Choosing the right Medicare plan for you
Delphi Insurance is here to help you!
For many customer, knowing how to choose Medicare Insurance coverage is a complicated process. Isn't obtaining Original Medicare sufficient? If you add additional coverage to Original Medicare, do you choose a Medicare Supplement Plan? Do you choose a Medicare Advantage Plan? Are there any other options to consider? What's the difference between plan options? What are the rules for getting and maintaining the added insurance? Looking over all the information available can be like navigating through a giant maze, or seem like you are reading a different language. NO WORRIES! We "speak" Medicare, and we can help simplify all the details, while guiding you through the MAZE!
If you have any questions about how Medicare works, about Medicare Options, or about Insurance Plans available, please don't hesitate to reach out to us. No question is too small or too big. Consultations are always FREE.
No two customers are alike
This is why a qualified consultation with careful examination of each customer's situation must be taking into account before we render a recommendation. We take information that we gather from talking with you and combine it with our knowledge of plan details, our knowledge of local peculiarities, and our understanding of how each available option can affect coverage. We want to give you the MOST coverage for the LEAST amount of money, while still providing protection from the unexpected. Determining appropriate coverage depends on your needs with careful consideration to plans available where you live. To best serve our customers, we must meet them to properly provide the FREE and valuable service we offer. We prefer to meet in person, but we have other means to discuss options. Often times, we can begin our initial interview right over the phone.
On the page below we will summarize considerations that clients might take into account, while providing some insight to considerations we utilize. This is in no means a suitable substitute for a detailed consultation, but serves as a useful first step. We will cover general information that covers the most important information that will apply to the greater number of individuals. There's many unique situations that we do not cover, but that does not mean we don't have the information. Nor can we address every question or concern that someone might have. Be sure to contact us for clarification on any information listed below, or to address your questions that were not actually addressed. We will either have the answer or can quickly get it. We're here for YOU!
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Other Important Considerations:
We often hear people mention things that they "heard." Some of these things might be coming from their "Uncle Bob" in Minnesota, their "Cousin Sally" in California, or their neighbor Eugene in a down-stairs apartment. Why is this relevant? Some of the information people hear is so old and outdated that it no longer applies. Some of the information people hear might be loosely based on laws or regulations applicable in another State, but does not apply to the State of Washington. There's no viable substitute for talking to an experienced, local, licensed Agent familiar with applicable laws and available plans in the State of Washington. Family and friends mean well, but often do not consider how their advise might be different from your needs. They may know a great deal about a small portion of the information, which means that you might not get all information necessary to consider. The other one we like is, "we saw a commercial the other day, and it was saying..." FYI: TV commercials often have misleading information based on what someone somewhere in the Nation may qualify for. They often advertise special programs available in limited locations that have very detailed qualifications in order to apply. It's better to just call a local agent for relevant information without the unnecessary hype. We will only provide accurate information for each individual, base on where they live and what they qualify for.
What are the Medicare Election Periods?
If you started receiving early Social Security Income, Social Security Disability Income (SSDI), or Supplemental Security Income (SSI), you will be automatically enrolled in Medicare, if you've received those payment for four months or longer. Most who are automatically enrolled will receive confirmation of their enrollment three months prior to the effective date. If you are paid any of the above income, but have Employer Group Health Insurance provided for by a spouse's employer, you will be given an opportunity to delay enrollment for Part B. If you do not receive such insurance, delaying Part B is possible, but not advisable. It can lead to many unintended problems. Everyone else must enroll in Medicare manually with SSA during their IEP. Again, if you continue to work and receive Employer provided Group Health Insurance or your spouse's employer provides the coverage, you may delay enrollment in Part B without fear of penalty. Certain precautions do need to be considered.
Initial Enrollment Period (IEP)
Your Initial Enrollment Period (IEP) is 7 months long. It includes your 65th birthday month plus the 3 months before and the 3 months after. It begins and ends 1 month earlier if your birthday is on the first of the month. You may enroll in Part A, Part B or both. You may also choose to join a Medicare Advantage plan (Part C) or a prescription drug plan (Part D). Prescription drug coverage must be creditable or you may be subject to a late-enrollment penalty when you enroll in a plan with Part D benefits.
