It is not unusual for Texas Medicare enrollees to be confused about the various parts of Medicare. There are Medicare Parts A, B, C, and D as well as Medicare Supplement Plans. What are they, what do they cover, and who should have them?
Original Medicare Does Not Cover All Your Expenses
If you are one of the many Medicare beneficiaries who opted not to enroll in a Medicare Advantage plan, it’s important to understand that Original Medicare does not cover all your health care expenses. Part A covers 80% of inpatient care in hospitals and skilled nursing facilities, whereas Part B covers 80% of physician services, outpatient care, and medically-necessary supplies. This leaves you responsible for the remaining 20%. There are also other out-of-pocket expenses, such as monthly premiums, deductibles, copays, and coinsurance.
Additional Part A Expenses in 2023
Premium: Most people receive Part A for free because they or their spouse had at least 40 quarters of employment history where they paid Social Security taxes. For those who are ineligible for premium-free Part A, the premium is either $278 or $506 per month, depending on the number of quarters the person worked.
Deductible and Coinsurance: The annual Part A deductible of $1,600 and coinsurance applies to inpatient hospital and skilled nursing facility stays. Once the beneficiary has met the deductible, the coinsurance for a hospital stay is as follows:
- $0 per day for a hospital stay of 1 to 60 days.
- $400 per day for days 61 to 90.
- $800 per day for days 91 to 150 (known as the 60 lifetime reserve days).
- All costs for each day beyond 150 days.
Additional Part B Expenses in 2023
Premium: The standard Part B premium is $164.90 per month. Higher-income earners may pay more.
Deductible: The Part B deductible is $226 per year for physician and outpatient services, certain home health services, and durable medical equipment. The 20% coinsurance applies to all services after the beneficiary meets the deductible.
There is no cap on how much you can spend in a year with Original Medicare. Medicare adjusts the cost of premiums, deductibles, copays, and coinsurance annually.
Part D Expenses
Original Medicare does not include prescription drug coverage. For this coverage, you will need to enroll in a Part D plan. Monthly premiums vary according to the plan and insurer, although the average monthly cost is $31.50 in 2023.
A Medicare Supplement Plan Helps Cover Gaps
If you have known health issues or want more predictable health care costs, you should consider a Medicare Supplement plan. Also known as Medigap plans, these are designed to help pay some of the out-of-pocket costs Original Medicare does not cover. They are sold by private insurers licensed to sell them in your state. You pay a monthly premium directly to the insurer.
You don’t need a Supplement plan if you have:
- A Medicare Advantage plan.
- Group health insurance through an employer, including government or military retiree plans.
- Medicaid or the Qualified Medicare Beneficiary Program – a Medicare savings program that helps pay your Medicare out-of-pocket costs.
Who Is Eligible for a Supplement Plan?
To be eligible for a Supplement plan, you must be enrolled in Medicare Parts A and B. You must be either age 65 or older or under age 65 and receiving disability benefits or diagnosed with ALS or end-stage renal disease.
If you are enrolled in a Medicare Advantage plan, you cannot buy a Supplement plan unless you are switching back to Original Medicare.
Comparing Plans and Costs
There are currently 10 standard Supplement plans, each designated by a different letter from A to N. In 2023, CMS added Plans F and G, which can be sold as high deductible plans. The annual deductible for these plans in 2023 is $2,700. You must meet the deductible before the policy will begin to pay benefits.
Plans A to N provide a different level of supplemental coverage to Medicare. There is no single “best plan” – you’ll need to determine the right plan for you according to the benefits it offers, the affordability of the monthly premium, and availability in your ZIP code.
The benefits each plan provides are determined by the federal government and are consistent across all insurance carriers. However, premiums can vary greatly based on your ZIP code, the insurance carrier, your age, your gender, whether you use tobacco, and whether you are applying within your initial open enrollment period.
When to Enroll in a Supplement Plan
The best time to buy a Medigap plan is during your one-time, six-month Medicare supplement open enrollment period, which begins the month you enroll in Medicare Part B at age 65 or older. You can use your open enrollment rights more than once during this six-month period. If you change your mind about a policy, you can cancel and buy another one.
This six-month enrollment timeframe is a period of protected enrollment with guaranteed issue rights. It is the only time you can buy a policy regardless of your health history or medical condition. This means insurers cannot turn down your policy application or charge you more and you won’t have a waiting period due to pre-existing conditions. The insurer also cannot cancel your plan – provided you pay your premium – but premiums can change annually.
If you miss this enrollment period, you are not guaranteed coverage. You may have to undergo the underwriting process, during which insurers will conduct a review of your medical history to decide if they want to accept your application and, if they do want to accept, to determine how much your premium will be.
Medicare Supplement policies renew automatically every year to ensure continuous coverage. If you drop your policy or it lapses, you might be unable to regain the policy or buy a new one.
Switching Supplement Plans
You might want to change your Supplement plan to find a better price, a different level of coverage, or a different insurance carrier. You can switch plans at any time after your initial enrollment period, but you have no guaranteed coverage: you risk being denied coverage or being charged a higher rate due to your age and health history. You may also have a waiting period for benefits if you have a pre-existing condition. Having said that, there are certain situations that allow you to change plans and maintain your guaranteed issue rights.
Comparing Medicare Supplement plans can feel overwhelming due to the large number of plan options and insurers who carry them. Medicare Educators is here to help. Our experienced and knowledgeable team can help you find a plan in your area that meets your needs and fits your budget.