Medicare is a healthcare payer program run by the Centers for Medicare and Medicaid Services (CMS), part of the federal government in the United States, for American citizens who are age 65 and older, plus some younger people who suffer from diseases such as end-stage renal failure. It pays the providers of health and medical services (doctors, hospitals, and others) reimbursements for providing those services to Medicare beneficiaries. The money used to pay for those services is collected from American citizens throughout their working lifetimes.
Medicare itself provides minimal health coverage for people age 65 and older. Called "Original Medicare," it provides basic coverage only for hospital care, doctor appointments and drugs. Here are some basics to know if you are considering Original Medicare:
- Is provided by the government, so you will work with the government to pay your bills.
- It provides for choices among hospitals, doctors, pharmacies and other providers. Any limitations to those choices will come from the providers themselves. (Not all doctors accept Medicare patients.)
- May require premiums (for Part B) and may have deductibles and co-insurance requirements for doctors appointments and hospital stays.
- Does not provide drug coverage by itself. Instead, to get drug coverage, you must have Part D coverage through a supplemental policy called a Medigap policy.
But many people find they need much more assistance than Medicare can offer by itself. There may be gaps between what they need, what they want, and what is covered.
Enter private insurance companies (like Blue Cross & Blue Shield, Wellpoint, United Healthcare and dozens of others) which offer those patients Medicare Advantage Plans (MAPs) to fill those gaps. For example, a Medicare patient who has very high drug costs and prefers a private hospital room knows those won't be covered by Original Medicare. So she may choose to pay extra premiums for a Medicare Advantage Plan so she will be covered when she needs that extra assistance.
Medicare Advantage Plans:
- Feel more like the traditional private insurance you had during your working days, before you turned 65. They are run by private insurers and are managed very similarly. MAPs are called "Part C" but they cover Parts A, B and D. (Leave it to the government to make it seem confusing. It's really not that difficult. Learn more about Medicare Parts here.)
- Your choices of doctors, hospitals and other providers will be limited to those providers the plan has a contract with. When it's time for open enrollment, you'll be able to see the list of providers to help you make your choice. That list will likely be more expansive than the list Original Medicare can provide.
- The benefits you receive will likely be more extensive and broader than Original Medicare in general. For example, you may have an expanded choice of doctors, and your drug costs will be (at least partially) covered.
- Drugs: Because of healthcare reform, the "donut hole" is diminishing. More and more of the costs of drugs are being covered. MAPs may also cover more than Original Medicare does, even for patients who might choose a Medigap plan through Original Medicare.
- The cost of a Medicare Advantage Plan will depend on your health and medical needs, and your wallet. Because most of the benefits are supplemental -- that is, they offer more than Original Medicare does -- they may make it easier for you to access the care you need, the way you want it. But they may also be more expensive for you, too.
Decision-Making - When and How Do You Make Your Medicare Choices?
Making your choices, figuring out what works best for both your health and your wallet, can be a complex task. But decision-making help is available in a variety of ways.
The time to make your choices will depend on your age:
- If you are an American citizen, you will become eligible for Medicare for the first time on the first day of the month you turn 65 years of age. Here is more information about getting signed up for Medicare.
- Once you are part of the Medicare system, you will be able to make changes to your Medicare plan during Open Enrollment each year. Learn more about Open Enrollment and the choices that must be made.
- During Open Enrollment each year, you'll find lots of invitations, maybe in your mail, maybe on TV or in the local newspaper, inviting you to programs to help you determine which of the Medicare Advantage Plans you would like to choose. Most of these programs are offered by the insurance companies that want you to enroll with them -- that's how they make their money. Be careful not to be swayed by elaborate brochures, a savvy salesman or yummy food! Do some homework ahead of time, ask them as many questions as you can think of, and do your best to compare apples to apples when making your choice. You might want to use the steps for choosing your health insurance to guide you.
- If you get confused, or if there seem to be too many choices and not enough answers, you can tap into your state's SHIP program -- that's State Health Insurance Program. Volunteers who have learned all about Medicare Advantage, Medigap and other plans will walk you through making the best choice for you based on your current health status, the type of coverage you would like to have, and the amount of money you are willing to spend for expanded coverage. Since they are volunteers, they won't be making money by helping you make your choice.