Medicare Deductibles and How to Avoid Them

Deductibles are essentially flat dollar amounts you must pay before your Medicare benefits kick in.  All told, in 2017 the total Medicare deductibles add up to potentially $3,187 in costs just for this year!  Plus, keeping up with them is no small task as they change (almost) every year.

To keep things simple, just remember this: A Medicare deductible is the amount of money you are required to spend out of your own pocket (first!) every year before your Medicare Plan starts paying for things. That’s really all there is to it.  If you have Original Medicare Part A, Original Medicare Part B and Medicare Part D, you’ll be “satisfying” deductibles before any of your claims or prescription drugs are paid for.  There are of course ways to not have to pay those deductibles, and we’ll quickly review those options below.

Some background: The Centers for Medicare and Medicaid Services (CMS) usually publish their deducible amounts for the following year in November for Medicare Part A and Medicare Part B.  They usually get around to publishing Medicare Part D deductibles in October of the prior year.  Like I said, they change every year.  Here’s what they are for 2017.

Medicare Part A Deductible:

$1,316

Medicare Part B Deductible:

$183

Medicare Part D Deductible:

$400

As I mentioned above, in 2017 this means if you have Original Medicare and a basic PDP plan, you’re going to potentially have to come up with $3,187 out of your wallet (or purse) before anything gets paid.  That’s quite a bit of money exposure I’m sure you’d much rather keep under the mattress or spend it on a vacation to the beach.  (If you do, go to the beach, make sure to see if your Medicare benefits will travel with you by clicking here).

While somewhere in the neighborhood of 20% of folks on Medicare don’t have either an MAPD or a Medicare Supplement, I’m a big fan of having some sort of supplemental or additional policy on top of having Original Medicare A and B.  I’m definitely not a big fan of going “bare with Medicare” as I outlined in a previous post, essentially because Original Medicare A and Medicare B do not protect or limit your financial exposure should a catastrophic health even happen to you.  You really need a MOOP!  If you’d like to read more about this, go ahead and click here.

The Takeaway:

If you’re shopping for Medicare Advantage plans (MAPD) the best place to do it (objectively of course) and really the ONLY place to do so to see all of your options at once is on the Medicare.gov site.  You can get there by clicking here.

If you don’t want to buy a Medicare Supplement or MAPD plan from a private insurance carrier and choose to keep Original Medicare for your medical coverage, you’ll still need to buy a PDP plan.  You can save yourself the pain of having to pay a $400 deductible for your prescription drugs by simply choosing a PDP plan that doesn’t have a deductible. Most “basic” plans (cheapest) have the deductible, but there are usually a few every year that are reasonably priced ($25-$35 per month range) that have no deducible.  You can search for those plans by clicking here, right on the Medicare.gov website.

Medicare Sales Scope of Appointment

Medicare’s Annual Election Period (AEP) is just days away. This is a very busy time for insurance sales agents, who are filling their calendars with sales appointments. But before they can sell you a plan, they must secure Scope of Appointment documents from YOU, the consumer.

If you call an insurance company or an insurance agency and request to meet with an agent, they’ll typically offer an appointment in your home, or at a library or coffee shop. But before you meet with a sales agent to discuss your plan options, every one of them will require you to fill out a Scope of Appointment.

The Scope of the Appointment outlines what you specifically want to discuss at the appointment whether it is a Part D plan, a Medicare Advantage Plan, or a Medigap plan. The agent is not allowed to talk to you about products that are not included in the scope of the appointment.
When the agent presents you the Scope of Appointment, typically they’ll want you to agree to discuss ALL plan options, which is usually a good idea. That’s because if you think you’re in the market for an MAPD plan, but it turns out you want a Medicare Supplement (Medigap), there’s a problem.  If you didn’t fill out the Scope of Appointment form to ‘OK’ talking about a Medigap plan, then the agent cannot talk to you about it.

Scope of Appointment Not Always Required

The Scope of Appointment form is not required during sales and marketing seminars. So, if you get invited to and attend a seminar to listen to Medicare options, and decide to buy a product at the end of the seminar, you won’t need one.

