Blog

Medicare Coverage and Enhancement Options

The most important information to know in assessing your Medicare plan options include the cost or monthly premium for each option, your out of pocket risk or exposure under each option and the specific issues associated with each option. Below you will find this important information.

MONTHLY PREMIUM/COST OF OPTIONS

  1. Original Medicare: $170.10 plus possible income related increase.
  2. Medicare Advantage HMO: Typically $0.00 (some plans pay a portion of your Medicare Part B premium).
  3. Medicare Advantage PPO: Approximately $0.00 to $35.00.
  4. Standard Plan G Medicare Supplement: (female) $105.00 (male) $120.00
  5. Standard Plan N Medicare Supplement: (female) $80.00 (male) $90.00
  6. High Deductible Plan G Medicare Supplement: (female) $42.00 (male) $50.00

With all of the six listed options above, you must also be enrolled in Medicare Parts A and B, and you must pay the Medicare Part B Premium (Option 1). The standard Medicare Part B premium is $170.10. With the exception of options 2 and 3 above (Medicare Advantage Plans), none of the other options (Medicare supplement plans) includes prescription drug coverage. You will need a stand alone Medicare Part D prescription drug plan to have drug coverage and to avoid the Medicare penalty for not enrolling in a Part D plan. Depending on your specific drugs, the recommended stand alone prescription drug plan will range in price from as low as around $8.00 per month for a standard plan with a $480.00 deductible and about $60.00 per month for an enhanced plan with no deductible. On average and including paying the monthly premium for the plan, Medicare beneficiaries save at least 50% to 60% on their annual drug costs by enrolling in a prescription drug plan. Please review our blog Part D Prescription Plans for more details.

OUT OF POCKET EXPOSURE/RISK

Original Medicare
With original Medicare only, there is no cap or limit on your annual out of pocket exposure and there is a cost associated with just about any type of medical care that you get. Here is a list of some of the more common out of pocket expenses you might have with original Medicare:

  • Inpatient Hospital Care: You pay for days 1-60 an initial deductible of $1,556.00. For days 61-90, you pay $389.00 each day. For days 91-150 you pay $778.00 per day. You pay 100% for each day thereafter.
  • Skilled Nursing Facility: For days 1-20 you pay nothing. For days 21-100 you pay $194.50 per day. You pay 100% for each day thereafter.
  • Doctor Office Visits: After you pay your $233.00 annual Medicare Part B deductible, you pay 20% of Medicare approved charges/amounts. If the doctor does not accept Medicare assignment as payment in full, you must pay an additional 15% of the charges.
  • Chiropractic Services: After you meet your $233.00 annual deductible, you pay 20% of Medicare approved charges/amounts for manual manipulation of the spine to correct subluxation. If the chiropractor does not accept Medicare assignment as payment in full, you must pay an additional 15%.
  • Outpatient Surgery: After you meet your $233.00 annual Medicare Part B deductible, you pay 20% of Medicare approved amounts for the surgeon and the outpatient facility charges. If the surgeon does not accept Medicare assignment as payment in full, you must pay an additional 15%.
  • Ambulance: You pay 20% of Medicare approved amounts, and the Medicare Part B deductible of $233.00 applies.
  • Emergency Care: You pay 20% of the facility charge and 20% of the emergency room physicians’ charges. The Medicare Part B deductible of $233.00 applies.
  • Diagnostic Tests, X-Rays and Lab Services: You pay 20% of Medicare approved amounts except for approved preventive care services, for which you pay nothing. Otherwise, the Medicare Part B deductible of $233.00 also applies.

It is important to understand how quickly and how high these costs can add up if you have original Medicare only. For example, if you had an extended hospital stay of 150 days, you would owe $49,266.00. If you were in the hospital for a year, you could owe more than $1.7 million. It is strongly recommended that you select an option (2 through 6) other than original Medicare only.

Medicare Advantage HMO (approximate amounts only):
The stated annual out of pocket limit/cap ranges from approximately $3,500.00 to $5,800.00, depending on the plan. The out of pocket costs include items such as hospitalizations ($226.00 per day for days 1-6), skilled nursing care ($160.00 per day for days 21-100), primary care physician visit ($0.00) and specialist doctor visit ($45.00).

Medicare Advantage PPO (approximate amounts only):
The stated annual out of pocket limit/cap ranges from approximately $5,500.00 to $7,000.00, depending on the plan. The out of pocket costs per year include items such as hospitalizations ($290.00 per day for days 1-6), skilled nursing care ($155.00 per day for days 21-100), primary care physician visit ($0.00) and specialist doctor visit ($45.00).

Standard Plan G Medicare Supplement:
Your annual out of pocket exposure is limited to the Medicare Part B deductible of just $233.00. With this plan, you would owe nothing else such as copays or coinsurance. Your only other cost is the monthly premium.

Standard Plan N Medicare Supplement:
There is no stated annual out of pocket limit. However, the out of pocket costs are limited to all of the Medicare Part B deductible ($233.00), all Part B excess charges (15% of the Medicare allowed amount) and a $20.00 copay for each doctor visit.

