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Holmes Harbor Blog

  • John Potter

Medicare 101: The Basics of Medicare Coverage Explained




The Medicare industry often inadvertently overwhelms people who are nearing 65 with a plethora of information that can lead to confusion. One of the most helpful steps you can take around 6 months prior to turning 65 is to give us a call to discuss your exact situation and review the specific steps that you need to take as you age into Medicare! We will begin the process by guiding you through signing up for Original Medicare which we’ll start three months before your 65th birthday so that we can go over the options available to you for coverage to begin in your birth month. 

 

Medicare is broken down into Original Medicare which is made up of Part A and Part B, and Medicare Advantage or Medicare Supplements with Prescription Drug Coverage. When you call we’ll go over what options make the most sense for you but here’s an overview of what each of these are. 

 

Original Medicare generally pays 80% of the approved costs of covered services, and you pay the other 20%. The Medicare website stays up-to-date on what covered services (https://www.medicare.gov/coverage) are. Some services, like flu shots, may cost you nothing. Original Medicare is broken into two parts, Part A and Part B.

 

Part A: Hospital Coverage 

When a person has worked and paid taxes for 40 quarters during their life, they may be entitled to premium-free Medicare Part A. This covers hospital care, skilled nursing facilities, lab tests, surgery, home health care.

Part B: Medical Coverage 

Most people pay a monthly premium for Medicare Part B. The standard premium is $174.70 for 2024. Based on your income, you may pay more or less than this amount, we can help you navigate that at your appointment. There is an annual Part B deductible of $240 for 2024 that applies to certain covered services.

Since 20% of Medicare-approved charges are out-of-pocket costs with no maximum limit, people opt to enroll in supplemental insurance. There are two options:

Medicare Advantage with prescription drug coverage

Medicare Advantage plans are offered as HMO (Health Maintenance Organization), POS (Point of Service), or PPO (Preferred Provider Organization). These include a network of providers that, typically, you must use for care. PPO plans are the exception, as they offer out-of-network coverage at a higher cost. Medicare Advantage plans include monthly premiums, deductibles, co-pays, and a yearly maximum out-of-pocket cost. Most plans have prescription drug coverage embedded, which means you cannot enroll in a separate Prescription Drug Plan. Costs and coverage vary by carrier; therefore, we look at your medications, providers, and facilities to help determine which plan will work best.

Original Medicare (or Medicare Supplement policy) does not cover regular eye, dental, or hearing exams. It does cover diseases of the mouth and the eyes. Some Medicare Advantage plans include eye, dental, and hearing coverage.

  

Medicare Supplement (Medigap) with a separate Prescription Drug Plan

 

Medicare Supplement policies cover the remaining 20% of Medicare-approved charges once the Part B deductible is met. This includes your part of coinsurance and co-payments. Medicare Supplement policies are accepted by any doctor in the U.S. who bills Original Medicare. Monthly premium amounts vary by plan and carrier. The most comprehensive policy is Plan G. Prescription drug coverage is not included in Medicare Supplement policies; this coverage is sold separately. Prescription Drug Plans (Part D) are used to help cover the cost of prescription medications. There are five tier levels that every covered medication will fall under. Some medications are not covered by any plan. Since coverage varies by carrier and pharmacy (standard vs preferred), we look at your specific medications to help determine which plan will work best. Part D plans may undergo changes throughout the year; therefore, many people choose to review their plan every year during the Annual Enrollment Period (AEP).


Once you've got the basics down of what's available to you in Medicare coverage, it's time to figure out how to get started. Click here to learn about the complete 10 step process of starting your medicare coverage.

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