Scope of Appointment forms often differ from one health insurance plan to another. The form usually indicates the sales agent does not work for the federal government and may benefit from the sale of the health product (will receive a commission).
The forms also bear the notice that signing the appointment form is not a binding agreement to enroll in any plan. The form does not affect your current or future enrollment status in any Medicare plan.

By law, it is not possible for any insurance sales agent to proceed with an in-person appointment unless the beneficiary or the person seeking information on their behalf has signed and submitted the form to the agent.
During the in-person appointment, the following are the actions that the sales agent is legally allowed to make:
1) They can discuss various plan options with you
2) They can distribute plan materials, including the enrollment kit for the insurance product
3) They can distribute or collect enrollment forms
4) They can advise on how to get plan information, for example through mail, a website or customer service
5) They can also provide educational content

However, the sales agent cannot market non-healthcare related products until at least 48 hours after the original appointment.

The Takeaway:

The Medicare Scope of Appointment is a form you must fill out before an insurance agent can discuss plan options with you.  It’s best to fill it out completely, marking all of the Medicare plan options you may wish to discuss.

Medicare Advantage Star Ratings and Your Wallet

Assigning Medicare Star ratings to Medicare Advantage plans is attempt by the government to neatly rate the quality of a Medicare Advantage (MAPD) plan.   Like most attempts to aggregate lots of information into a small rating system for easy public consumption, it’s flawed. Plan Star ratings should be one aspect of your Medicare insurance coverage decision.  However, it shouldn’t overshadow other considerations like price, network, MOOP or your prescription drug coverage.  Star ratings are important to you, because ultimately if your plan is rated 3 stars or below, it generally means you’ll pay more money for your policy or your benefits won’t be as rich as plans with 4 Stars or higher.    

The Centers for Medicare and Medicaid (CMS)  established a five star rating system in order to help consumers identify and educate the consumer as to the overall quality of their Medicare Advantage (MAPD) Prescription Drug Plan (PDP) plans.  

The star rating system is numbered from 1 to 5, with 5 being the best and 1 being lowest in terms of quality of service:

5 Stars- Excellent

4 Stars- Above Average

3 Stars- Average

2 Stars- Below Average

1 Star- Poor

Medicare Advantage Star Ratings

Medicare Advantage (MAPD) health plans are rated based on the following categories:

1) Staying healthy: screenings, tests and vaccines. CMS evaluates whether members of a particular health plan got various screening tests and vaccines and whether they got other check-ups that would go a long way in keeping them healthy.

2) The management of chronic conditions: individual health plans are graded on their ability to ensure that members with long term conditions got tests and treatments that helped in managing their chronic conditions.

3) The experience of beneficiaries with the plan: the CMS routinely surveys members to elicit their experiences with different health plans, and this is factored into the STAR rating that each health plan will get.

4) Members’ complaints: beneficiaries under a certain plan can lodge complaints if they encounter problems when using their plan. Medicare also routinely evaluates the health plan of the private insurance company to plot the plan’s performance and improvement over time.

5) Customer service: this includes how often members with appeals and other problems are handled by the health plan’s customer service.

Medicare Stars Rating Flawed?

I mentioned above the ratings system is flawed. I say that, because every year, CMS changes the rules and how they score health plans.  Think about it:  There are over 54 million people on Medicare.  Can you really break down plan ratings across the country in only one way?  Can you really break down these ratings into a neat 5 star sliding scale?  The obvious answer is no, and policy professionals and insurance companies quietly (and sometimes not so quietly) let CMS know about it.  Differences in geography, access to hospitals and doctors, income and even attitudes about what it means to be healthy mean the results are suspect and imperfect.

I won’t spend any more time here on the flaws, as plenty of people smarter than me have already done so.  If you’re a policy wonk and would like to check those out, you can click here, here, or here.