High Deductible Plan G Medicare Supplement:
Your annual out of pocket exposure is limited to a total of $2,603.00 which includes a plan deductible of $2,370.00 and the Medicare Part B deductible of $233.00. The out of pocket costs that apply to the $2,370.00 annual plan deductible include 1) the Medicare Part B excess charges and 2) foreign emergency travel. The costs also include 100% of 1) Medicare Part B coinsurance, 2) blood, 3) Part A hospice care, 4) skilled nursing and 5) the Medicare Part A deductible.

OPTION SPECIFIC ISSUES

Original Medicare:
There is no good reason to have original Medicare only and expose yourself to over $1 million in risk. The out of pocket exposure/risk is just too great. This is especially true in light of the fact that a high deductible Plan G Medicare supplement caps your out of pocket exposure/risk at $2,603.00 and costs just $45.00 or so per month. There also are Medicare Advantage plans that cap your out of pocket exposure/ risk at roughly $3,500.00 per year and cost around $0.00 per month to buy. So please be sure to pick a plan.

Medicare Advantage HMO Plans:
The $0.00 price is hard to ignore along with the fact that some plans will literally pay you between $50.00 and $75.00 per month to be in a plan. However, there are a couple of issues with Medicare Advantage HMO plans. First, please understand that Medicare Advantage HMO plans are not Medicare supplement or Medigap plans. One of the biggest issues you will have with a Medicare Advantage HMO plan that you will not have with a Medicare supplement plan is doctor and hospital availability, both locally and when traveling. Some doctors and some hospitals (such as the Mayo Clinic) do not accept Medicare Advantage plans while nearly all doctors and hospitals take original Medicare and Medicare supplement plans. Another issue is budgeting. Because you do not know how much, if any, of the $3,500.00 or so in annual out of pocket expenses you might incur in a given year under a Medicare Advantage plan, it is not as easy to budget as it would be with a Standard Plan G Medicare supplement where the out of pocket expenses cannot exceed just $233.00 for the year. With a Standard Plan G Medicare supplement plan, you know exactly what your monthly cost will be. A Medicare Advantage HMO plan is best suited for healthy budget minded individuals who do not have chronic or recurring illnesses or a family history of illness. This type of plan also works well as a back-up plan for individuals who have coverage through the Department of Veteran Affairs.

Medicare Advantage PPO Plans:
Same as option 2 above except the plans generally have slightly higher annual out of pocket expenses. However, unlike an HMO plan, a PPO plan does give you a little more flexibility by permitting you to get medical care outside of the network but at a higher cost share. This type of plan is best suited for healthy budget minded individuals who do not have chronic or recurring illnesses or a family history of illness.

Standard Plan G Medicare Supplement:
There are no issues with this plan with the exception that it costs the most. As with most things, you get what you pay for. If you want flexibility in finding doctors and hospitals and peace of mind knowing you will have very limited out of pocket risk, this is the right plan for you. This plan is especially well suited for anyone with chronic or recurring health conditions or a family history of illness.

Standard Plan N Medicare Supplement:
Same as option 4 except there is the additional out of pocket risk of 1) all Medicare Part B excess charges which are 15% of the Medicare allowed amount and 2) a $20.00 copay for each doctor visit. As to the Medicare Part B excess charges, there is really no way of predicting how high this figure could be. With that said, if you remain healthy and have no out of pocket costs, you would save several hundred dollars per year with the lower monthly premium compared to a Plan G. On the other hand, you could easily end up spending much more with the out of pocket risk not having a stated limit. You would still have access to most providers, including the likes of the Mayo Clinic. This type of plan is best suited for healthy budget minded individuals who do not have chronic or recurring illnesses or a family history of illness but still prefer the flexibility of a Medicare supplement plan.

High Deductible Plan G Medicare Supplement:
The biggest issue with this plan is the out of pocket risk of $2,603.00. If you remain healthy, though, and have no out of pocket costs, you could save nearly $850.00 per year with the lower monthly premium. On the other hand, you could easily end up spending much more with an annual out of pocket risk of $2,603.00. You would still have access to most providers, including the likes of the Mayo Clinic. This type of plan is best suited for affluent, healthy and budget minded individuals who do not have chronic or recurring illnesses or a family history of illness. This plan also works well as a back up plan for individuals who have coverage through the Department of Veteran Affairs.

 

Plan Avg. Monthly Rate at age 65 What You Owe / Out of Pocket Risk Annual Premium Savings
G Supplement
$115.00
$233.00 Part B deductible
$0.00
N Supplement
$85.00
$233.00 Part B deductible, all Part B excess charges and $20.00 office visit copay
$350.00
High G Supplement
$45.00
$2,603 out of pocket limit with all of it up front
$840.00
Advantage PPO
$0.00
Various copays and coinsurance and $5,500 to $7,000 out of pocket limit. Note: Potential provider availability issues
$1,380.00
Advantage HMO
$0.00
Various copays and coinsurance and $3500 to $5,800 out of pocket limit. Note: potential provider availability issues.
$1,380.00
Original Medicare Only
$0.00
Unlimited out of pocket risk!
$1,380.00

At Prescott Health and Life, our expert advisors can help walk you through this maze of options and help you figure what coverage is truly best for you. Because we are independent, we are able to work with all of the major insurance companies as well as those companies that have the most competitive rates. That enables us to offer you more choices in one place so that you can make the best decision without spending months researching plans and companies.

Contact Us

Mail:

Prescott Health and Life 1963 Commerce Center Cir, #Suite C, Prescott, Arizona 86301