Let's explore all of the hoopla that you see on TV, especially during the Medicare "enrollment" season in October, November and December each year.
The first thing to remember is that every person that begins Medicare coverage begins with enrolling into Parts A and B with the government. You will pay the government a monthly premium if you choose to enroll into Medicare's Part B. You also could have a premium for Part A coverage, however, most people do not.
So, that sets the stage. There are six levels of "costs" to the Part B coverage as well. Here are the charts showing the pricing for Part B premiums in 2023. Remember that there is a two year look back. The Social Security Administration will look back to your Modified Adjusted Gross Income from 2021, in this case, to determine your 2023 monthly premiums for Medicare health insurance coverage. These additional costs are referred to as IRMAA. An Income Related Monthly Adjustment Amount). Those with higher income will pay higher premiums on both the Part B and the Part B side of things.
Should you not agree with the assessment due to a possible recent retirement as an example? You can request a redetermination of that monthly amount. See our YouTube clip discussing how to do that. Totally different topic but worth referencing here!
So you enroll into Part A and Part B. You know how much you'll be paying each month. You now have 80% coverage as Medicare is an 80/20% plan with no maximum annually for you on your 20% side.
One option is to only enroll into Part A and Part B and calling it a day. It's not an option that we would recommend but we certainly come across people that have only Original Medicare (Part A and Part B).
A significant thing to point out at this stage as you look to additional options related to your Part A and Part B coverage is that whatever path you choose, you will still be paying your Part B premium to the government. This at times can get confusing when you see all of the information on TV saying that you'll get FREE coverage if you call this special phone number today to enroll.
Just note that you won't stop paying your premium to the government in either situation. Now, there are special circumstances where people do NOT pay their premium. Those would be specifically for people that are dual eligible. They are eligible for BOTH the Medicare insurance program, federally, and by their State Medicaid program. We are isolating our information here to those that are NOT dually eligible.
Back to the two paths. Your two choices: (1) Medicare Advantage Plans and (2) Medigap insurance contracts.
Again, back to YouTube since it's far easier to learn by watching! Here's the Medicare Advantage piece AND the Medigap piece.
A current Michigan client recently rewatched the clips and said "Every person on Medicare should watch each of them". She's a retired physician and still truly didn't understand that if she wanted to change Medigap plans she would need to be medically underwritten. And, she's been enrolled into Medicare since age 65.
Joe is talking about Medicare Advantage plans. And, if you listen carefully to his words, he'll say things like "call this number now to see if you are eligible" or "call us to see if your zip code will qualify for".... We get calls asking "what is he talking about?"
Joe is talking about Medicare Advantage plans and specifically dually-eligible programs. So, YES, if you call the number and happen to be Medicaid eligible and live in a certain zip code, there ARE excellent programs available to you.
But, he's not talking to the average new retiree that we're working with. We work with a retiring nurse from Beaumont Hospital in Detroit, for example, that doesn't have retiree health insurance coverage. So, she needs to figure out how to get enrolled into Medicare and purchase the products that she needs to go along with, or replace, her Original Medicare. That's where we come in. She's not eligible for Medicaid but she certainly perks up when she hears the commercials, too.
Remember that you still pay your Part B premiums. But, then you decide that a Medicare Advantage plan will work well for you. That's perfect. We help enroll you into that Plan and you will still pay your monthly premium to Uncle Sam. You will then pay zero each month or $26 each month (example) - whatever PRICE that the Medicare Advantage plan will be, you'll add to your base premium with Medicare. In Michigan, that monthly premium can go as high as $300.
Confusion zone #1: Here's where people disconnect. Since you are still paying that premium to the government each month, most people don't understand that when you enroll into a Medicare Advantage plan, you are now receiving the services of Parts A and B, but you are receiving them through the Medicare Advantage carrier that you enrolled with. You are NOT getting your coverage directly from Original Medicare, Parts A and B. So, to be clear - yes, you pay for A/B each month BUT you receive the coverage that those dollars pay for from the insurance carrier. NOT the government.
Confusion zone #2. Yes, you can certainly pay zero PREMIUM each month to a plan. Does that mean that you will waltz in and out of doctors offices and hospitals paying zero? Not at all. Be sure that you read and understand your summary of benefits that your plan provides to you. Be sure you understand your maximum out of pocket charges (annually). Be sure that you understand your in and out of network status. You generally need to remain in network for best pricing with most Medicare Advantage plans. Be sure that you understand whether your doctor or hospital will accept the plan as in or out of network.
So, the plans can work well for some people but just understand that you are not getting "free" Medicare care each month for zero dollars out of your pocket if you are using services.
Confusion zone #3. How can they provide plans for zero each month? Insurance carriers that offer Medicare Advantage plans receive capitated payments to provide all Medicare-covered services to plan enrollees. So, that's what they do. The government pays the carrier to deliver Medicare-covered services to those that enroll. The carriers can provide extras such as dental, gym memberships and such - whatever they'd like to add. They must provide coverage for at least what Original Medicare (A/B) does, however.
So, that's how they do it! It's not free, someone is paying. The someone is a blend --- you pay your Part B premium, the government pays the carrier and you have co-pays, co-insurance, deductibles perhaps.
Bottom line? Just don't look at those commercials as FREE coverage and somehow you are missing out.
The second path to your coverage doesn't involve Medicare Advantage plans but we'll mention here as well.
Medigap contracts are different. In this case, you are paying your Medicare A/B premium each month to the government. You then pay an insurance carrier an additional sum each month. Let's use a 65 year old female rate in Detroit. That would be approximately $120.00 per month.
She would pay the carrier that $120.00 per month and, in essence, she is buying a contract to pay her bills that Original Medicare doesn't cover. Remember that 20% that she's responsible for? That's what she's paying the insurance carrier to handle. They pay the bills so that she doesn't have to.
She doesn't have networks other than the "network" of Original Medicare (the United States). Any doctor or facility that "takes Medicare" is where she can go. Based on her Medigap selection, she may have no co-pays, no co-insurance, no deductibles. She pays a higher monthly cost for the ability to not have bills.
Read more about Medigap contracts on our page here.
There's no free lunch. Here's what we find. Most of the population would like to have a Medigap contract but they would like it to cost what a Medicare Advantage plan might. Z E R O.
It's not gonna happen. There's truly nothing fancy or any hidden secrets; it's not possible.
Choose your path wisely and knowingly. We're here to help navigate with you.