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 Part B vs. Part D Prescription Drugs – Are You in the Right Medicare Plan?

If you’re in the wrong type of Medicare coverage, you may be paying a whole lot of money for prescription drugs billed under Medicare Part B, not Medicare Part D.  This is especially true if you get cancer.  How can this be?  Read on.

Medicare Part D covers Prescription Drugs, right?  Not always… Medicare Part B can play a big role.  In fact, there are many instances when Medicare Part D actually doesn’t cover all drugs you may need during the course of your healthcare.  When medical conditions get serious, many medications aren’t covered by Part D.  Instead, they’re covered by Part B.  Knowing the difference between the two could save you hundreds if not thousands of dollars when choosing your Medicare coverage.  This is especially true if you have cancer as chemotherapy drugs and all the associated medications that come into play during cancer treatment are extremely expensive.  

Medicare Part D Covers Prescriptions at Retail Pharmacy Locations or Mail Order

Generally, Part D covers prescription drugs at a retail or mail-order pharmacy.  Let’s say you get bronchitis; you make an appointment with your primary care physician, he/she sends your prescription into your local pharmacy.  When you pick it up, you pull out your PDP or your MAPD card, swipe it and pay the associated copay or coinsurance.  Simple, right?  Right.  

But what if you need a prescription drug that’s administered by a doctor? Let’s say you have macular degeneration, and you’re seeing an ophthalmologist for treatment.  Many folks with this condition get very expensive shots in the eye to slow the degeneration.  Clearly (no pun intended) you can’t do this yourself.  When this happens, the doctor actually bills the prescription under Medicare Part B, not Medicare Part D. 

Same goes for prescription drugs that are administered in an outpatient setting.  If you’re having your knee scoped or drained, and the doctor shoots localized anesthesia into your knee before the procedure, that will hit Medicare Part B, not D.    

So, generally, Part B covers drugs that usually aren’t self-administered, which is a fancy way of you’re not taking them by yourself.  The doctor, nurse practitioner, surgeon, anesthesiologist, etc. are giving them TO you.

Here’s a short list of medical conditions that, when prescription drugs are used in your treatment, are covered under Medicare Part B, and not covered under Medicare Part D.  

Cancer
  • Oral cancer drugs: Medicare helps pay for some cancer drugs you take by mouth if the same drug is available in injectable form or is a prodrug of the injectable drug. As new oral anti-cancer drugs become available, Part B may cover them.
  • Oral anti-nausea drugs: Medicare helps pay for oral anti-nausea drugs used as part of an anti-cancer chemotherapeutic regimen. The drugs must be administered immediately before, at, or within 48 hours after chemotherapy, and must be used as a full therapeutic replacement for an intravenous anti-nausea drug
Hepatitis

Hepatitis B shots: Usually a series of 3 shots covered only for people at high or medium risk for Hepatitis B.

Osteoporosis
  • Injectable osteoporosis drugs: Medicare covers an injectable drug for women with osteoporosis who meet the coverage criteria for the Medicare.
Transplants
  • Immunosuppressive drugs: Medicare covers immunosuppressive drug therapy for people who received an organ or tissue transplant for which Medicare made payment.

Other Prescriptions Covered Under Medicare Part B, not Medicare Part D

  • Some other vaccines when they’re directly related to the treatment of an injury or illness (like a tetanus shot after stepping on a nail).
  • Durable Medical Equipment (DME) supply drugs: Medicare covers drugs infused through an item of DME, like an infusion pump or a nebulizer.
  • Injectable and infused drugs: Medicare covers most injectable and infused drugs given by a licensed medical provider if the drug is considered reasonable and necessary for treatment and usually isn’t self-administered.
  • Antigens: Medicare helps pay for antigens if they’re prepared by a doctor and given by a properly instructed person (who could be the patient) under appropriate
  • Blood clotting factors: If a person with Medicare has hemophilia, Medicare helps pay for clotting factors they give themselves by injection.
  • Parenteral and enteral nutrition (intravenous and tube feeding): Medicare helps pay for certain nutrients for people who can’t absorb nutrition through their intestinal tracts or can’t take food by mouth.

Are You In The Right Medicare Plan?  