Medicare Advantage Star Ratings Affect Your Wallet

Here’s what it means for you, the consumer.  In a nutshell, when you join a Medicare Advantage plan the federal government (CMS)  pays insurance companies a set dollar amount for your care every month.  Plans rated 4 Stars or higher get more money from the government for everyone enrolled in the plan.  This money really adds up, quickly.  Let’s say there are 10,000 people enrolled in the same MAPD plan.  And let’s say, for the sake of argument, that insurance company gets $1,000 per month, on average, from the government for every person’s medical and prescription drug care.  That’s $10 Million dollars per month, or $120 Million dollars per year.  Yes, that’s a big number, but remember the Medicare Advantage plan is on the hook for all the medical and prescription drug care (from the healthy to the very ill) of those 10,000 members.

So, let’s say the plan achieves a Star Rating of 4 Stars.  The insurance company will earn an additional 5% on top of the $1000 they get for all 10,000 people on that same plan.  Quick math means that’s an additional $500,000 every month MORE that insurance company makes, and $6 Million dollars more a year.  Some of that can be profit for the insurance company, but the government mandates a portion of this money MUST be spent on making the Medicare Advantage plan’s benefits better.  That’s where your pocketbook comes in.

Since Medicare Advantage plans need to take a portion of that additional 5% and put it back into the actual insurance plan, they usually do so in two ways.

  1. Lower the plan’s monthly premium
  2. Make benefits richer.  (Ex. Lowering doctor’s copay from $10 to $5, lowering hospital copays, etc.)

Medicare Advantage plans get a Star rating every year.  So if you think about it, if you’re in a 3 Star plan instead of a 4 star plan over the course of 5 years, and those Star ratings remain the same all 5 years, you’re missing out.  Why?  Because remember, a portion of the money the 4 Star plan gets over those 5 years MUST be put back into lower premiums or better benefits.  After 5 years, the Medicare Advantage plan rated 4 Stars should essentially, be cheaper (both in premium or by having better benefits) than the 3 Star plan will.

The Takeaway

Do Star ratings really matter?  Sure.  They matter because they give an overall indication as to the quality and customer experience of a given Medicare Advantage plan.  Is there a significant difference between a 3 Star plan and a 4 Star plan, from the consumer’s standpoint or experience?  No.  There are flaws, to be sure and the “rules” insurance companies must abide by change every year.  The real impact to YOU, the CONSUMER is that higher-performing MAPD plans that receive 4 Stars or higher are paid more from the federal government.  Half (or more) of that additional money MUST be put back into benefits or lower insurance policy premiums, which in the long run, is better for you and you wallet.  

Medicare Supplement: What’s the Difference Between Plan C and F?

Medicare Supplement plans have been around for ages, and the most popular plans by far are Plan C and Plan F.  So, what’s the difference?  Not much. In fact, the only thing Medigap plan Plan C does not cover is Medicare Part B excess charges, which Medigap plan F does.  Is it a big deal?  Not really.

Medicare Part A covers hospital stays and Part B covers outpatient services while Part D covers prescription drugs. As you know by now, Original Medicare still leaves gaps in your healthcare coverage.  Medicare supplemental insurance (Medigap) fills in these gaps.  Some plans fill in most of the gaps, others fill in ALL of the gaps.  Medigap plans F and C fill in all of the gaps, hence their popularity.  Unlike Medicare Advantage plans, you don’t need to worry about an HMO or a PPO network when you buy a Medigap policy.   When you buy a Medigap policy, Original Medicare will pay its Medicare-approved amount first, and the Medigap policy will then pay its part. Depending on the plan, this may leave a balance for you to pay.

Medicare Supplement = Medigap

Medicare Supplement insurance policies are also known as Medigap policies. These Medigap policies are important due to the fact that they may take care of other costs Original Medicare coverage will not cover. These include costs such as: co-payments, coinsurance and deductibles. Some Medigap policies also go the extra mile and pay for care when you travel outside the country. If you travel a lot, you need to check out my post on this subject by clicking here.

There are many different Medigap plans, ranging from plan A to plan N. Two of the most popular plans are Medigap Plan C and Medigap Plan F. Both of these plans cover 100% of what Medicare doesn’t cover.  Out of all the supplement plans available, only Plan F is more comprehensive than Plan C.