Medicare Supplement's (Medigap's) Open Enrollment
Medicare Supplement Insurance (Medigap) has a six-month open enrollment period (OEP). Your open enrollment period begins when you are both:
- 65 years old and
- Enrolled in Medicare Part B
Unlike the Medicare OEP that happens once every year, you have only one Medigap OEP. If you get Medicare Part B before you turn 65, your Medigap OEP starts the first day of the month you turn 65. If you delay enrolling in Medicare Part B until after you turn 65, your Medigap OEP automatically starts the month you enroll in Medicare Part B.
Common Myth about Medicare Supplement's Enrollment Eligibility:
Some are told that they MUST enroll in a Medicare Supplement Plan during their one and only 6 month Open Enrollment to ensure guaranteed issue. This might be true in some States or with some plans, but it is NOT completely true based on how some carriers interpret Washington State Laws. We have Supplement plans that allow for multiple periods of guaranteed issue every year, particularly with those currently enrolled in a Medicare Advantage Plan (Part C) wishing to switch to a Medicare Supplement Plan (Medigap), or replacing a Medicare Supplement plan with another. Such insurance carriers view Medicare Advantage Plans as more comprehensive coverage. There are some restrictions that apply, so contact us for details. Not all carriers interpret Medicare Advantage Plans as more comprehensive coverage, so they may avoid the requirements for replacing them without evidence of insurability. We accomplish this very thing on a regular basis with select carriers and some minor planning may be necessary. We can help you understand!
Annual Enrollment Period (AEP), October 15 - December 7?
During annual enrollment you can add, drop or switch your Medicare coverage.
Medicare Advantage Open Enrollment Period (OEP), January 1 - March 31
If you are already a Medicare Advantage plan member, you may disenroll from your current plan and switch to a different Medicare Advantage plan one time only, during this period. You may also drop a Medicare Advantage plan to return to Original Medicare and add an optional Medigap Policy. If dropping a Medicare Advantage Plan, it is critical to replace it with a Stand-alone Prescription Drug Plan (PDP -- Part D) in order to avoid future late enrollment penalties if you lack creditable drug coverage. Creditable drug coverage may include, but is not limited to coverage from the VA, TriCare for Life, or certain Group Employer Health Insurance (while employed) through you or your spouse's current employer.
Special Enrollment Periods (SEP)
Depending on certain circumstances, you may be able to enroll in a Medicare plan outside of the initial enrollment or annual enrollment time frames. Some ways you may qualify for a Special Enrollment Period are if you:
- Retire and lose you or your spouse's employer coverage. You may apply for Part B, while still employed and are anticipating a retirement date. Once you or your spouse lose employer coverage (COBRA does not count), you will have up to eight months to add Medicare Part B. Waiting too long has two problems. 1st you may have to wait until the following GEP, which could subject you to life long Penalties. Secondly, even if you have an extended period to add Part B, after 63 days of losing your Employer Group Health Insurance you may be subjected to a late enrollment period for Medicare Part D. Having COBRA insurance does not help avoid such penalties, so we advise our clients to avoid any delays for adding additional coverage.
- Move out of the plan's service area
- Receive assistance from the state (such as the Medicare Savings Program) or qualify for "Extra Help."
- Have been diagnosed with certain qualifying disabilities or chronic health conditions
- as well as many more less common situations
Special Enrollment Periods can be particularly complicated with a number of special rules attached. We are here to provide guidance on this issue, since there are many potential events that can allow for a special election period and most of them will sometimes include complicated conditions for how to use them, how long they can be used, etc.
Special Needs Plans have other eligibility requirements. This is another issue we deal with on a regular basis all year long.
What is the Medicare General Enrollment Period (GEP) and when is it used?
If you failed to enroll in Original Medicare Part B with SSA (Social Security Administration) during your Initial Enrollment and are not covered by you or your spouse's Employer Group Insurance (while working), you will have to wait for Medicare's General Enrollment Period (GEP) that runs between January 1 and March 31st. (For those who were employed by an employer with 20 or more employees, they are given an additional 8 month window to enroll in Part B, however, not having the drug coverage from their employer plan beyond 63 days can trigger a late enrollment penalty for Part D coverage.) This special enrollment period is completely different than the Medicare Advantage Open Enrollment, the Medicare Supplement Open Enrollment or any other election period, since it is specific to obtaining Part B coverage only. Once approved, your Part B coverage will not begin until July 1. The major problem with this goes beyond not qualifying for Medical coverage. In this scenario, you may also be subject to a 10% penalty for late enrollment into Part B for every full 12 months you are without coverage. This goes beyond the late enrollment penalty you may be subject to, if you do not add prescription drug coverage when first eligible and do not have creditable coverage (such as through the employer plan). If you need information or advice, please reach out to us. The final problem is that in order to enroll in a Medicare Advantage Plan, you would have an enrollment period for the three months prior to the July 1st effective date (April, May, June), or be forced to wait until the following AEP for complete coverage. This could also increase potential Part D penalties. Also, it would likely prevent anyone in this circumstance from obtaining Guaranteed issue of a Medicare Supplement plan (which eventually could occur in the State of Washington after enrolling in a Medicare Advantage Plan first.
