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What is Medicare ?

Medicare Basics

Selecting a Medicare plan can make you feel like you would feel in a bowl of alphabet soup.
Parts, plan, letters. How do you sort it all out?

Start with the chart below.

Health care costs will probably be one of your biggest costs in retirement. Selecting the right
Medicare health plan is essential to your health and your wallet.

If it’s been a while since you looked at your Medicare coverage, you may find some new terms
and plans. If you are new to Medicare, understanding the basic choices will help you find the
right solution.  Keep these basics in mind as you explore Medicare choices:

  • Part A and Part B are referred to as Original Medicare
  • Part C combines Original Medicare and additional benefits
    (maybe include Part D)
  • Part D is Prescription Drug coverage which can be stand-alone or
    included in Part C

Through our consultative approach, Longevity Alliance’s licensed health insurance advisors
explains the basics of Medicare and helps you find the Medicare solution that best meets your
needs. At Longevity Alliance, we understand it’s not just about health insurance; it’s about the
right health coverage at the right price.

Part A

Government plan that helps cover the cost of inpatient hospital stays and skilled nursing facility care, hospice care and home health care.

Premium is free for most people eligible for Medicare. There is a deductible for each hospital stay ($1,068 in 2009) and copayment for other benefits.

Part B

Government plan that helps cover medical expenses such as doctor’s services, inpatient and outpatient medical and surgical services, physical and speech therapy.

Monthly premium of $96.40 for 2009 (more if your income is over $85,000), an annual deductible of $135. Medicare generally pays up to 80% of the care cost.

Part C

Medicare Advantage plans include Part A and Part B plus additional benefits. Often ~/eHealth Part D coverage. Medicare pays a fixed fee to the plan for your care. Provided by private insurance companies.

You must have Part A and Part B to join a Medicare Advantage Plan. Plans are provided by private insurance companies. Some zero premium plans are available.

Part D

Helps cover generic and brand name prescription drug costs. Provided by private insurance companies.

Monthly premiums for insurance provided by private insurance companies. The national average premium per month in 2009 is $28.

Medigap Insurance Policy

Helps cover the costs that Medicare does not cover including deductibles, co-pays and generally 20% of services paid by Medicare. Plan benefits are standardized – the same from all insurers. Plans are lettered – Plan A through Plan K. Provided by private insurance companies.

Monthly premiums depending upon which plan you purchase. Covers most out-of-pocket expenses. Prices vary widely by company and location, so you will benefit by comparing plans.

Tip: If choice is important: Part A + Part B + Part D + Medigap. If keeping your premium
is most important: Part C (which ~/eHealth Part A and Part B) + Part D (it may or may not
be included in your Part C plan)

Prescription Drug Plans

Prescription drugs can be a major cost as you age and they are not covered by Original
Medicare or a Medigap plan. Purchasing a Part D insurance plan to go along with a Medigap
plan provides protection against catastrophic health care costs. Part D coverage may also
be included in a Medicare Advantage plan.

Part D plans are offered through private insurance companies. Plans vary widely, as do
prices. How specific drugs are covered differs among plans, too. So when you shop for a
plan, compare these benefits and features:

  • How your drugs are covered (check their formulary – drug list)
  • What is the deductible?
  • Are there co-pays?
  • How are your drugs covered through the initial period, the coverage gap (doughnut hole) and catastrophic coverage?
  • Is your local pharmacy in the network?

Generally you will pay a monthly premium and a yearly deductible. You will also pay a part of
the cost of your prescriptions, including a copayment or coinsurance. Costs will vary depending
on which drug plan you choose. Most plans have a “doughnut hole” during which you will pay
the entire costs of drugs (usually $2,510 - $4,050).

Tip: The right plan for you has a lot to do with the specific drugs you are taking. When you call, please be ready to provide the names of the drugs you take, the amount and frequency. That makes it easier to find the plan that fits your needs best.

What is the “Doughnut Hole” and does it affect me?

The government says just over 25% of beneficiaries on Part D plans will enter the “Doughnut
Hole” at some point each year. This “gap” period begins when the total of the drug plan’s full
cost of your drugs reaches the current year’s gap threshold ($2,700 in 2009, including your deductible, if any) and continues until the beneficiary has spent enough to reach the
“Catastrophic Coverage” level ($4,350 in 2009) at which point, the copays for the prescription drugs will generally be less than $6.00 and no more than 5% of the drug’s full cost.

Medicare Supplement Plans

If Choice is Important:

Select Original Medicare and Medigap Insurance

If it is most important to you to have the widest range of choice in where you receive health
care, then the right solution is probably a Medicare Supplement (Medigap) plan and a Part D
Prescription Drug Plan.

It’s called “Medigap” because it covers the gaps in coverage from Original Medicare (Part A and
Part B). Through Original Medicare, about 80% of health care costs are covered. Medigap
policies generally cover the remaining 20% of out-of-pocket costs including co-pays and
deductibles. So you pay higher monthly premiums, but less in out-of-pocket costs.

The benefits offered in a Medigap plan will be the same no matter what insurance company
provides your policy. The plans are differentiated by letters – A through K – and there are set
benefits for each plan. The plans are standardized by the Federal government. So it’s easy to
compare plans across different insurers.

Costs, however, are not the same between companies.

Why Choose a Medigap Policy?

  • You want the widest choice of doctors and hospitals.
  • You want the most coverage for out-of-pocket expenses.
  • In many cases there is no need to change plans if you move.

Tip: Plan F is the most popular plan – coverage ~/eHealth basic benefits including Part A and
Part B co-insurance and deductibles, skilled nursing facility co-payments, and coverage for
foreign travel emergencies. Other popular plans are the basic Plan A and Plan C.

Medicare Advantage Plans

If Low Premium is Important:

Select a Medicare Advantage Policy

A Medicare Advantage Plan provides Medicare Part A and Part B benefits and other
benefits, depending upon the plan. The cost for the insurance is usually less than a
Medigap plan, but you may face more out-of-pocket expenses and you will be limited to
doctors and hospitals in your plan’s network.

The most common forms of Medicare Advantage Plans are Health Maintenance
Organizations (HMOs) and Preferred Provider Organizations (PPOs). Like many employer
health insurance plans, these plans restrict the doctors, services and hospitals that you
can use to their network. Some let you pay a higher price to go out of network. These
plans promote preventative care. You pay co-pays and deductibles so that you share in
the cost of any service you use.

Additional benefits beyond Medicare Part A and Part B are included in most Medicare
Advantage Plans. They can include vision, physical fitness and dental benefits and some
also include prescription drugs, so you may not need a separate Part D plan. Make sure
you ask if prescription drugs are covered and whether it is good coverage for your
prescription drugs.

Medicare Advantage Plans are very specific to a local area. Before signing up, check to
make sure your preferred physicians will accept the Medicare Advantage Plan you are considering.

Why Choose a Medicare Advantage Plan?

  • You want the convenience of one plan and are comfortable with being limited to
  • using services within a specified network.
  • You want lower insurance premiums and are willing to share the cost of services
  • through co-pays and deductibles as you use services.
  • You currently participate in this type of health insurance plan through your employer
  • and feel comfortable with using it for your Medicare benefits.

Tip: Once you are in a Medicare Advantage Plan it is usually about a year before you can
switch to another plan if you don’t like it. It can be cost effective, but make sure you are
comfortable with the rules around what doctors and hospitals you can use.

Get A Quote For Medicare Insurance >>

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