Many of the things we educate clients about at Marathon Financial Services move a little beyond strict “financial” subjects. Medicare is a common concern among clients, and we offer many resources for those seeking understanding. The following are some basic details about Medicare, and you’re invited to call us with any questions.
Medicare began in 1965 as an attempt to provide people over the age of 65 with basic health care coverage in retirement. Most people lost coverage from their employer during retirement and were faced with great vulnerabilities were they to become ill or hospitalized. The Medicare program has evolved over these 53 years, both expanding coverage to some under the age of 65, as well as helping to develop additional programs that would complement Original Medicare.
Here are the basics of Medicare:
Original Medicare is divided into 2 Parts: Hospital Care and Doctors/Medical Providers.
Medicare Part A – Hospital Care: For the majority of enrollees, Part A has no monthly premium to be paid on an individual level, as it is funded through the years that person paid into Medicare during their work-life. Enrollment in Part A is the 7-month window from 3 months prior to the month in which one turns 65, and includes the month they turn 65, as well as the three months following.
Medicare Part B – Doctors or Medical Providers: Part B has a monthly premium that the individual must pay. For most enrollees, it is $135.50 per month in 2019, and it is likely to slightly increase for 2020. If one’s income is high, there will likely be a higher premium charged.
Both parts A & B offer other services, however the basic distinction that I have offered hopefully establishes at least a foundation for this discussion
Parts A & B are Original Medicare and were never designed to cover all of one’s Medical Costs. It is easiest to envision Medicare as a block of Swiss Cheese, as there are holes in Original Medicare where the individual pays for services out of pocket. The out of pocket services are:
- Co-Pays [fixed dollar amounts paid to providers at the time of service]
- Coinsurance [cost sharing of a percentage of services]
- Deductibles [amounts the individual pays before Original Medicare pays for certain services]
- Excess costs [those services which are not covered by Medicare].
The other significant coverage that Original Medicare does not cover is Prescription Drugs.
What are supplement plans?
In the 1980’s a number of private insurance companies began offering products called Medicare Supplement Plans [some refer to these types of plans as Medi-Gap Plans]. Each plan is designed to fill in some, if not most, of the gaps in Original Medicare. Each plan is priced differently and based on where you live.
What are Medicare Advantage Plans?
More recently, Medicare has helped private insurance companies develop a collaborative approach to secure comprehensive coverage. Medicare outsources parts A & B to the private companies which must provide nothing less than original Medicare services. Individuals must still pay the Medicare Part B monthly premium directly to Centers for Medicare Services. Most plans offer additional services, benefits and prescription medication. Each plan is different and as such, most people can likely benefit from meeting to explore which plan(s) are best suited to your individual needs.
Yes, Medicare is complex, but does not have to be complicated. Understanding Medicare is just a phone call away – Marathon Financial Advisors are able to answer your questions and help you navigate this complex system. Contact us today!