Top Medicare Insurance for Baby Boomers

Medicare is a federal health insurance program for people 65 years and older. Millions of Baby Boomers enroll in the program each year and depend on it to cover medical expenses.

Medicare can be difficult to understand, causing new applicants unexpected and unwelcome confusion and stress. This article will outline the program in clear terms to help Baby Boomers understand exactly what Medicare is.

What is Medicare?

Established in 1965, Medicare is a U.S. health insurance system that covers most, if not all of the costs of medical care for people aged 65 and older. The program is funded through a 1.45% payroll tax you’ve been paying throughout your working years. Medicare is a benefit you have earned.

When you sign up for the program you are enrolled in “Original Medicare.” Original Medicare is defined as a “Fee For Service” health plan that is made up of two central pieces: Hospital Insurance (also known as Medicare Part A) and Medical Insurance (also known as Medicare Part B.) When you enroll in the program, you get Part A and Part B. If you want prescription drugs covered, you’ll need to enroll and pay separately for a Medicare Part D program. These programs are available through an insurance company or other private company approved by Medicare.

When you receive medical services, you will be required to pay a deductible. The remaining balance due for the services received is covered through the program but the amount paid will be limited to a Medicare-approved amount. If there is still a remaining balance due, you are responsible to pay it.

Medicare ends up covering approximately 50% of medical expenses incurred by those enrolled in the program. The remaining 50% of health care costs are generally covered by separate private insurance policies and/or through publicly available Part C or Part D Medicare health plans.

Medicare Advantage

Medicare Advantage plans can be full of extra benefits like prescription drug coverage, and dental, hearing, and vision coverage. Another advantage of a Medicare Advantage plan is a mandatory out-of-pocket maximum. You may also be limited to provider networks.

If you’re new to Medicare, you may be curious about Medicare Advantage. Here are some pros and cons of enrolling in a Medicare Advantage plan.

For starters, Medicare Advantage plans are offered by private insurance companies but are regulated by Medicare. Regardless of whether the Medicare Advantage plan you choose has a monthly premium or not, you must continue to pay your Medicare Part B premium. Some Medicare Advantage plans have premiums as low as $0.

You may not know that Original Medicare (Part A and Part B) has no out-of-pocket maximum. That means that if you face a catastrophic health concern, you may be responsible for paying tens of thousands of dollars out of pocket.

All Medicare Advantage plans have out-of-pocket maximums, which prevent you from extremely high spending when a serious illness happens. Once you meet this limit, your plan covers the costs for all Medicare-covered services for the rest of the year. 

Medicare Advantage plans may offer extra benefits beyond what Original Medicare covers. Medicare Advantage plans must cover, at a minimum, everything that Part A and Part B cover. They also may offer extra benefits such as…

 Prescription Drugs

• Most Medicare Advantage plans have prescription drug coverage. This could be good news if you take one or more prescription drugs.

Vision and hearing

• Many Medicare Advantage plans offer routine vision and hearing coverage. This could include coverage for routine eye exams, routine eyewear, routine hearing exams, and hearing aids.

Gym Membership

• Gym membership provides a fitness program for Medicare Advantage beneficiaries. Not all plans offer Gym Membership.

Dental

• Some Medicare Advantage plans may cover preventative dental services including oral exams, cleanings, fluoride treatment, and x-rays.

Other extra perks

• Other extra benefits may include:
• Meal delivery for beneficiaries with chronic illnesses
• Transportation for non-medical needs like grocery shopping
• Carpet shampooing to reduce asthma attacks
• Transport to a doctor’s appointment or to see a nutritionist
• Alternative medicine such as acupuncture
• Keep in mind not all Medicare Advantage plans offer the same extra benefits. Since benefits vary by plan, check with the specific Medicare Advantage plan you’re considering for more details.

Lower out-of-pocket costs

• Under Medicare Advantage, each plan negotiates its rates with providers. You may pay lower deductibles and copayments/coinsurance than you would pay with Original Medicare. Some Medicare Advantage plans have deductibles as low as $0.

ESRD coverage

• Medicare Advantage plans can now accept you if you’re a Medicare beneficiary under age 65 who has ESRD (end-stage renal disease, a type of kidney failure).

Medicare Advantage Cons

Con 1: Networks

Many Medicare Advantage plans have networks, such as HMOs (health maintenance organizations) or PPOs* (preferred provider organizations). Many Medicare Advantage plans may have provider networks that limit the doctors and other providers you can use. Under Original Medicare, you can use any provider that accepts Medicare assignments.

Con 2: Doesn’t work with Medicare Supplement

Medicare Advantage and Medicare Supplement insurance plans are mutually exclusive. Medicare Supplement insurance plans help cover Medicare’s out-of-pocket costs, such as copayments, coinsurance, and deductibles. You can’t get this help if you have a Medicare Advantage plan.

Con 3: The out-of-pocket maximum resets every calendar year

… and it also varies among plans (although no plan may exceed the Medicare-set maximum amount). For example, suppose your plan out-of-pocket maximum is $6,700 per year. Say you start getting cancer treatment in October. You could reach your $6,700 maximum in 3 months. Then as you keep getting treatment in January, you could reach your $6,700 maximum again in three more months. That’s $13,400 out of pocket in six months.

If you decide a Medicare Advantage plan is not for you may consider a Medicare Supplement plan.

*Out-of-network/non-contracted providers are under no obligation to treat Preferred Provider Organization (PPO) plan members, except in emergencies. For a decision about whether the plan will cover an out-of-network, you or your provider are encouraged to ask for a pre-service organization determination before you receive the service. Please call the plan’s customer service number or see your Evidence of Coverage for more information, including the cost-sharing that applies to out-of-network services.

Another option is a Medicare Supplement

Medicare supplement insurance fills in the gaps between what original Medicare pays and what you must pay out-of-pocket for deductibles, coinsurance, and copayments.

Medicare supplement policies only pay for services that Medicare says are medically necessary, and payments are generally based on the Medicare-approved charge. Some plans offer benefits that Medicare doesn’t offer, such as emergency care outside the United States.

Medicare supplement policies are sold by private insurance companies that are licensed by TDI. But Medicare supplement benefits are set by the federal government.

Open enrollment
It’s best to buy Medicare supplement insurance during your six-month open enrollment period. Your open enrollment period begins when you enroll in Medicare Part B at age 65 or older. During this time, companies can’t refuse to sell you a policy because of your health history or condition. If you wait until after your open enrollment period, you might not be able to buy a policy if you have a preexisting condition.

Note: Your Medicare supplement policy is renewed automatically each year to ensure you have continuous coverage. If you drop your Medicare supplement policy, you may not be able to get it back, or you might not be able to buy a new policy.