You Need a Medigap or Medicare Advantage Plan

As you by now know going “Bare with Medicare” is an OK option, but not advisable under most scenarios, mostly due to the lack of a, “Maximum Out Of Pocket,” or MOOP.  Click here to see my post outlining why a Medicare Supplement needs to be a part of your health insurance coverage if you don’t want to choose a Medicare Advantage plan.

The Takeaway

The only thing that Medigap plan Plan C does not cover is Medicare Part B excess charges.  Plan F DOES cover Part B excess charges. These are the fees that a doctor is legally to charge over and above the amount approved by Medicare as payment for a health service at a physician’s office IF THEY DON’T ACCEPT MEDICARE ASSIGNMENT.  Usually, when these charges occur, it is up to the patient to pay for them out of pocket.  I wrote a blog post about Medicare excess charges and Plan F.  You can read that by clicking here.

Over 99% of doctors and hospitals across the country accept Medicare Assignment. The doctors and hospitals that don’t are usually specialty cancer centers or research institutions.  Medigap Plan F covers these excess charges.  Medigap Plan C does not.   So if Medicare Supplement plan C is substantially less expensive than Medicare Supplement plan F, I’d go ahead and choose C.  If the monthly premiums are within $10, I’d stick with Plan F.

It is also important to note that Plan F offers a high deductible plan. HD-F has a pretty substantial deductible you must pay before it kicks in.  But when it does, the same features of the regular Medigap plan F kicks in, including coverage of the Medicare excess charges.  Check out my comparison of HD-F and Medigap F by clicking here.

 

The Three Types of Medicare Websites

Over the years, I’ve spent thousands of hours online reviewing Medicare websites.  What’s available is confusing, incomplete, wrong or not quite objective enough for me.   These websites fit neatly into three distinct categories.

1.  Insurance company websites

Insurance company websites can certainly be helpful, but looking for Medicare information at an insurance company website is much like doing new car research:  The Ford website will tell you everything you need to know about all the Ford options they have, but don’t/won’t tell you anything about Honda… or Chevy… or BMW… you get the point.  They don’t offer the complete picture or landscape of choices, but they usually do a pretty decent job of providing you company-specific information and the ability to enroll online.  Let’s be honest: the ability to enroll online may exist, but your patience will be taxed doing so.  Every insurance company website has a different way to enroll, different forms and different pages to navigate to.  The experience can be horribly frustrating, leading many people to simply either give up or call the company.  If you’re 100% sure you want to buy a policy from a particular policy, then enrolling online is the way to go.  If you want to compare different plans from different companies, you’ll have to visit multiple sites and each of them have their own web navigation positives and negatives.

2.  Lead-generation websites

Lead-generation websites are usually insurance agents or agencies that set up a site (or a dozen) to generate leads for themselves or their employees.  Often, these sites urge you to share your personal information, and then sell that information to a local agent or agency in your ear.  From what I’ve seen, they give you just enough information to get your interest piqued, then encourage you to contact them, send them your email address, etc.  They then either hound you to BUY BUY BUY or sell/give your information to call centers and/or insurance agents.  Their sites are full of long, complex definitions and articles chock-full of keywords the search engines love. They have to do this in order for Google, Bing or Yahoo to pay attention to them in hopes that when somebody searches for, “Medicare” their site ends up on the first page of the search results.  In all cases, unless you want to be contacted by someone trying to sell you something, stay away from these.

3.  Medicare’s Website

Medicare.gov is the Centers for Medicare and Medicaid (CMS) homepage.  Those are the folks who run (you guessed it!) Medicare and Medicaid.  If you’re ready to enroll in Medicare or you’re all set to enroll in a particular product, this is a good place to go but it’s not perfect by any stretch of the imagination.  However, there is a ton of content, and you could easily spend thousands of hours on their site reading through various items.  Information overload is easy to experience on this site, especially if you’re brand-new to Medicare.