As you can see, it does not pay to delay these decisions.
NOTE: If someone delays enrolling in Part A for some reason, they may add it at anytime (certain rules and exclusions apply to someone who hasn't established 40 quarters of work history for them or their spouse). If someone did not have sufficient work history to obtain Part A at no cost, delaying enrollment may subject them to a temporary late enrollment penalty. If someone delays Part A enrollment and qualifies for free coverage, the effective date will be retroactively applied for up to SIX month prior to enrollment, but not sooner than they were otherwise eligible. Most individuals have no real reason to defer enrollment into premium free Part A, even if they or their spouse delay retirement and are covered by an Employer provided Group Health Insurance plan. The one exception is if that EGHI plan is an HSA. Delaying enrollment into Part A may be warranted, as long as they are not automatically enrolled. If someone were to delay enrollment into Part A, they can add it back at any time with no need to wait for any enrollment period. For those with an HSA wanting to defer their Part A enrollment, special precautions MUST be considered. Call us for pre-planning information, or discuss the matter with a tax attorney or CPA.
Original Medicare costs
The first step is to enroll in Original Medicare, which consists of Medicare Part A and Part B. It's important at this stage to understand what costs are associated with Medical coverage "assuming" you only have Original Medicare to pay your medical expenses. We always try to tell our customers to pretend they have not added additional insurance YET (incase they already have), since most are unsure of why additional insurance is needed. This tends to be true with many preparing for retirement, as well as those who have been covered by Medicare for decades.
Some of this information is a review of information in previous pages, but we will add some details on costs.
Medicare Part A costs:
Part A is the portion of Original Medicare that covers the costs for inpatient care, hospital stays, and Skilled Nursing Facilities
Most people won't pay a monthly premium for Part A (sometimes called "premium-free Part A"), and are considered "Entitled" to this coverage. This occurs once you have been credited for 40 quarters of paying Medicare taxes, which is also the same time you become "vested" in Social Security (although they are different programs). If you paid Medicare taxes for less than ten years (40 quarters total), you may purchase this coverage. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $471. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $259.
What you pay in 2021:
- First 60 days in Hospital: $1484 Deductible
- 61st thru 90th day: $371 per day Co-Pay
- 91st and after, while using 60 lifetime reserve days: $742 per day Co-Pay
- After lifetime reserve is used: You pay 100% of ALL costs.
Skilled Nursing Home costs that you pay for 2021:
- Days 21-100: Up to $185.50 per day Co-Pay
- Days beyond 100: 100% of all costs. These cost are considered "long term care," and are not covered.
Medicare Part B costs:
Part B is the portion of Original Medicare that covers doctor visits, out-patient care.
For 2021 the standard Part B premium is $148.50 per month (for most Beneficiaries) and is paid directly to Medicare usually through automatic deductions from SSA income, or paid quarterly (when manual payment is necessary). Income Related Monthly Adjustment Amount (IRMAA) can also be added for those who earned higher incomes from two years ago. IRMAA, if it applies to you, is an extra charge added to your premium. The full Part B premium can be paid for by the State for those qualifying for the Medicare Savings Program, even if you are subject to IRMAA right now.
What you pay in 2021 (with no additional coverage):
- Annual deductible of $203
- 20% Co-insurance for all approved services
- PLUS up to 15% added (new for 2021. Previous amount was 10%) to the approved bill for any providers who do not accept "assignment." This is what is known as Part B excess.
Important notes: There is NO Cap for Max Out-of-Pocket expenses with Original Medicare. Also, we generally see the Part B excess the most, when out-patient surgery is performed. It can, however, become an issue in other situations and with certain providers.
