Insurance is insurance… At least, that’s what I thought before I was unexpectedly thrust into the world of Medicare when my mother-in-law suddenly and unexpectedly fell ill and was hospitalized. I was in my mid 40’s, and it had never occurred to me that I needed to understand how Medicare worked. But, as the family caregiver of aging parents, I learned the hard way just how critical it is to understand Medicare long before you will be eligible yourself.
My Medicare education started with a necessity-led, crash course in how Medicare works followed by several additional months navigating the complexities of the program and making some costly mistakes. Below are 7 key facts about Medicare that I wish I had known in advance.
Fact 1: Medicare is Complicated!
Medicare is a veritable alphabet soup of options. All individuals age 65 and older have the choice to receive their Medicare benefits straight from the government (Original Medicare) OR through private insurance plans (Medicare Advantage) so an understanding of the basics is critical.
The Basics
Original Medicare: The Government Offering
Part A: Hospital Insurance
Covers inpatient care in hospitals, limited post-hospital stays in a skilled nursing facility (SNF), and home health / hospice care if they are medically necessary.
Part A Cost: There is no cost for Part A as long as you (or your spouse) paid into Social Security for at least 10 years, but deductibles do apply:
Part A Deductibles for 2019:
- $1,364 deductible for days 1-60 of each benefit period
- $341 per day copay for days 61-90 of hospitalization
- $682 per day copay for days 91-150 of hospitalization (60 total available lifetime reserve days). No Medicare coverage after 90 days of hospitalization in any single benefit period once you have used all lifetime reserve days.
- $170.50 per day copay for days 21-100 of a stay at a skilled nursing facility. No Medicare coverage after 100 days of SNF care in any single benefit period.
Part B: Medical Insurance
Covers services provided by doctors in their offices and in hospitals, services from other health care providers, outpatient care and home health care, and durable medical equipment like wheelchairs and walkers.
Part B Premiums in 2019: Monthly premium which starts at $135.50 and increases on a sliding scale based on income for people with incomes greater than $85,000 per year. The premium is usually taken out of insured’s Social Security check but may be set up as a direct pay from a bank account.
Part B Deductibles for 2019:
- $185 deductible
- 20% of the Medicare-approved amount for covered service
- No annual out of pocket maximum
Part B Additional Costs:
Individuals are also responsible for paying the difference between the Medicare-approved rate for any service and the amount the doctor charged up to 15% over the Medicare approved rate.
Part D: Rx Drug Coverage
Benefits and premiums vary by plan provider.
Each drug plan has a host of drugs that it covers as well as rules and costs. Some plans have a yearly deductible after which:
- Medicare pays 75% of costs up to $3,820
- You pay the majority of costs between $3,820 and $5,100 (the donut hole)
- Medicare pays the majority of costs over $5,100
Medigap: Supplement Plan
(Optional)
Medigap supplemental plans cover gaps in Original Medicare coverage to cover costs such as co-pays, coinsurance and deductibles. There are no networks, so you have the freedom to choose your providers as long as they accept Medicare. There are a range of plans and benefits to choose from, but all Medigap plans are standardized by the government and are identified by the letters A through N.
Medicare Advantage Plans: Alternative Private Insurance
Part C: Medicare Advantage
Offered by a private insurance company combining Medicare Part A, Part B and Part D (most of the time).
Medicare Part C combines Medicare Part A and Part B coverage so you get all hospital and medical benefits from one source. Most plans also include Medicare Part D prescription coverage as part of their plan.
Plans are usually designed as either Health Maintenance Organization (HMO) plans or Preferred Provider Organization (PPO) plans with coverage areas and provider networks that can vary widely. These private plans may offer extended benefits including coverage for extra days in the hospital, dental, vision, hearing, and other wellness benefits. To enroll in a Medicare Advantage plan, you must enroll in Parts A and B and pay your part B premium. You will then likely also pay an additional monthly premium for the Medicare Advantage plan.
The Complications
So… if you aren’t already confused enough, a few more important facts for your consideration:
Fact 2: There are standard exclusions.
Original Medicare A & B does not cover most prescriptions drugs, hearing aids, routine vision care, routine dental care, extended long-term care, or medical care outside of the United States.
Fact 3: Medicare operates using a defined benefit period
Medicare operates using a defined benefit period rather than a standard commercial insurance plan year. A benefit period begins the day you’re admitted to a hospital or skilled nursing facility. The benefit period ends when you haven’t received any hospital or skilled nursing facility care for 60 days in a row. Deductibles must be met for each benefit period, and there can be multiple benefit periods in a single year.
Fact 4: Medicare doesn't cover long-term skilled nursing facility care.
Medicare only covers the cost of care in a skilled nursing facility after a qualifying hospital stay and for a limited period of time. A qualifying hospital stay is an inpatient hospital stay of 3 days as an inpatient (outpatient days, observation days, and the day they leave the hospital are not counted). The patient must enter the SNF within 30 days of being discharged from the hospital and must need services related to the medical condition they were treated for during their qualifying hospital stay (or a related condition). Coverage will be limited to a maximum of 100 days in any benefit period. Medicare does not cover long-term care in a skilled nursing facility.
Fact 5: You should sign up for Part D when you are first eligible.
You should obtain a Prescription Drug Coverage plan (Medicare Part D) when you are first eligible, even if you don’t use any prescription drugs at that time. If you don’t choose a plan when you are eligible (and don’t have other drug coverage through alternative private insurance), there will be a penalty for every month you could have enrolled which could make adding prescription drug coverage later cost prohibitive.
Fact 6: You should check your prescription drug coverage annually.
You should check annually to ensure that your prescription drug coverage is optimized. Changes in your drug coverage plan or changes in your prescriptions could mean that there is a Part D plan available that would be less expensive for you. If you are willing to change prescription plans, the savings can be as much as several thousand dollars per year.
Fact 7: There are resources available to help you navigate the maze!
A wealth of information is available to research options and programs at www.medicare.gov. You should also establish a relationship with a qualified Medicare consultant in your area who can advise you and provide you with an annual Medicare check-up to ensure that your coverage is optimized. And, don’t be afraid to ask for help from social workers and care managers that are involved in the care of your loved one.
Much of my knowledge about Medicare came from mistakes we made taking care of our aging parents. And, unfortunately, this experiential learning came at a cost of many thousands of dollars for our family. From one family caregiver to another, this is an area where a little bit of knowledge can go a LONG way.
I hope this information will help you on your caregiving journey and save you the frustration and cost of repeating some of our mistakes.
Darra Wray is a Care Consultant and Certified Senior Advisor with My Care Companions in Boise, Idaho, a company she founded to help family caregivers streamline and simplify the administrative side of care. You can learn more about My Care Companions and their My Data Diary family information organization tool at www.mycarecompanions.com.
