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What Exactly is Medicare?

While some people have a vague perception of what Medicare is, few understand all of the intricacies and how to get the most out of their benefits. Before we get into the various sections or “parts” of Medicare, we want to first acquaint you with some simple facts and the history surrounding the program.

DID YOU KNOW: In 1966, Medicare spurred the racial integration of thousands of waiting rooms, hospital floors, and physician practices by making payments to health care providers conditional on desegregation!

Medicare Insurance Company Surprise & Peoria AZ
First and foremost, Medicare was started in 1966 under the Social Security Administration as a national health insurance program. The name “Medicare” was originally referred to a program providing health care for families of people serving in the military as part of the Dependents’ Medical Care Act in 1956. It wasn’t until 1961 when President Dwight D. Eisenhower held the first White House Conference on Aging in which he proposed creating a health care program for social security beneficiaries. After several years of research and policy creation, in July of 1965, President Lyndon Johnson passed the first version of “Medicare” under Title XVIII of the Social Security Act. The first version of Medicare was designed to provide health insurance to people age 65 and older, regardless of their financial situation or medical history.

FACT: President Harry Truman and his wife became the first recipients of Medicare!

Since its inception in 1966, the program has undergone numerous revisions, updates, and changes. The program is now broken into 4 main parts, A, B, C, and D. Below we will provide some basic information on each of the programs, their deductibles, co-insurance, and more…

Medicare Part A

In general, Part A covers qualifying medical expenses associated with hospital care. It includes coverage for services like skilled nursing care, hospice, and some home health care. Generally, to qualify for Medicare Part A, you must be 65 years old and have had 40 or more quarters in which they paid Federal Insurance Contributions Act taxes, and be a US Citizen or legal permanent resident alien. The benefit is the same no matter how much or how little the beneficiary paid as long as the minimum number of quarters is reached. You may also qualify for Medicare Part A before 65 if you have a disability, end-stage renal disease (ESRD), or amyotrophic lateral sclerosis (ALS). The nice part of Medicare Part A is that there are no premiums associated with your coverage meaning you don’t pay a monthly fee for this benefit. The fee was collected in your younger years as a part of your payroll tax contributions.
Medicare Part A Plan Peoria & Surprise AZ

With that said, Medicare Part A is pretty comprehensive but there are several gaps in coverage that you might want to consider. Medicare Part A had an inpatient hospital deductible of $1408, coinsurance per day as $352 after 61 days confinement within one “spell of illness”, coinsurance for “lifetime reserve days” (essentially, days 91-150 of one or more stay of more than 60 days) of $704 per day. There is a little more to these deductibles so take a look at the chart below. There are also deductibles for skilled nursing stays, limits on coverage for blood transfusions, durable medical equipment (covered under Part B), and more. To understand your coverage gaps and how to get the most out of your Medicare benefits, schedule some time to meet with one of our licensed Medicare brokers in Peoria and Surprise, AZ, or give us a call at 623-777-3315.

Medicare Part A shares some costs with you if you need to be hospitalized. The table below shows the different costs that may apply. Costs for 2019 are as follows:
Medicare Part B Plan Surprise & Peoria AZ

Medicare Part B

If you are looking to find out more information on Medicare Part B, grab a seat because there is a lot of information to share. Part B of Medicare provides coverage for things like doctor visits, qualifying routine healthcare expenses, x-rays, lab services, and more. Generally speaking, it covers most “out-patient” services and some in-patient services not covered by Part A. Medicare breaks it out into two types of services, medically necessary services, and preventative care services.

Unlike Part A, Medicare Part B has premiums and costs associated with it. Most people will pay a standard premium amount of $144.60 (2020). If your modified adjusted gross income is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA). To find out more about this, give us a call so we can discuss your specific situation, or you can visit https://www.medicare.gov/your-medicare-costs/part-b-costs. In addition to your monthly premium, Medicare Part B also has a deductible and a co-insurance amount that will add to your out-of-pocket expenses for the year. Part B works as a true 80/20 plan meaning that Medicare covers 80% of the qualifying medical expense and you are responsible for the remaining 20%. What many people don’t understand is that there is no lifetime or annual cap to that 20% co-insurance meaning that if you accrue $100,000 in medical expenses, your out-of-pocket could be $20,000 or more! See the graph below that helps break down how this works.

