This article is part of an ongoing series of informative Medicare guest posts written by MedicareFAQ. I'd suggest reading this article closely before deciding which type of Medicare is right for your parents, your spouse, or you. You will then be able to make an educated decision. - Carol
Let’s Review Original Medicare and How it Works
Original Medicare is at its roots a simple 80/20 plan with no cap in coverage. It has 2 basic portions; Medicare Part A and Medicare Part B. Original Medicare is accepted by most doctors and hospitals nationwide.
Medicare Part A
Medicare Part A is the hospital and inpatient side of Medicare. There is a re-occurring deductible of $1,364 in 2019. Once this deductible has been met, it covers services during the benefit period for the reason of admission. After 60 days additional costs start to add up. It is wise to note that is it possible to have additional costs while in the benefit period related to Part B of Medicare.
Medicare Part B
Medicare Part B is the doctor and medical services side of Medicare. For most Medicare beneficiaries, they will have a premium deducted from their social security check of $135.50 in 2019. In addition, there is a small annual deductible for Part B or $185 in 2019.
Once the deductible has been satisfied, they will be responsible for 20% of the medical bills and any excess charges their provider may charge. If a doctor accepts Original Medicare but does not accept Medicare assignment, they can charge up 15% more than the Medicare-approved amount.
Medicare Part D
When it comes to prescriptions, beneficiaries are covered by Medicare Part D. Part D Plans are administered by private insurance companies and the plans must provide at least a minimum benefit of coverage as outlined from the Centers for Medicare and Medicaid Services (CMS).
Medicare Beneficiaries have 3 choices at this point. They can stay on Original Medicare and elect a Part D Plan, elect to pick up a Medigap Plan in addition to Original Medicare and a Part D Plan, or enroll in a Medicare Advantage Plan, commonly referred to as Medicare Part C.
With a Medicare Advantage Plan, beneficiaries are in effect replacing Original Medicare coverage benefits with an HMO or PPO style plan that is now in charge of all health care decisions. Most of the time these include a built-in drug plan and cannot have a separate Part D Plan that caters to the prescriptions that a beneficiary is taking.
Even though the beneficiary is no longer using Original Medicare benefits they are required to pay the Part B premium, in most cases. These plans have little or no cost up front, however, there is a payment required every time the plan is used.
While this sounds like a good option, and it can be for some people, keep in mind that the doctor no longer controls the procedures or treatments received. The plan has an administrator that controls the plans, cost of procedures and treatments and they can deny the treatment that a doctor recommends or deny paying the claim if it is a service the administrator feels is not necessary.
A Medigap Plan fills some or all the gaps in Original Medicare, depending on the plan chosen. There are no network restrictions or referrals needed when using Original Medicare, and therefore no network requirements for Medigap Plans.
There are currently 10 Medigap Plans in service. Plans are named by letter designations. The names of the current plans are Plan A, Plan B, Plan C, Plan D, Plan F, Plan G, Plan K, Plan L, Plan M, Plan N, and Plan High Deductible F.
Currently, the most comprehensive plan is the Plan F. Plan F covers all the costs that the beneficiary would be responsible for once Medicare pays its portion, meaning the beneficiary would not pay anything other than the premium. You can read Medicare Plan F Reviews here.
Plan C is almost identical except it does not cover excess charges. In 2020 these plans will be retired because of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. This act effectively states that there can be no first dollar plans.
If a beneficiary is on Plan F or Plan C, they are considered grandfathered in, this means they will be allowed to keep the plan. Once this happens it is expected that beneficiaries on these plans will see higher rate increases than normal because no one else will be able to enroll into Plan F or Plan C.
Plan G is the most popular plan option currently available. The rate increase on average is about half of the increase of the Plan F or Plan C. The only coverage difference between Plan F and G is the beneficiary must pay the annual Part B deductible.
Once the deductible has been met, the beneficiary will pay nothing more out of pocket for Medicare-covered services for the remainder of the year.
The 2nd most popular choice is the Plan N. Like the Plan G, the Part B deductible is not covered. The other differences are a small copay of $20 when the beneficiary goes to see any doctor and $50 for an emergency room visit, as well as no coverage for excess charges.
The other letter options are less used, though the High Deductible F is a quite popular plan as it functions like a Health Savings Account style plan that many seniors have become accustomed to during their working years.
With this plan the beneficiary pays all Medicare cost-share until the plan deductible, $2,300 in 2019 has been reached. Once the deductible has been met the plan pays the beneficiaries cost share for the remainder of the year.
A Medigap Plan helps you budget because it allows the beneficiary to control their healthcare. When on a Medigap they enjoy the freedom to travel, get the coverage the doctor recommends the first time, and allows them to choose a Part D prescription plan catered to their individual needs.
Medigap Plans are the most comprehensive and strongest coverage a Medicare beneficiary can get. Here’s a great article that discusses industry myths about Medicare that may help you make an educated decision on your Medicare plan.