The Takeaway

Learn to love medicare.gov.  The site does a decent job of helping you search for Medicare Advantage and PDP (Part D) plans, but is woefully lacking on helping you choose Medicare Supplemental plans.  Medicare.gov allows you to enter in your prescription drugs and pharmacy of choice.  Unfortunately, it doesn’t do a great job of letting you know your doctor or hospital of choice is in the plan’s network.  This is mostly due to the fact that Medicare PPO and HMO networks are in a state of constant flux; doctors and hospitals get added and removed on a monthly basis.   My advice is to use this site to enter in your prescriptions and pharmacy, and see what spits out.  Once you’ve narrowed down your top 3 choices, call those insurance companies and ask them if your doctors are in their plan.  They’ll try to sell you a policy over the phone.  Go ahead and buy it, if you’re ready, or do so online.

-OR-

Use a good independent Medicare insurance agent.  Note I said, “good” Medicare insurance agent, because they’re not all good and finding the good ones can be a chore.  Good agents will be able to narrow down the choices based on your financial goals, coverage needs, doctor usage and health status.  I’ve got a series of posts queued up on Medicare insurance agents, so check back soon!

Why Choose a Medicare Advantage Plan?

Medicare Advantage plans (MAPD) have exploded in popularity since re-introduced around a decade ago.  Is it the best plan for you? What makes these plans so popular?

It’s no secret prescription drug costs are rising much faster than inflation, and overall health spending is up.  Every year, it seems the government raises the Medicare Part B premium, Medicare Supplement (Medigap) and Medicare Part D (PDP) plans cost more, too.  Although I assume by now you already know what a Medicare Advantage plan is (click here if you don’t for a primer) there are very distinct reasons why according to Kaiser Family Foundation 31% of all seniors are now enrolled in a Medicare Advantage plan.

Medicare Advantage plans come in 3 flavors.

  1.  PPO – “Preferred Provider Organization” – you can use doctors and hospitals in and out of the plan’s network.
  2. HMO – “Health Maintenance Organization” – you cannot use doctors out of the plan’s network
  3. HMO-POS – “Health Maintenance Organization – Point of Service” – while rare, these plans let you go out of the plan’s network, often requiring a referral from a doctor who is in the network.

So, why choose a Medicare Advantage Plan?

Combined Medical and Drug Coverage

Remember the acronym in the first sentence?  Medicare Advantage is the same thing as an “MAPD.”  That stands for Medicare Advantage Prescription Drug.  By far the biggest reason people enroll in these plans is because they get their medical coverage and their prescription drug coverage all in one plan, with one company.  It doesn’t matter if you’re at the pharmacy, in your doctors office or at the hospital; one card in your wallet is all you need.

Premiums Are Inexpensive (or $0!)

The number of plans available to you varies depending on where you live.  Cities get more choices, rural areas only a few.  Generally, the availability of these plans increase where there are more people in a geographic area who have Medicare.  For most of you, there are usually multiple insurance companies in your area offering $0 premium MAPD HMO plans.  They can afford to not charge you a premium, because they’re getting reimbursed from the government for your care and prescription drugs.  You can usually find HMO plans with better benefits for an additional premium ranging between $19-$40 per month.  PPO plans are available too, although typically there are fewer options and they’re more expensive at $30-$150 per month, depending on the plan.

Limit Out-of-Pocket Costs

Original Medicare Part A and Part B have significant drawbacks to them, and never cap the amount of money you can potentially spend should you get really sick.  Click here for a post I wrote a while back on this subject.  MAPD plans have a feature called the MOOP.  MOOP stands for Maximum Out OPocket.  Medicare mandates MAPD plans pay 100% of your medical care after a maximum of $6,700 out of your pocket in a calendar year.  Many plans have a lower MOOP and this is a KEY factor you should be shopping for, by the way.  The lower the MOOP, the better for you.

Low Co-pays for Doctor Visits and Prescriptions

Medicare Advantage insurance companies want you to see your primary care physician, and as soon as possible.  While that might not make much sense on the surface, it does if you have a medical condition.  If you have a medical condition and the doctor notes it in his or her chart, the insurance company can file for additional reimbursement from the government for your care.  Good for them.  All this really means to you is your doctor copays on a Medicare Advantage are low (usually $5-20 per visit, sometimes $0!).  Insurance companies also want to make sure you’re taking your prescriptions.  That’s right!  If you don’t, they get dinged in the wallet by the government in a variety of ways.  That’s why prescription drug copays are generally less expensive on MAPD plans than they are on Medicare Part D (PDP) plans.