Here’s where it gets interesting.  If you have a Medicare Supplement Plan (Medigap), these drugs are usually covered at 100%, especially for the two most popular plans, Medigap C and Medigap F.  That’s because these plans cover 100% of the Medicare Part B costs, which includes the deductible and any associated coinsurance.  The third most popular Medigap plan is Plan N, and if you have this one you’d be covered at 100% after paying the Part B deductible.

If you’re on a Medicare Advantage (MAPD) plan, odds are you’ll be paying 20% of the cost for Part B drugs, all the way up to the annual Maximum Out Of Pocket (MOOP).  To make sure, you need to pull out your Annual Notice of Change or your Summary of Benefits right now.  Flip to the Section entitled, “Medicare Part B drugs.”  If I were a betting man, (and I’m not) I’d bet you right now your MAPD plan doesn’t cover Medicare Part B drugs any more than at an 80% level, leaving you 20% to pay.  You stand a very good chance of hitting your MOOP very quickly if you have cancer, or any other serious condition requiring hospitalization involving prescriptions administered by hospital staff.  

The Takeaway:

If you’re turning 65 or otherwise now eligible for Medicare, this is an often overlooked “gap” in traditional Medicare, as well as most Medicare Advantage plans.  Most agents breeze right by this section in their presentations, and it’s not prominently one of the topics in “educational” presentations or seminars.  But, you clearly need to pay attention to it since over 1.6 Million people in the United States will get cancer in a given year.  Chemotherapy drugs are not cheap by any stretch of the imagination if you happen to be stricken with cancer and neither are osteoporosis drugs.  

If you’re playing it safe and this gap is of concern to you, I’d seriously consider getting a Medicare Supplement plan, if you can afford the monthly premium.  9 out of 10 times, a MAPD plan is going to be cheaper (along with a whole other set of considerations, click here for more on those) but you’ll have to cough up 20% of the Part B drugs if you need to.  

 

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 Basics of Medicare and Enrolling

In this quick, easy post, I’ll provide the basics of Medicare, explain its different parts and highlight how and when you can enroll.

What is Medicare?

Medicare in the United States is a national social insurance program. Medicare has been around since 1966, after its enactment in 1965 by Congress under Title XVII of the Social Security Act, signed by President Johnson.  Did you know Harry Truman and his wife, Bess were the first two Americans to get Medicare?  Now you do.  Anyway, Medicare generally covers people who are 65 years and above. However, there are some exceptions for younger people living with disabilities, end stage renal disease and Lou Gehrig’s disease (amyotrophic lateral sclerosis).

The Alphabet Soup of Medicare

Medicare is divided into 4 parts, A-D:
1) Medicare Part A: hospital insurance that will cover Inpatient care, skilled nursing facility care, hospice and home health care.
2) Medicare Part B: medical insurance that mainly covers outpatient care and preventive treatment services such as Pap smear tests for cervical cancer.
3) Medicare Part C: this is also referred to as Medicare Advantage and is a combination of Part A and Part B. Part C is offered by private insurance companies that have been approved by Medicare. Under this plan, you may be able to access more benefits and services, though sometimes at extra cost.
4) Medicare Part D: this plan covers drug prescription costs you’d normally get at a pharmacy or mail-order pharmacy.

How Do I Enroll in Medicare?

When enrolling for Medicare, there are really only two options available when you break it down.  I know, there are millions of websites and publications out there that are confusing.  I call it, “analysis paralysis.”  Don’t spend hours and hours trying to figure out what options are out there, because there really are only two.

1) Staying in Original Medicare: this is Medicare Part A and Medicare Part B. If you are interested in a PDP plan (and you should be) then you will have to find a Part D plan (PDP). It is important to enroll for Medicare Part D when you are first eligible, as this will protect you from paying the late enrollment penalty if you decide to do so later. You may also opt for supplemental insurance (Medicare supplement, or Medigap) that will plug gaps in the benefits offered by Part A and Part B.  And believe me, there are a lot of gaps to plug if you decide to go “Bare with Medicare.” Click here for my post about why you really need to think about a Medicare Supplement policy if you decide not to go with a Medicare Advantage plan. Also, check out my post on whether or not Medicare Supplement plan F or Medicare Supplement plan High-Deductible F makes more sense by clicking here.

2) Joining a Medicare Advantage Plan (Part C): this is the other option available. In order to be eligible for this plan, you must first sign up for the Original Medicare Part A and B.  Check out my post on whether or not a Medicare Advantage plan is right for you by clicking here.

