By Chuck Moline

Advisornet Financial

A major time in everyone’s life is when they become eligible for Medicare. This program of Social Security provides you with basic Health Insurance Coverage. How does it work?

Part A: you qualify for this coverage by working a required number of quarters (40) of work during your lifetime. Part A has been paid through an employer/employee payroll tax. If you qualify there is no direct premium cost for you when eligible.

This part of Medicare covers most inpatient hospital and nursing expenses, after a deductible has been paid and for a limited number of days

Part B: covers most outpatient charges, i.e. doctors visits, lab work, diagnostic test, etc. Under Part B you will have an annual deductible. After the deductible has been paid, this part will pay 80 percent of Medicare’s approved amount. Leaving the 20 percent for you to pay.

This part of Medicare requires a monthly premium. For most individuals that cost is $135.50 per month, but could be higher based upon income. In most cases this premium can be deducted from your monthly social security retirement payment or paid on a quarterly basis directly.

Part C: Also called a Medicare Advantage Plan. If this type of insurance is selected all of Part A, Part B, and Part D Benefits are assigned to an insurance company which in turn will administer benefits on behalf of Medicare.

Part D: Provides prescription drug coverage on a plan’s formulary list offered by a private insurance plan.  Not Medicare. Drug plans will typically have five tiers of drugs, tier one is the least expensive generic and increase in cost to tier five which are expensive brand drugs. As your drugs fall into higher tier levels, your cost will increase as well.

The premiums for this coverage, deductible, copays and coinsurance will vary based upon individual companies. Premiums may be subject to a penalty if a plan is not purchased when subscriber is first eligible. Formulary lists of drugs varies between companies and are subject to change. If you need to purchase Part D make sure you compare the drugs you take with the company’s formulary list.

In most cases, having only original Medicare will leave unpaid bills for you to pay with no out of pocket limits. This is the reason many people will purchase a supplemental insurance policy or a Medicare Advantage Plan (Part C) to pay some or all of these unpaid expenses.

The Initial Enrollment Period occurs when you are first eligible for Medicare. If that event is when you are turning 65 and are planning on enrolling in a Medicare Advantage Plan (Part C), you can enroll three months prior to your birth month, the month you turn 65, or three months after your birth month. Enrollment during this seven-month period can be done regardless of your health.

If your thinking about enrolling in a Medigap (Supplemental) policy the enrollment period starts the first of the month your Part B goes into effect and for six months following. Again, this is regardless of your health. If a subscriber wishes to enroll in this type of insurance after their initial enrollment period, medical underwriting will be done by the insurance company and coverage is not guaranteed. Remember, with this type of insurance you will need to also purchase a stand-alone Part D plan.

An annual open enrollment period occurs every year from Oct. 15-Dec. 7. This is the time subscribers can change their plans.

Our next article in this series will take a closer look at Medicare Advantage (part C) plans, Medigap (supplements) and part D drug plans.

If you have any questions call us at Advisornet Financial 507-434-2299.