You are turning 65 in a few months and all your friends keep telling you to pick one plan over another because the plan provides excellent coverage and your friend likes their doctor, etc. I know as I have heard those same comments hundreds of times.
This blog will try to simplify Medicare so everyone can understand how simple it really is to figure out.
The four (4) parts of Medicare are Part A (Hospitalization); Part B (All outpatient services), Part D (Standalone drug plan), and Part C (Parts A, B & D from private insurance. (There are other options to consider which have been already covered in an earlier blog.)
Under federal law, a Medicare recipient must have Parts A, B, and D to avoid any lifetime penalties.
So, after much thought, you decide to get Parts A & B and a standalone drug plan. This allows you to see any doctor, go to any hospital if they take Medicare. Great, you have got that solved. But do you? Medicare is the only insurance in the country that does not have a maximum out of pocket. Meaning you are on the hook for 20% of the bill with no maximum out of pocket. If your bill is $300,000 you owe 20% or $60,000. Not a good situation. There is another 15% that could be passed onto you, but we will cover that another time.
The other option is to get a Medicare Advantage Plan which includes Parts A, B, and D but is from private insurance. (The government does an annual actuarial study in each county in the country and establishes what the costs incurred are for a Medicare recipient with just Part A & B. (We will discuss Part D in a later blog.) In Clark County, the US government estimates it costs them around $1100 per month, per recipient. They give private insurance $900 per month (those that offer MAPD plans) thus saving $200 per Medicare recipient per month. With 150,000 Medicare recipients in Clark County that is a significant monthly saving for the government. Multiply that by 6000 counties in the US and the savings are significant.
These MAPD plans are offered as an HMO, PPO or MSA plan. We are only going to discuss the HMO and PPO plans currently.
If you choose either the HMO or PPO, several things happen simultaneously. You have met the burden under government regulations by having Part A, B, and D covered by the plan.
HMO stands for Health Maintenance organization meaning you use their doctors, their hospitals, and usually need a referral to see a specialist in their plan. (We are not going to talk about the various plans offered in Clark County other than to say a specific carrier does offer HMO services and does not require a referral to see any specialist in their network.) These plans differ considerably from Original Medicare in that each plan has a yearly maximum out of pocket and when you hit that max, the plan pays all fees for the balance of the calendar year.
There are many carriers offering HMOs in Clark County so when trying to determine which one would best serve your medical needs, you should consider who the doctors are and are covered in the plan? Also, determine if your medications are covered and at what cost. This is not an easy task and would recommend you seek out an insurance broker who is independent of any specific insurance company, so you get an unbiased evaluation of the plans you are considering. (Many of the insurance carriers offering MAPD plans have their own staff of brokers who only sell those plans.) An independent broker offers all plans, and you will get a better evaluation of your specific needs. (You should also be aware that all insurance companies pay the same commissions for the sale so there is no incentive to sell one specific plan over another) All these HMO plans are good, offering more than Original Medicare at no monthly cost to you. Evaluate them carefully to ensure you get what you want and need from the insurance.
These plans are called Preferred Provider Organizations meaning they have their own independent doctors who service clients in these plans. The major difference over the HMO is you do not need a referral to see any specialist in their network. See a doctor outside their network and the cost is significantly increased with different fees and a higher maximum out of pocket. Like the HMO, these PPO plans also have a maximum out of pocket and the same rules apply as well.
The PPO plans also allow you to go out of Clark County to any doctor, any hospital anywhere in the US if the doctor or facility is in the national network. For that privilege, the copays and max out of pocket are higher than the HMO plans. The government sets the max out of pocket by type of plan and the insurance company can charge less but not more than that maximum. If you choose to go out of network for anything other than an urgent or emergency, the plan copays, and maximums are higher than using in-plan doctors or facilities. Urgent and emergency services are available nationwide and worldwide and covered as if you were in the network. Many seniors like the freedom of choosing any doctor in the network and do not mind paying a higher copay for those services.
Both these plans are offered in Clark County, NV without a monthly premium which is especially good for seniors on a fixed monthly income. The popularity of these plans increases annually because of the flexibility of these plans and the many extras these plans offer over Original Medicare.
Picking either of these types of plans will help you navigate Medicare and keep your medical costs reasonable. Choose wisely and make sure your doctors and medications are included in the plan and that you know those costs before you proceed.
The MAPD season allows you to make plan changes twice annually. The Annual Elections Period or AEP happens between October 15th and December 7th yearly. During that time, you can change your MAPD plan or standalone drug plan as many times as you want. The last one chosen is what you are stuck with for the following year. The Open Enrollment Period (OEP) occurs between January 1st and March 31st and during that time you can only change your MAPD plan once and that is the plan you will have until the 1st of January in the following year. At this time, you cannot change your standalone drug plan during the OEP.
Choose wisely and remember the services of an insurance broker costs you nothing as they are paid by the insurance company. Use an independent broker as they typically offer all plans in your area and since the commissions are the same regardless of the plan chosen, they will have an objective approach to assisting you in making the correct decision that meets your needs medically.
Len Barend, broker
The Barend Agency Inc.