When Can You Apply for Medicare?

For starters, most people get Medicare coverage automatically. These people include:
1) People already receiving benefits from Social Security or the Railroad Retirement Board.
2) People under 65 years, living with disabilities and have been receiving disability benefits for 24 months.
3) People living with ALS (amyotrophic Lateral Sclerosis) receive coverage the month their Social Security benefits start kicking in.

Some folks do have to sign up, for instance:
1) People close to 65 and not receiving Social Security benefits.
2) People with End Stage Renal Disease.
3) People living in Puerto Rico will have to sign up for Part B separately.

There are three enrollment periods when you can initially sign up:
1) Initial Enrollment Period: this is a 7 month part that begins 3 months before you turn 65 up to 3 months after your 65th birthday.
2) General Enrollment Period: If you did not sign up for Medicare during the initial enrollment period, you can do so between January 1st and March 31st every year.
3) Special Enrollment Period: this is for people (or their spouses) who are still working and are covered by their group’s health plan, or during an 8 month period that begins the month that their employment ends.

Finally, there’s the Annual Election Period (AEP) which begins on October 15, and ends on December 7th.  That’s when folks already on Medicare get to choose the PDP or the Medicare Advantage plan they want for the following year, without underwriting.

 

Do Commissions Influence Medicare Insurance Agents?

It’s one of the biggest questions many people silently ask themselves: How do I know if my Medicare insurance agent has my best interests in mind, and not influenced by earning the highest possible commissions for themselves when enrolling me in a Medicare plan? Is my insurance agent selling the policy that best fits my needs, or simply selling me a product that pays him/her as much as possible?

Let’s start with the basics. First of all, 99.9% of independent insurance agents are fine, upstanding, moral, high-character people who ALWAYS put the best interests of their customers first. If they’re not, they will soon be found out and kicked out of the business and stripped of their insurance license. But like any industry (financial planning, stock market, etc.) there are always a few bad apples who don’t do the right thing and more often than not, end up on the news.

Independent insurance agents selling Medicare products go to extreme measures to remain compliant with Medicare regulations and laws, must be licensed as an agent and sit through hours of classes for each company they represent to remain “certified” to sell MAPD and PDP plans every single year. They also must take continuing education classes every year to keep their insurance license. Insurance companies have an extremely low tolerance for agents who do not follow the rules and are quick to terminate their ability to sell their products if they suspect any improprieties.

So (very good) odds are, the insurance agent you’re dealing with for your Medicare insurance needs are highly trained, ethical, honest and highly regulated sales professionals who know their business, know the local market and know what plans are (usually) the best for you.

How Much Do Medicare Insurance Agents Make?

Independent insurance agents selling a Prescription Drug Plan (PDP) or a Medicare Advantage plan (MAPD) … ANY MAPD or PDP are paid exactly the same, regardless of the policy they sell you. Around 10 years ago, these commissions were not regulated, and that led to different insurance companies offering some staggeringly high commissions for selling MAPD plans… at times as high as $850 or more per sale. That led to a number of folks complaining to Medicare their agents were inappropriately placing them into a plan based upon those high commissions, and not because it was the best plan for them and their health and financial conditions.

That all changed around 2007, when Medicare stepped in and mandated Medicare insurance companies pay exactly the same commission amounts, and proposed steep penalties for not doing so.

Current MAPD and PDP Commission Rates

For plans that go into effect in 2017, agents selling an MAPD plan are paid $443 for the first year, and $221 every year after that, usually for 6-7 years. That $443 is paid if you’ve recently enrolled in Medicare, or are buying an MAPD for the very first time. If your agent is merely switching you from one MAPD plan into another MAPD, they only get $221 per sale, and get that every year until you choose a different plan. So, if you buy an MAPD from an agent and stick with the same plan for 6 years, the total amount that agent is paid for your enrollment could be around $1,500. Yes, that’s quite a bit of money! But because every MAPD plan is not allowed to pay more than those amounts, it’s hard to argue there’s an incentive for agents to inappropriately steer people to one plan over another. Remember, the vast majority of independent insurance agents are just that: INDEPENDENT. That means they’re independent contractors, with no base salary and no benefits, no car allowance, no gas money and pay taxes on those commissions. Factor in all those costs and $1,500 over 6 or 7 years doesn’t seem quite as high.

