Older Americans have several alternatives for health care insurance but the plans vary in coverage and cost. Medicare, which most Americans qualify for at age 65, has different types of coverage, referred to as Parts A, B, C, D, etc. Supplemental insurance coverage is referred to as Plans A through L. In addition, seniors have other options such as Medicare Advantage Plans offered through private insurers.
Medicare, Part A
Medicare is a federal program that provides medical coverage for Americans aged 65 and older. It also provides coverage for people younger than 65 who have disabilities. Part A is free for most retired Americans. It is "free" because it is paid for through the recipient’s or their spouse's payroll taxes while they were working (if they worked for at least 10 years.) Part A helps pay for inpatient hospital care, hospice, home health care and a few days of short-term care in a skilled nursing facility. Medicare also helps you pay for health care but like with other insurance plans, you will have out-of-pocket costs. Part A is part of the "original Medicare" and is a fee-for-service plan. You can choose the hospital and doctor of your choice. Part A has high deductibles. You can enroll in Medicare during a seven-month period: three months before you turn 65 years old, during your birthday month and then three months after you turn 65 years of age.
Medicare Part B
Part B is also part of the original Medicare and you automatically qualify when you reach age 65. It helps pay for your doctor visits, outpatient hospital care, medical equipment, rehabilitation therapy services, lab tests, x-rays, mental health services, ambulance service and some preventive care and home health services. This coverage costs approximately $110.50 per month for most people. Coverage is optional. You qualify immediately at age 65, but if you wait to sign up for Part B, you will likely pay more in monthly premiums when you do enroll.
Medicare Part D
Medicare Part D helps you pay for prescription drugs. Americans, 65 and older or people with disabilities can enroll in the plan each year between November 15 and December 31. During this time period you can also switch plans if you already are enrolled in a Part D plan. The new coverage will begin on the January 1 after you enroll. Anyone who in enrolled in Medicare can join a Part D drug plan, regardless of income. This coverage is provided through private insurers. Medicare drug plans do not cover over-the-counter medicines and do not cover every prescription drug. You are not required to take this coverage, but if you wait to enroll, you will pay a late enrollment fee (one percent per month for each month you wait to enroll.)
Medigap insurance is a supplemental insurance that will help you pay for things that Medicare Parts A and B do not cover. Private insurance companies sell it. Regulations allow insurance companies in most states to offer up to 12 Medigap plans (A through L.) The cost varies depending on what the Medigap plan pays for, such as hospital stays, doctor's visits or blood transfusions. If you already have a retiree health plan through a former employer, you probably do not need to buy a Medigap plan. Lower income seniors might be covered under Medicaid, which will fill in the gaps in Medicare coverage. Some Medigap policies limit the providers that you see, making them more affordable, but eliminating some of your choices. You can enroll in a Medigap plan during the six months after you enroll in Medicare Part B. This is the only time you can enroll.
Medicare Advantage Plans
Also called "Medicare Health Plans" or "Medicare Part C", these plans are offered by private insurance companies and are not part of the original Medicare. If you enroll in a Medicare Advantage Plan, this takes the place of traditional Medicare. The plans often require you to pay a small co-payment for doctor visits. Most plans require you to go to specialists, doctors and hospitals on their list of providers--just like many health insurance Health Maintenance Organizations or Preferred Provider Organization plans.
Private Fee-for-Service Plans
This is coverage provided by a private insurance company. Like the Part A, fee-for-service coverage, you can choose your own doctors and hospitals. The insurer pays part of your medical fees and you will usually have to pay a share or copay. These plans are not regulated by Medicare, which means you will likely pay more under these types of plans than under the original Medicare. However, this type of plan might also pay for some things that the Part A plan would not cover.
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- Boston Globe: "When Choosing a Medicare Plan, Don’t Let Its Labyrinth Of Letters Intimidate You"; Humberto Cruz; 2010.
- "The AARP Retirement Survival Guide"; Julie Jason; 2009.
- "All About Medicare 2010"; Sonya E. King; 2010.
- operation image by astoria from Fotolia.com