Example: Suppose you have an out-patient surgery that has an approved amount of $80000. Let's assume the surgical team (surgeon and/or anesthesiologist) do not accept assignment. Your bill would be $16000 for your 20% co-insurance, plus $12000 for your Part B excess. That's $28000 in total amount due. The higher you are billed, the higher your responsibility will be, without additional insurance. Also remember for the above situation, only Medicare Supplement Plans F, C, and G will pay that Part B excess amount. Medicare Advantage Plan, on the other hand, largely eliminate this common issue. Depending on the Medicare Advantage plan selected, your cost for the above situation could be as little as a few hundred dollars, or subject to a significantly lower out-of-pocket maximum amount due. Understanding what's available is part of what we help people with.
The Part B excess of 15% is actually new for 2021. Previously the amount providers were allowed to add to "approved amounts" was 10%. That means that for 2021 and beyond, the Part B excess allowance has increased by 50%. A Part B excess charge in 2018 for $4000 might be $6000 in 2021. This can be greatly mitigated by the use of quality Medicare Advantage Plans, or by increasing Medicare Supplement coverage to the more comprehensive plans. That will be discussed in the next section.
The above costs are not all inclusive, nor a complete explanation or prediction of what any individual may pay with coverage only through Original Medicare. The premiums, deductibles, co-pays, co-insurance, and examples given do represent the most common expenses that Medicare Beneficiaries may experience. As you can see, it also does not include prescription drug coverage that must be obtained with a policy covering Medicare Part D benefits.
Next we will explore what "Options" are available to help mitigate the above costs.
It rarely makes sense for most people to not add additional insurance coverage beyond Original Medicare. It's also true for those that have some or all of their medical expenses paid through the State's Medicaid program. For those people, Special Needs Plans are available to greatly enhance benefits and availability of misc. care.
It's most important to understand what options are available, while not getting confused by using the wrong definitions for those options.
As we seen in the previous section, there are many holes in coverage associated with Original Medicare than can create substantial costs. For most people, the only way to mitigate those costs are though the use of Private Insurance.
Let's first look at incorrect definitions:
Some people refer to any insurance added to Original Medicare as either "Supplemental Insurance" or simply use the word "Supplement." This is incorrect.
- Supplemental Insurance coverage refers to added insurance such as Dental, Vision, Hospital Indemnity, etc. It's the wrong word, when referring to Medicare Options.
- A Medicare Supplement Plan is a specific category of added insurance and should not be used as a generic expression for "any" insurance added to Medicare (Medicare Options). A Medicare Advantage Plan is not a Supplement Plan. It's a Medicare Part C plan and works differently.
In the months leading up to someone's 65th birthday, and during the month of October, most people are inundated by an endless supply of advertisements, brochures, literature, and information related to Medicare. It's all confusing, if you don't already understand what your options are. Within those 10 lbs. of mail that you receive is all kinds of information that would make the average person's head spin. Including ours.
It might be easy to assume that your choices are endless and that there are hundreds of Options to choose from. We simplify this by explaining that you really have TWO Main Choices. Yes there are many insurance products within each choice, but lets first simplify the initial stage of choosing.
The two "Options" above are labeled as 1 and 2 purely for illustration purposes. We could just as easily reverse their label and the message is the same.
Below is a brief summary of how each "Option" works and how they differ. What we don't discuss here is the cost difference or analysis on the level of coverage someone truly needs. Those details are more appropriate for a personal consultation with us, but we will simplify it for comparison sake.
It's extremely important to remember that regardless of which option one might chose, enrollment in Medicare Part A and Part B will always be the prerequisite for adding coverage. That also means that all premiums for Original Medicare must continue to be paid regardless of which Options you may choose.
Medicare Option 1:
Medicare Supplement Insurance are standardized plans offered by private insurance companies designed to "fill the gaps" of coverage provide by Original Medicare. That's why they are sometimes called "Medigap Policies."
What does it mean, when we say the plans are "standardized?" Except for a few States, all Plan choices for Supplement Plans offer the exact same coverage. A Plan A from one insurance company will be the exact same as a Plan A from another company. Likewise, a Plan F from one company is offers the same coverage as a Plan F from another company. Not all insurance companies will offer every Plan available, and other than changes to added benefits, the primary difference in Plans from one company to the next is mostly price.
This is how they work: Original Medicare acts as your primary insurance to cover your initial Medical Costs. Depending on which Medicare Supplement Plan you choose, the Medigap policy will cover all or some of what Medicare does NOT. The more comprehensive the plan and the more it pays will determine HOW MUCH your additional premium will be. As an example, some might qualify to enroll in a plan that pays 100% of all costs. Their premiums for that plan will also be higher than less comprehensive plans.