For PDP, that commission amount is $71 for the first year, and then half of that amount in the following years, usually stopping around year 6 or 7, depending upon the company. The same logic applies as found in the MAPD scenario above; it’s hard to argue an insurance agent has an incentive to enroll you in one PDP plan over another… because they make the same amount of commission for every plan.

These commissions are not paid by you, nor do they directly influence the cost of your MAPD. Your premium does not go up or down if you buy a policy from an independent Medicare insurance agent. Online, over the phone or in your home on your couch with your insurance agent, the MAPD premium (if there is one) and the PDP premium you’ll pay stays the same regardless of where or how you buy it.The price as they say, is the price.

Medicare Supplement Commissions

The issue of commissions gets a little murky when talking about Medicare Supplements. Unlike MAPD or PDP plans, Medicare supplements are regulated by the states, not the federal government. And unlike MAPD and PDP plans, commissions are not the same and can actually vary quite a bit. For example, Company A might pay $15% sales commission for year 1, and 10% commission for years 2-6. Company B might pay 22% sales commission for year 1, and 15% commission for years 2-10. If one company pays more than the other for the exact same Medicare supplement insurance policy… are you sure your agent is putting you in the product that best fits your needs and budget? Let me remind you, 99.9% of the time that answer is YES. But how do you really know?

How Do I Know If I’ve Got a Trustworthy Agent?

Most independent insurance agents represent multiple Medicare insurance companies. So, if your agent only presents you one option, get suspicious and ask questions. Ask them, “Why this option and not the others?” Be active and challenge them! There’s usually a good reason. Medicare Supplement plan F is the exact same plan, regardless of the company logo. In that case, your agent may be recommending you take one option over another due to lower premiums, for example.  Maybe your doctors and preferred hospitals are in one plan’s network and not the others. The key here is to ASK. Ask them WHY they think this is the best plan for you.

The Best Way to Size Up Your Medicare Insurance Agent

Ask them how much commission they’re making if you enroll in the product they’re selling. If they say they don’t know, or refuse to tell you, end the sales presentation right then and there. If your independent insurance agent won’t disclose their commissions to you, what else are they not telling you? A good insurance agent will have no problem telling you how much commission they make on a sale. Heck, they should be proud to tell you. They’re professionals who know their stuff, work extremely hard and ALWAYS put the needs of their clients FIRST.

The Takeaway

Commissions paid to insurance agents are standard for Medicare Advantage and Medicare Prescription Drug Plans. Commissions paid to insurance agents for Medicare Supplement plans are NOT standard. These commissions do not directly influence the price you pay for your insurance policies and the price you pay is the same regardless of where you purchase your policy; phone, web or agent.

Good, professional insurance agents who specialize in Medicare coverage are all around, but like any profession, there are bad actors. When meeting with an agent for the first time, act like Dan Rather or Charlie Rose and interview them. How many clients do they have? How long have they been doing this? What companies do they represent and why? Finally, how much commission will they make if you buy a policy from them? Use your gut; if they can’t (or won’t) answer those basic questions, it’s best to thank them for their time and find a better agent.

Medigap Plan F Versus High Deductible Plan F

Medicare Supplement (Medigap) High Deductible Plan F suffers from a horrible name, but don’t overlook it.  The premiums can be very affordable and the coverage is better than the name suggests.

Let’s begin with shortening up Medicare Supplement (Medigap) High Deductible Plan F for readability.  Let’s use HD-F from now on.

Deductible

Next, let’s make sure you understand with the word – deductible.  A deductible is the amount you pay each year before your health insurer begins to cover your medical services.

The deductible in 2016 for HD-F is $2,180.

Just to be crystal clear, this means before your Medicare Supplement insurance company pays anyone or anything… the first $2,180 is out of your wallet.

The thing is, the deductible really isn’t all that high, especially when you compare it to what they are in individual ACA (Obamacare) plans.  Right now, the average the average combined deductible for 2016 is $5,765 for bronze plans (up from $5,328 in 2015) and $3,064 for silver plans (up from $2,556 in 2015).  So, if you’re currently paying for your own individual coverage, odds are $2,180 doesn’t scare you.

If it does, I’m about to show you how the differences between premiums for these plans can more than pay for the deductible in a very short amount of time.