Extra Benefits Not Offered by Medicare

The government allows Medicare Advantage plans to offer some bells and whistles to their plans to sweeten the deal for potential buyers.  Many, but not all plans offer built-in dental coverage, vision insurance, hearing aid coverage and even an over-the-counter purchasing allowance.  You get none of those items I just mentioned on Original Medicare, Part D or a Medicare Supplement plan.  If you were actually able to find a dental plan to purchase outside of an MAPD plan, I’d a) be amazed and B) tell you not to buy it because it’s not worth the money.  More on that in another post.

There you have it.  Four pretty good reasons to elect a MAPD plan for your Medicare coverage… low (or no) premiums, a limit on your yearly financial exposure, low co-pays for doctors and prescriptions and some dental, vision and other “freebies” thrown in for good measure.

Medicare Supplement Plan F and the Medicare Excess Charge

Medicare Supplement Plan F, also known as Medigap Plan F, is and has been by far the most popular plan purchased by seniors looking for the most complete Medicare coverage. It’s also the most expensive, with premiums ranging from $150-$250 per person, per month. I say most complete, because Plan F pays the rest of the charges Original Medicare doesn’t charge plus an additional amount called, “excess charges.” What are excess charges? The vast majority of doctors and hospitals across the country accept what’s called, “Medicare Assignment.”

What is Medicare Assignment?

In plain English, that means Medicare says they’ll pay them a certain amount for a procedure or a doctor’s visit, and those doctors and hospitals essentially say, “OK.” These folks are considered to be “participating” in Medicare. In return, they’re not allowed to bill the person receiving medical care any additional amounts. If the doctor, hospital or facility does NOT accept Medicare Assignment (non-participating) they can still bill Medicare, get paid and then bill YOU an additional 15% above and beyond what Medicare paid them. This is called the Medicare Excess Charge. Of course, doctors and hospitals that opt out of Medicare altogether can bill you whatever they want.

Before you get all worried about these charges, it’s important to put them in perspective. Over 99% of doctors and hospitals across the country accept Medicare Assignment. The doctors and hospitals that don’t are usually specialty cancer centers or research institutions.

The Takeaway

Medicare Supplement Plan F is the only Medicare supplement product that covers that additional 15% should you need it. Odds are you won’t, but if you like that security blanket (and it seems many do, based on the popularity) then Medicare Supplement Plan F is for you.

Of course, and this is true with all Medicare Supplement buyers, most folks buy these because they want the freedom to choose any doctor or hospital they want, don’t want the hassle of a network (PPO or HMO) and they can afford the monthly premium.

One last note: Medicare Supplement Plan C (second most popular plan) is essentially Plan F, without the excess charge coverage. If there’s a meaningful difference in premium between the two in your state and your doctors and hospitals take Medicare assignment, it may make sense to go that route.

Should I Stick With Original Medicare?

Choosing a Medicare plan isn’t a once-in-a-lifetime experience, it’s something you really need to be doing every year.  Just as your financial situation, health and even living arrangements change, so do the benefits and premiums of Medicare insurance policies.  Hopefully, this post will give you some things to think about if you’re considering staying on original Medicare for your hospital and doctor coverage.  This is known as, “Going Bare with Medicare.”  Future posts will provide an overview of hospital and doctor coverage when considering Medicare Supplement and Medicare Advantage plans, and when they’re up I’ll link them in blue.

Protect Your Savings!

At its core, any insurance product should really serve one primary purpose:  Provide you financial protection against exposure to high-dollar claims. Think about your car insurance… no one in their right mind has a $250 or even a $500 deductible anymore… and if you do, you’re paying entirely too much for car insurance!  The days of first dollar insurance coverage, especially in the health insurance field are long, long gone.  Just look at the Affordable Care Act (ACA) plans that were rolled out a few years back.  The average (annual!) deductible for an individual in 2016 is now over $5,700 and more than $11,000 for a family!   I wouldn’t be alone in arguing that those deductible levels are borderline insane, but the point remains; first dollar coverage is over!

