The ABCs of Medicare Summary

This guide reviews the four parts of Medicare:  Parts A, B, C, and D. 

1. Parts A and B are provided by the government (also known as Original Medicare).
2. Parts C and D are offered by private insurance companies.

Original Medicare: Part A and B

Coverage:  What do Medicare Part A and Part B cover?

• PART A – The "brick and mortar" portion of Medicare, covering hospital benefits.
• PART B – The medical component of Medicare, covering physician services.

Costs:  “Premium-Free” Part A, Part B Premium, and IRMAA (if applicable)

• PART A – No monthly premium if you've paid FICA taxes for 40 quarters (10 years).
• PART B – The standard Medicare Part B premium is $174.70 per month for 2024, however, this premium can go higher based on your Modified Adjusted Gross Income.
  • This additional premium is called an Income Related Monthly Adjustment Amount.  \

Understanding IRMAA:  Income Related Monthly Adjustment Amount

• The government may add an additional cost, called an Income Related Monthly Adjusted Amount (IRMAA for short) to the standard monthly Part B premium based on your Modified Adjusted Gross Income (M-AGI) from two calendar-years prior.   
• Here are two examples of individuals that may be subject to IRMAA: 
  • If you file an individual tax return and your M-AGI was greater than $103,000 in 2022, you are subject to IRMAA.
  • If you file a jolint tax return for you and your spouse and your M-AGI was greater than $206,000 in 2022, you are subject to IRMAA.
• You can appeal IRMAA if you experience a Change of Life Event by completing form SSA-44.   

Summary | First Half:

• Medicare Part A and Part B cover 80% of your medical bills and 0% of your medications for $174.70/month (plus IRMAA for higher-income earners).
• The 20% Medicare doesn’t cover poses a financial risk. Adding Part C Medicare Advantage (or a Medicare Supplement + Part D) plan helps mitigate your risk.

Medicare Advantage vs Medicare Supplement Plans

Medicare Supplement Plans (Medigap Plans)

Medicare Supplement Plans - sold by private insurance companies to cover the gaps in Original Medicare (Part A & Part B), such as copayments, coinsurance, and deductibles. Also known as Medigap, this insurance provides beneficiaries with the freedom to visit any doctor or hospital that accepts Medicare, without requiring a referral for specialists.

Benefits of Medicare Supplement Insurance

• Provider Freedom: Beneficiaries can visit any doctor or hospital that accepts Medicare without network restrictions.                                                                                    
• Predictable Costs: These plans cover out-of-pocket expenses such as copayments, coinsurance, and deductibles.
• No Referrals Needed: Beneficiaries do not need referrals to see specialists.
• Standardized Coverage: Plans are standardized nationwide (A through N), making it easier to compare options and understand coverage.
• Travel Coverage: Most plans provide for emergency care during foreign travel.

Drawbacks of Medicare Supplement Plans

• Higher Premiums: Monthly premiums for Medigap plans are typically higher compared to Medicare Advantage plans.
• No Prescription Coverage: Medigap plans do not include prescription drug coverage, so beneficiaries need to purchase a separate Part D plan.
• Limited to Original Medicare Services: Additional benefits like vision, dental, and hearing are not covered.

10 Standardized Medicare Supplement Plan Options (A – Z)

The two top Medicare Supplement Plan options are Plan G and Plan N.  

1. Plan G: “As good as it gets but as expensive as it gets for Medicare Insurance!” 
   • The Cadilac Plan: covers all gaps in Medicare Part A & B, except for the 2024 annual Medicare Part B deductible of $240.
   • Premiums: Generally higher than most Medigap plans.
   • Most Predictable Out-of-Pocket Expenses: Apart from the Part B annual deductible, most other costs are covered, with no copays or coinsurance.
2. Plan N: Lower premiums to Plan G due to additional out-of-pocket expenses.
   • Unlike Plan G, Plan N does not cover Medicare excess charges.
   • Plan N also requires copays up to $20 for some office visits and up to $50 for emergency room visits that do not result in inpatient admission.

