Understanding the ABC’s of Medicare

Although the majority of the seniors that I assist with purchasing a Medicare Supplement or Advantage Policy are well educated, they all make a comment about being totally confused by their choices. A big part of the problem is Medicare lingo. Once you understand the basics you realize it is not that complex. Medicare is a federal health insurance program that pays for much, but not all, of the medical expenses for people 65 and over. It also covers individuals under 65 with certain disabilities.

These are the four parts:

•Part A helps cover inpatient care in a hospital, skilled nursing facility, hospice and home health care. If you or your spouse paid Medicare taxes while working, you will pay nothing for Part A.

•Part B helps cover doctor’s services, hospital outpatient care and some preventative services. For individuals new to Medicare in 2011 the average Part B premium is $115 per month. This amount is higher for singles earning more than $85,000 or couples earning over $170,000.

•Part C is Medicare Advantage Plans (also known as Medicare Health Plans). These plans are another way to receive your Medicare benefits and are sold by private insurance companies approved by Medicare. They combine the benefits of A, B and often D. To be eligible for a Medicare Advantage Plan you must be enrolled in both A and B.

•Part D is Medicare prescription drug coverage. Starting this year, 2011, high income earners will pay a surcharge for this coverage. If you currently are not taking prescription drugs, you may be tempted to not purchase a plan. However, if you neglect to purchase a drug plan when you are first eligible you will have to pay a higher premium if you decide to purchase one at a later date. Financial assistance is available through government programs to low-income individuals.

Most individuals will purchase a Medicare Supplement and a drug plan or a Medicare Advantage Plan that includes drug coverage. The government handbook, “Medicare and You” is designed to help you make this choice. If you already know you want a Medicare Supplement (also known as a Medigap Policy) the government handbook, “Choosing a Medigap Policy” will help you decide which policy is your best choice. The government web site, , assists Medicare beneficiaries in choosing Medicare Advantage and drug plans with an on-line analysis that is based on their zip code and prescription drugs. North Carolina residents can call SHIIP (Seniors’ Health Insurance Information Program) at 1-800-443-9350 when they have questions about Medicare Plans.

Although you can spend days doing the research by yourself and make the purchase without assistance, an insurance broker with a Medicare Supplement License can do the research for you. To maintain their license and company appointments they are required to be up to date on this ever changing environment. Since these agents are compensated by the companies they represent, you will not pay an extra fee for using them versus doing all the work yourself.