Ask a Zenefits Advisor: What Should I Know about Medicare and all the Supplemental Plans?

Bud Bowlin has been advising business owners about health insurance and benefits for more than 35 years. For his 70th birthday, we gave him his own advice column. Got a burning benefits question for Bud? Send it to [email protected].

Dear Bud,

I’m receiving frequent inquires (and have questions myself!) regarding Medicare. There are a group of us ‘of a certain age’ who are being bombarded with literature from supplemental Medicare companies. We hear of Parts A, B, C, and D – but it’s all very confusing. I understand that as long as we continue to work at NGAGE and are covered under our company plan, Medicare becomes the secondary provider. But what do we do about enrolling in Medicare and all of the supplemental plans?

We all feel that we’re really intelligent professionals, but find the Medicare options to be overwhelming. As I read your “Ask Bud” columns, I’m impressed by your way of explaining things in a simple, concise manner. Would you be willing to provide some information to me and my colleagues about Medicare, our choices, and the do’s and don’ts?

Thank you very much for your consideration in helping us “old people” figure this out. (Actually none of us can really believe we’ve reached the age to be eligible!)

Cheers,
Looking at Insurance Supplements for Aging

Dear L.I.S.A.,

You’ve hit upon an often-asked question, and you and your colleagues are definitely not alone in feeling confused. Let me break it down for you.

First, let’s deal with Medicare as it affects you as an individual turning 65.

One of the first Medicare benefits (passed back in the Sixties) was Medicare Part A. Part A is sometimes known as “Hospital Insurance” because it covers hospital inpatient stays, skilled nursing facility care, and hospice care. Part A also covers lab tests, surgeries and durable medical supplies, like wheelchairs and walkers. Medicare Part A is provided at NO COST to those who have paid into the system for 10 years. While it’s good because it’s free, the coverage is very limited. Enter Medicare Part B.

Medicare Part B picks up where Medicare Part A leaves off. Part B covers preventative care, doctors’ visits, lab work, and outpatient services, along with ambulance, mental health, and a few prescriptions. It bears repeating that Part B covers preventative care, and not just what is medically necessary. So, what’s the catch?

You must eligible, and you have to pay a monthly premium for Part B. Premiums vary with your income. The more money you make, the higher the premium. But even after paying a premium to access benefits under Medicare Parts A & B, there are still things that aren’t covered: long term care, dental care, eye exams, and hearing aids. Hence, the need for further Medicare plans.

Medicare Part C is offered by private companies to provide Part A and B combined in an HMO or PPO environment, including a comprehensive prescription drug benefit. Part C is commonly known as Medicare Advantage, and it’s sold in lieu of a Medigap or Medicare Supplement policy.

Medicare Part D is the newest Part of Medicare. It was enacted in 2003 to eliminate the huge gap in prescription drug coverage. Eligible people purchase and pay a monthly premium to private companies that contract directly with Medicare. To enroll, you must have Parts A & B or have Part C. A wide variety of plans and deductibles are available.

Medicare Supplement Plans that offset the shortcomings of Parts A & B are highly regulated by the US government and now provide an excellent source of benefit gap filling. All sellers of Medicare supplements must use the same plan definitions for their products. Plan F from one company will be identical to Plan F from another, so you’re shopping for the lowest price of a commodity (rather than having to listen to sales pitches over and over). My advice is to first decide what level of coverage you desire, and then buy the best plan you can afford. So if it’s Plan F you want, find the most affordable, local plan.

Now, what if you have insurance through an employer or a spouse’s employer when you turn 65?

If you’re 65 or over, eligible for Medicare, and have health insurance through your current job (or spouse’s current job), in most cases you should at least take Part A (hospital insurance). For most people, Part A is free. Then, assess whether your employer’s health insurance will be primary or secondary to Medicare. If your employer (or your spouse’s employer) has 20 or more employees, your employer coverage is primary, and Medicare is secondary. If your employer has fewer than 20 employees, then Medicare is primary and your employer coverage is secondary..

Primary insurers pay for your health benefits first. If there’s a leftover copay, the secondary insurance comes into play. Generally, you don’t need Medicare Part B if you have primary employer coverage (unless you’re unhappy with that coverage). You may still want to consider whether paying for both types of coverage would offset your health care costs, or whether it would be more affordable to have one or the other. This is particularly true if your employer pays a large portion of your health coverage.

On a personal note, let me share my situation. When I turned 65, I was covered on my spouse’s plan where she worked. I signed up for Part A Medicare and stayed on her plan. Her employer was my primary payer. After a few years, the premiums for spouse coverage went up. I chose to sign up for Medicare Part B and purchased a Medicare Supplement through the local BCBS organization because it was less than half the cost of spousal coverage on my wife’s plan. Later, I added a Part D prescription plan.

Hope this helps, Lisa!