Anyway, back to the point of the article.  Staying, “Bare with Medicare” isn’t a bad way to go… and about 20% of the population who have Medicare don’t have any additional coverage.  It’s true Original Medicare (parts A and B) works for a lot of people, but it also has plenty of gaps… gaps that could expose you to high-dollar claims, however unlikely.  Let’s review a few of them.

You Need a MOOP

First of all, Original Medicare has deductibles and coinsurance, and no MOOP.  By far my favorite acronym, the MOOP stands for “Maximum Out Of Pocket.”  That’s a fancy way of saying under Original Medicare, you have no annual or lifetime cap on how much you’ll pay for healthcare.  Once you meet your Part A and Part B deducible (every year, BTW), then you’ll pay coinsurance (a percentage of all additional charges) up to…. well, forever.  There’s no MOOP!  On the other hand, all Medicare Advantage plans must have a MOOP, and none have one higher than $6,700 annually in 2016 (More on those plans in Choosing a Medicare Plan Part 3).

Let’s say you’re hospitalized and have Original Medicare A and B only.  In 2016, you’ll first pay a deductible of $1,288.  As long as you’re not in the hospital for more than 60 days, you’re all set.  However beginning day 61 through day 90 you’ll pay an additional $304 per day.  If you do the quick math, a 90 day hospital stay will cost you a minimum of your $1,288 deductible, plus 30 days X $304 ($9,120) = $10,408!!!

That’s huge.  How likely is it you’re in the hospital for 90 days?  Highly unlikely.  More likely is a) you’ll be dead or b) you’ll be moved out to a nursing home or a Skilled Nursing Facility (SNF).  Not trying to be morbid, just realistic.

If we assume you end up in a Skilled Nursing Facility, then Medicare will cover your stay at 100% for days 1-20.  Days 21-100 will cost you $152 per day in 2016.  The price tag for a (SNF) stay that lasts exactly 100 days is $12,008!   Anything longer for 100 days, and you’ll be picking up 20% of the entire tab for every day you’re in the facility.   Once again, there’s no MOOP!

Worst-case scenario: If you’re in the hospital for exactly 90 days, then get moved into a Skilled Nursing Facility, stay there for 100 days, you’ll have a bill totaling $22,416!

Going back to our original premise, first and foremost insurance should provide you financial protection.  How much financial protection is up to your personal risk tolerance, health status and thickness of your wallet. I think it’s safe to say most people shouldn’t be purchasing super-rich insurance products that offer first dollar coverage.  That is of course unless you simply like the peace of mind giving all of your money to insurance companies for first dollar coverage instead of keeping it in your own wallet!

Not Covered Under Original Medicare A and B:

  1. Routine eye exams & glasses (except after cataract surgery, but who wants that?)
  2. Dental insurance & dentures
  3. Outpatient prescription drugs prescribed by your doctor (Part D covers this)
  4. Gym memberships or fitness classes
  5. Weight management programs
  6. Routing hearing tests
  7. Custodial care (help with bathing, dressing, using the bathroom & eating) at home or in a nursing home
  8. Long-term care (fancy phrase for nursing homes and in-home assisted living)
  9. Acupuncture
  10. Cosmetic Surgery
  11. Most chiropractic services
  12. Most care while traveling outside the United States

The Takeaway

Going “Bare with Medicare” isn’t for everyone, but it’s a fine solution that has worked literally for hundreds of thousands of Medicare beneficiaries since 1966!  Odds are that you’ll never come close to being in the hospital for more than 60 days in any one stay, and it’s highly unlikely you’ll be in a Skilled Nursing Facility for more than 20 days.   I’ve highlighted a few worse-case scenarios, but the real problem is the fact Original Medicare has, you guessed it, no MOOP!  And that’s precisely the reason you’re probably better off served by purchasing some type of supplemental policy or Medicare Advantage plan that offers an annual MOOP limit.

Readers, what’s been your experience going “Bare with Medicare?”