There are some individuals who live in remote areas not sufficiently covered by doctor networks or quality Medicare Advantage Plans that may best be served with this option. There are also certain individuals with increased medical needs that may do better with the more comprehensive plans. Other's may want to consider Option 2.
Since Original Medicare is the Primary Insurance when someone utilizes Option 1, here are a couple important facts to keep in mind:
- The Medicare Supplement Plan will only pay the amount it's designated to pay, only IF Original Medicare approves the services rendered. If Medicare does not pay, the Supplement will not pay, and YOU will owe the full amount.
- Since Original Medicare does not include Prescription Drug coverage, anyone utilizing Option 1 MUST add the optional Medicare Part D to have such coverage.
It's important to remember that not enrolling in a Medicare Part D Prescription Drug Plan can cause a late enrollment penalty, once coverage is added. It is optional, but that penalty continues to grow and will be a permanent monthly increase in costs. If you have delayed adding Part D coverage, please talk to us. For many people, the penalty is not as much as they thought, and by adding it as soon as possible, we are able to help you from having the penalty grow.
Medicare Option 2:
Medicare Advantage Plans are also known as Medicare Part C. They are offered by private insurance companies and are designed to combine all the benefits of Part A and Part B into one policy. Most also include Medicare Part D, while adding varying levels of additional benefits not included in Original Medicare.
This is how they work: When you enroll in Medicare Part C, you are still part of Medicare. CMS (The Centers for Medicare and Medicaid Services) regulates the insurance carriers to ensure they cover at least the services offered through Original Medicare. CMS (sometimes they are collectively referred to as "Medicare") pays the private insurance companies to administer the benefits (effectively acting like a subsidy for coverage). Ever hear of a ZERO premium Plan? Those are the plans that have sufficient money paid to them by CMS to cover all benefits within the plan. Some Plans offer additional benefits or more comprehensive coverage with a varying level of added premiums. This is why some Medicare advantage plans cost less than some stand-alone Prescriptions Drug Plan (Part D), yet have less costs associate with their Medical coverage compared to Original Medicare. This is also why many of the more comprehensive plans can have such a rich amount of added benefits and significantly reduced cost for various services, while keeping the premiums lower than expected.
Medicare Advantage plans have several ways to help reduce costs, both for predictable expenses, and the unexpected.
Here's some key points related to Medicare Advantage plans in our Service Area within Washington State:
- Most do not have Annual Deductibles for Medical Coverage.
- Most have reduced co-pays for services rendered, which are predictable and easier to manage.
- The inclusion of additional benefits and prescription drug coverage helps further reduce cost, while provided additional services.
Not all plans are created equal. Some plans are better at some things that others are not. Co-pays and the level of benefits change not only from one company to the next, but also depending on how comprehensive you want the coverage from each insurance company. That affects the price. Below you will see an illustration of some the the added benefits available on various plans. The statistics are based on National figures, but there are many additional benefits within plans available in select Counties in Washington State.
There are such a wide variety of choices within the Option 2 that speaking with an experience, local agent is so important. There are inherent differences with different plans that only experienced agents will understand, since not all of them may be published.
Final Thoughts on selecting one of the Medicare Options:
Medicare Advantage Plans were introduced in 2005 and were first made available in 2006, when Prescription Drug Coverage was enacted by Congress. Not only have they evolved significantly over the past few years or so, they are significantly more advanced compare to when they were first introduced. While Medicare Supplement plans are appropriate for many, I'd say a much larger percentage or Medicare Beneficiaries in Washington State (particularly in Western Washington Counties that I-5 cuts through) can better utilize Medicare Advantage Plans to help mitigate both their Medical and Prescriptions Drug needs. There are always exceptions, and there are always specific situations that change this. That's part of the consultation efforts we apply.
We have a large number of clients that chose both the Medicare Supplement Plans and the Medicare Advantage Plans. There's multiple reasons why each option can be appropriate for those who have them. Our mission is not to tell you what to or not to enroll in. Our mission is simply to provide the necessary information that will allow our clients to make a well informed decision based on how each plan works and what Options are available.
We do meet many people who are clearly enrolled in less than appropriate plans for their specific needs and their specific locations. We do our best to help them discover more appropriate choices available to them.
As you can see, there are many things to consider, even when we summarize what the Options are. Within each of the two options there are many combinations to choose from. As we've said many times, NO two customers are alike.