Part D: Prescription Drug Plans (PDP)

Medicare Part D - the prescription drug coverage component of Medicare, designed to help Medicare beneficiaries pay for outpatient prescription drugs. Plans vary by state and are purchased from private insurance companies.

• Standalone Prescription Drug Plans (PDPs) - for beneficiaries on Original Medicare + Medicare Supplement plan and need separate prescription coverage.
  • Part D PDP coverage is typically included in Medicare Advantage plans.
• Average premium: The estimated average enrollment-weighted monthly premium for Medicare Part D stand-alone drug plans is approximately $48/month in 2024, however, premiums can range from $ 0 - $ 110/m. * Source IKF
• Formulary: Each Part D plan has its own formulary, or list of covered drugs.
• Selecting a Plan: We help beneficiaries compare plans based on the specific drugs they need, as coverage and costs can vary significantly between plans.

Medicare Advantage Prescription Drug Plans: Part C

Medicare Advantage Plans (MAPD) - an alternative to Original Medicare, offered by private insurance companies approved by Medicare.  MAPD plans bundle Part A, Part B, and often Part D, along with additional benefits like vision, hearing, and dental care.

Benefits of Medicare Advantage Plans

• Lower Premiums & Deductibles: Unlike Medicare Supplement premiums, most Part C Plans have zero (or minimal) premiums and low-to-no medical deductibles.
• Bundled Benefits: Many plans include prescription drug coverage (Part D) and additional benefits such as vision, dental, and hearing care.
• Out-of-Pocket Maximum: There is an annual out-of-pocket spending limit, providing financial protection against high costs.
• Extra Services: Some plans offer extra services like fitness programs, wellness benefits, transportation, over-the-counter goods, and more.

Drawbacks of Medicare Advantage Plans

• Restricted Networks: MAPD Plans typically have limited networks of doctors and hospitals; enrollees may need referrals to see specialists and pay more or seek care outside their network if they need to see a provider not covered by their plan.
• Prior Authorizations: often require prior authorization for certain treatments. procedures, and medications.
• Cost Concerns: While MAPDs offer lower premiums, out-of-pocket costs can be higher, less predictable, and copays/coinsurance can accumulate quickly.
• Plan Complexity: Plans can vary significantly in terms of coverage and costs, making it more challenging to compare options.
• Geographical Limitations: Coverage and plan availability can vary by region, which may impact access to certain plans and providers.

In summary, Original Medicare +a Medigap plan offers greater provider flexibility and predictable costs at a higher premium, while a Medicare Advantage Plan provides additional benefits and potentially lower premiums but with more network restrictions and need for prior authorizations.

Guaranteed Issue (GI) Rights

What are Guarantee Issue Rights?

Guarantee issue rights - also known as "Medigap protections”, GI rights safeguard you from medical underwriting. This means you can purchase Medicare insurance from any insurer without regard to your health condition or having to answer health questions.

Do Medicare Supplements have “Guarantee Issue Rights”? 

• Medigap policies have guarantee issue rights only during the Medicare Supplement Open Enrollment Period (OEP). There are a few exceptions (i.e., Trial Right).   
• Medicare Supplement OEP?
  • It's a 6-month window that begins when you are at least 65 years old and enrolled in Medicare Part B.
  • During this period, you are protected from medical underwriting, penalties, and denial of coverage.

Do Medicare Advantage and Part D plans have “Guarantee Issue Rights”? 

• Part C/ Medicare Advantage Prescription Drug Plans (MAPDS) and Part D/ Prescription Drug Plans are always Guarantee Issue.
• You cannot be denied a Medicare Advantage or a Part D plan during your Initial Election Period (IEP) or during Medicare’s Annual Enrollment Period (AEP).
• Medicare’s Annual Enrollment Period (AEP) - is a designated time each year when Medicare beneficiaries can make changes to their Medicare coverage.
• Medicare's AEP occurs between October 15 – December 7th annually.