits beyond Original Medicare may include:
Vision Dental Hearing Gym Memberships
PART D – PRESCRIPTION DRUG COVERAGE
Original Medicare and Medicare Supplements do not include prescription coverage. Prescription drugs can be a big expense for seniors, and many are surprised Original Medicare does not cover these costs and assesses a penalty if you have a lapse in drug coverage.
Prescription Drug Coverage may be included as part of a Medicare Advantage plan, but it is also available as a stand-alone plan for those enrolled in Original Medicare, or a Medicare supplement.
Monthly premiums and out-of-pocket expenses vary by plan. Each Medicare Prescription Drug Plan also has a formulary—a list of prescription drugs covered by the plan. The formulary may change at any time and affect your client’s coverage. Ask your clients which medications they take regularly to help evaluate their options.
MEDIGAP / MEDICARE SUPPLEMENT INSURANCE
You pay into Original Medicare during your working years, with a small amount deducted from every paycheck. Once you retire, the contributions to Medicare are used to subsidize your benefits.
Unfortunately, Original Medicare doesn’t cover everything. Medicare Parts A and B will cover a portion of your hospitalization costs, doctors visits, and other necessary medical services recommended by your doctor, with the exception of prescription drugs.
Original Medicare covers about 80% of your medical bills, leaving Medicare recipients to cover the remaining 20% themselves. This can quickly add up and become a financial burden, especially if a patient requires emergency medical care, advanced treatments, or ongoing care.
A Medicare Supplement Insurance plan, or Medigap, is designed to fill in for the gaps in coverage. It’s not a replacement for Original Medicare, but rather a supplemental plan provided by an insurance carrier.
These plans cannot overlap with a Medicare Advantage plan.
Medigap plans are numerous – ranging from Plans A-N. These can be overwhelming to both agents and clients, but the good news is these plans are regulated by Medicare and provide the same coverage, no matter the carrier. The only differences between carriers for Medigap plans are plan pricing and the quality of the company itself.
The Insurance Coach provides Medicare Supplement Insurance solutions for our clients. As insurance brokers, we find the best game plan for your life.