Price

Then there’s the price: They’re cheap.  Obviously, prices vary from state to state and carrier to carrier, but they’re generally half – if not less than half the price of a regular Medicare (Medigap) Supplement Plan F.

Let’s take a look at both of them side-by side (premiums are illustrative only).  Here’s a hint:  The only things different are the monthly premium and MOOP!

We’ll start first with Medigap Plan F

Medicare SupplementPlan F
Monthly Premium$180 per month
Annual Deductible ExpenseNone
Annual Coinsurance ExpenseNone
Annual Maximum Out-of-Pocket (MOOP)Zero
NetworkYou can see any doctor who accepts your coverage; no referrals needed for specialists
Other Out-of-pocket CostsNo copays for doctor's visits or hospitalization
Prescription Drugs Does not include prescription drug coverage

Well, that was nice.  Let’s now look at Medigap HD-F

Medicare SupplementHigh Deductible F
Monthly Premium$80 per month
Annual Deductible Expense$2,180
Annual Coinsurance ExpenseNone
Annual Maximum Out-of-Pocket (MOOP)$2,180
NetworkYou can see any doctor who accepts your coverage; no referrals needed for specialists
Other Out-of-pocket CostsNo copays for doctor's visits or hospitalization
Prescription Drugs Does not include prescription drug coverage

Break Even

I’ve done a bit of quick math for you below.  If you assume a monthly premium of $180 for Medicare Supplement (Medigap) Plan F, and an $80 monthly premium for HD-F, the chart shows you’ll break even in a little under 2 years.  Another way of saying that, is: by paying less monthly premium for HD-F, you’ll effectively save enough money (if you don’t use it) to cover the deductible in just under years.

 Medicare Supplement Plan F Monthly PremiumMedicare Supplement HD-F Monthly Premium
Jan$180$80
Feb$180$80
Mar$180$80
Apr$180$80
May$180$80
Jun$180$80
Jul$180$80
Aug$180$80
Sep$180$80
Oct$180$80
Nov$180$80
Dec$180$80
Total Annual Premium Cost$2160$960
Annual Savings$1200
Number of Years to Break Even1.81

But there’s yet another way of thinking about this: If you buy an HD-F when you turn 65, by the time you turn 67 you will have already saved enough money to cover an entire yearly deductible.  By the time you’re 69, you’ve already got more than two and on your way to three year’s worth of maximum deductibles saved up.

The Takeaway

So, which one is the right choice for you?  To get there, the central questions you must ask yourself (and answer) are these:

  1.  Do I want to give the insurance company $180 per month for 100% coverage and 100% peace of mind?
  2. Or do I want to give them $80, save $100 a month in premium and stick that $100 it in my back pocket just in case I get sick and need it?
  3. Should I just go with a Medicare Advantage plan?

 

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.

Welcome to Prepare for Medicare

Hello, world!  Welcome to Prepare for Medicare. We’re going to cover a lot of ground on this site, hopefully a bit educational and some fun sprinkled in to make your life easier, save you money and hassle.  We’re talking about everything Medicare on this site with (I’m sure) some sidebars into retirement, money matters, etc.  Along the way, I’m going to teach you what you need to know and how to filter out all the noise.

Just before your 65th birthday (and for the rest of your life) insurance companies will absolutely flood you with ads. Direct mail will jam your mailbox, TV and newspaper ads with smiling celebrities or unassuming presenters will urge you to call for, “information” and blinking, flashing pay-per-click advertising online will promise the moon.  Meanwhile, news anchors and newspaper headlines blare out various injustices and scams perpetrated by insurance agents and companies that hurt normal Americans just tying to buy the right coverage.   Yet, for the more than 40 Million people already on Medicare and the estimated 10,000 Baby Boomers turning 65 every day, coverage choices must be made.

Sticking your head in the sand won’t help; the wrong choice could cost you thousands of dollars.  How do you know if you’re in the wrong plan?  Paying too much?  Enrolling in a quality, reputable plan?  Using a quality, reputable insurance agent?  Is the system beating you, or are you beating the system? If you’re a caregiver helping your parents or other family members decide, what’s your role?  Where can you turn for objective guidance?

It comes down to this: You can learn how to use the system to your advantage.  You either need to educate yourself and understand the tools to do it yourself, or be able to identify a professional independent insurance agent to help you navigate through the maze.  This site is a living, breathing opportunity for you to do both.

Welcome!