Traditional Medicare is a public insurance trust that pays private health care providers, using money collected through payroll taxes under the Federal Insurance Contributions Act. Each month, payroll taxes are withheld for Medicare (2.9%) and Social Security (12.4%); the employer and employee evenly split the 15.3% combined tax. Between 300,000 and 400,000 Americans enroll in Medicare or Medicare Advantage for the first time each month. This includes individuals who are eligible because of age as well as those who qualify because of disability.
Traditional Medicare includes Part A, which covers hospitalization – usually with no additional premium, and Medicare Part B which covers doctors. A monthly premium, based on income, is required for Medicare Part B. The current base premium is $185 per month plus an annual deductible. It is an 80/20 plan; Medicare covers 80% of allowable costs with the patient covering 20%. It usually does not cover drugs, vision, dental or hearing aids.
Many Americans who choose traditional Medicare purchase a supplemental or Medigap plan that limits the 20% co-payment and covers deductibles, and a Part D Drug Plan. The Part D premium may be as low as $0 depending upon the drugs covered and the percentage of co-pay the policy holder wants to assume. Anyone, regardless of health, is guaranteed acceptance for a Medigap plan within six months of signing up for Medicare. Once that window has closed, underwriting is required, and insurance companies can deny coverage or charge much higher premiums to those who have been ill or have chronic conditions.
Medicare Part C, also referred to as Medicare Advantage, are Medicare approved plans administered by a private insurance company. Of the 61.2 million current Medicare beneficiaries, over half are currently enrolled in Medicare Advantage plans. The popularity of these programs is because of monthly premiums that are very low – possibly $0 premium – and may include drugs, vision, dental, hearing and gym membership as part of the package. The best financial coverage is provided when patients receive services from in-network providers. A hefty penalty is applied for nonemergency out-of-network care, and these plans do have deductibles, co-payments and coinsurance.
Another serious drawback is that most care must be preapproved by the insurance company, effectively second-guessing your health care provider. While many denials are eventually overturned, they add cost to the system and delay timely care patients may need to ensure the best outcome. In addition, while the promise of a $0 or low premium may be appealing when one is generally healthy, patients with a family history of diabetes, heart disease, etc., may find that the lower premium is more than offset by higher add-on costs when care is needed. Another consideration is that some major care providers like the Mayo Clinic do not accept Medicare Advantage at all of their facilities. While your primary care physician or trusted specialist may be in-network when you initially sign up for a Medicare Advantage plan, if they leave the network, your co-payments will be higher if you choose to remain with them.
Medicare is complicated, and decisions during initial enrollment may impact available options for future coverage. While switching between Medicare Advantage plans and drug plans is fairly easy and straightforward, moving from a Medicare Advantage plan to traditional Medicare can be difficult, or impossible. Coverage options are limited and may be very costly, so it’s important to choose wisely at the outset to protect long-term flexibility and coverage.
The Montezuma County League of Women Voters is hosting a “Medicare or Medicare Advantage?” panel presentation at 10 a.m. Sept. 13 at the County Annex, 107 N. Chestnut St. Don’t wait until you turn 65 with little time to decide; come learn from experts the questions you should ask and things to consider before choosing a plan.
Karen Sheek of Cortez is the chair of the Montezuma County League of Women Voters. She served two terms on Cortez City Council and two terms as mayor. Contact the local league at lwvmzc@gmail.com and on Facebook at https://bit.ly/3YgpBZt.
