Medicare: Wading Through the Alphabet Soup

How did Medicare get started? Let’s see how you do on this quiz.

  1. Which U.S. President signed Medicare as a law? (source)
    Answer: Lyndon B. Johnson 
  2. How many people signed up for Medicare in 1965, its first year? (source)
    Answer: 19 million 
  3. Before Medicare was signed into law in 1965, how many revisions had been drafted? (source)
    Answer: Approximately 80 revisions, compromises, and alternatives.

With 80 revisions, you can quickly assess how difficult it was to create Medicare from the very beginning. Over time, the Medicare system has not decreased in complexity.

For many people, their 65th birthday is an extra-special celebration because of Medicare enrollment. However, the wrapped gift of Medicare comes with a very confusing tangle of ribbons and bows.

The first ribbon to untie is the alphabet soup. Medicare Parts A, B, and D all cover different services:

  • Think of Part A as the most basic need: hospital insurance. It covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
  •  Part B pays for doctor services (amongst other services), which is the majority of coverage in the Medicare program. Many people don’t realize that Part B premiums are means-tested based on your income. (source)
  • Part D covers prescription drug service. These plans are offered by insurance companies.
  • What happened to Part C? Part C is the private insurance option called Medicare Advantage Plans.  Before you can choose Part C, you must have Parts A and B. Often times Part D is part of a Medicare Advantage Plan.

Once the ribbons are tied, the bow on top is a Medicare Supplement (also known as Medigap plans).

  • Supplement plans are typically offered by private insurance companies.
  • The purpose of having a Supplement is to cover “the gaps” in Original Medicare, such as co-insurance and deductibles.
  • More alphabet soup: Medicare Supplement plans are offered in A, B, C, D, F, G, K,L, M & N. Each plan has its own coverage and benefits. The chart below shows basic information about the different benefits that Medigap policies cover. If a percentage appears, the Medigap plan covers that percentage of the benefit, and you must pay the rest.

 

Medicare Table

(source)

* Plan F is also offered as a high-deductible plan by some insurance companies in some states. If you choose this option, this means you must pay for Medicare-covered costs (coinsurance, copayments, and deductibles) up to the deductible amount of $2,180 in 2015 before your policy pays anything.

** For Plans K and L, after you meet your out-of-pocket yearly limit and your yearly Part B deductible ($147 in 2015), the Medigap plan pays 100% of covered services for the rest of the calendar year.

*** Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don’t result in an inpatient admission.

 

What is your experience wading through the Medicare alphabet soup? Please tell us in the comments below.

One thought on “Medicare: Wading Through the Alphabet Soup

  1. I think it is unfortunate that Seniors have to reevaluate their coverage each year during an open enrollment period. The dates occasionally change and should the Senior be ill or not computer literate it becomes an even larger problem. If you aren’t on top of your options you may be trapped in a plan with a high premium or in the case of drug coverage (Part D) a plan that no longer covers your drugs. I do find however that the Medicare.gov web site is a big help with making the yearly decision and in our town there are volunteers at the Senior Center who will help those who need computer help and are willing to seek help. Thank you for the article summarizing and simplifing the medicare options.

    Like

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