Did you know that you could be subject to a penalty if you don’t sign up for Medicare Part B when you turn 65? That’s right! If you do not sign up for Part B when you first become eligible, your Part B premium may go up 10% for each full 12-month period that you could have had coverage but didn’t. There is a 7-month window to enroll, called your initial enrollment period which starts 3 months before your 65th birthday, the month of your birthday, and then the following 3 months after your birthday. Some exceptions apply here so don’t panic. We can help guide you through this, so you don’t have to pay a penalty down the road. While there is a lot more to Medicare Part B, you can see that it does not cover everything, and it can leave you with a substantial out-of-pocket liability.

Fortunately, we have you covered. Do yourself a favor and set up an appointment to speak with one of our licensed Medicare brokers in Peoria and Surprise, AZ. We can go through the ins and outs of Medicare and make sure that we minimize your out-of-pocket expenses and get you the coverage you need to cover your healthcare expenses

Need help understanding Medicare?

Don’t worry, you’re not alone. Give us a call today or set up an appointment to meet with one of our licensed insurance agents!

Medicare Part C

Medicare Part C can be a little tricky so we will try to be as detailed as possible. Part C, as it is more commonly known Medicare Advantage Plans combine both your Part A, B, and D (not all plans cover Part D) into one privately administered health plan. Instead of paying a monthly premium to Medicare, you are paying it to a private insurance company. Part C plans are required to offer coverage that meets or exceeds the standards set by Original Medicare, but they do not have to cover every benefit in the same way. Most Medicare Advantage plans are administered through either a local HMO network or a PPO network. This allows the private insurance companies to control their costs and provide better service to plan participants.

Medicare Advantage Plans Provider Surprise & Peoria AZ

So what does this mean for you? Well simply put, in some cases, you get a bigger bang for your buck. Traditional Medicare does not provide coverage for things like dental, vision, gym memberships, and more and some Medicare Advantage plans do. Other benefits are out-of-pocket maximums, reduced or no deductibles, and more. A drawback of a Medicare Advantage plan is the networks. Unfortunately, to provide these additional coverages, the insurance companies need to control their costs and so they have pre-negotiated rates with providers who are “in-network” and reduced coverage for providers that are “out of network”. The chart below provides a good illustration of how Plan C works compared to Original Medicare.

To find out if your provider is covered, give us a call so we can find out what Medicare Advantage plan is a good fit for you and if your doctor is covered!
Medicare Part D Prescription Surprise & Peoria AZ

Medicare Part D – Prescription Drug Plans

Unfortunately, Original Medicare (Part A and Part B) does not include coverage for prescription drugs so if you decide to stay on Original Medicare, then you will need to also find a Part D plan or a prescription drug plan. These Part D plans are approved and regulated by Medicare but are actually administered by private insurance companies or co-op organizations. Each Part D plan that offers prescription drug coverage must give at least a standard level of coverage set by Medicare. Plans can vary the list of prescription drugs they cover (called a formulary) and how they place drugs into different “tiers” on their formularies. To find out what drugs are covered, click here. Coverage by beneficiary spending is broken up into four phases: deductible, initial spend, gap (infamously called the “donut hole”), and catastrophic.

DID YOU KNOW: Medicare Part D wasn’t established until 2003!

With Medicare Part D, you will have a monthly premium that you will pay to the insurance carrier and possibly a co-pay for your prescription depending on the plan. There are also rules for when you can enroll and dis-enroll from these drug plans. To avoid paying a Part D late enrollment penalty, you’ll need to sign up for Part D when you first become eligible for Medicare or you’ll need to show proof of creditable drug coverage if you join the plan later. Creditable prescription drug coverage is coverage that’s expected to pay, on average, at least as much as Medicare’s standard prescription drug coverage. Your current employer health plan tells you each year if your drug coverage is creditable.
For more information on Medicare Part D, give us a call! We would be happy to review your current list of medications, doctors, and healthcare needs to help find you a plan that works best for you!

Medicare Enrollment Period

Initial Enrollment Period (IEP)

7-Month “Turning 65 Election Period

Annual Enrollment Period (AEP)

October 15 – December 7

Open Enrollment Period (OEP)

January 1 to March 31

Special Enrollment Periods (SEP)

Individuals who drop their employer group health plan, qualify for the Extra Help (Low-Income Subsidy (LIS)) program, or eligible for both Medicare and Medicaid benefits (Dual-eligibility).

As your trusted local independent insurance agent in Peoria & Surprise, AZ, The Turning 65 Advisor is here to help find the Medicare plan that best meets your needs and budget. Call today for a consultation.