What is Medicare?

Medicare is a national government health insurance program that began in 1965 under the Social Security Administration (SSA). It is administered by the Centers for Medicare and Medicaid Services (CMS). It is primarily for Americans that are 65 or older, but also for Americans with disability status as determined by the SSA, and also includes people with end state renal disease and amyotrophic lateral sclerosis (ALS). Medicare consists of Part A, B, C & D. Parts A & B are the Medicare health insurance program. Part A covers hospitalization, skilled nursing and hospice services. Part B covers outpatient procedures, doctors charges, office visits and most professionally administered prescription drugs. Part C is an alternative to A & B offered through private insurance companies, where out of pocket exposure is reduced. Part D is a stand alone prescription drug program. Medicare Part A is typically no cost to enrollees that that have been citizens of the United States for at least 5 years and paid Medicare Taxes for at least 10 years. The premium is also waived for citizens on disability for at least 24 months, or are receiving continuing dialysis or need a kidney transplant. CMS has reported that on average most enrollees using Medicare A & B as their health insurance typically end up paying about half of their medical expenses.

What are Medicare A, B, C & D?

Part A - Hospital Insurance

Part A is the section of the Medicare health insurance program that covers inpatient hospital stays where the beneficiary has been admitted to the hospital. There is a deductible that covers the first 60 days of a hospital stay, then begins charging a daily copay up to 90 days. After 90 days, it will cover up to 150 days at a higher daily copay, but those last 60 days can only be used once in an enrollees lifetime. Part A will also cover brief stays for rehabilitation after a hospital stay. Also, it will cover hospice services for terminally ill patients that have been determined by their physician to have less than 6 months to live.

Part B - Medical Insurance

Part B is the section of the Medicare health insurance program that covers some services and products not covered by Part A. It is generally for outpatient services, doctors services, office visits and covers many prescriptions/injections provided in the doctor's office. There is an annual deductible for services under Part B, then the patient is responsible for 20% of all remaining costs. This would include services such as x-rays, diagnostic tests, some vaccines, limited ambulance transportation, and many other services administered in a doctor's office. Chiropractic care is also covered under Part B. Preventive services are covered under Part B at no cost to the patient. Part B is optional. Beneficiaries are required to pay an additional monthly premium to have Medicare Part B.

Part C - Medicare Advantage

In 1997, the Government passed the Balanced Budget Act of 1997, formally giving Medicare beneficiarries the option to receive benefits through private insurance companies. These plans were known as "Medicare+Choice". In 2003, the Medicare Modernization Act of 2003 re-branded the plans as "Medicare Advantage" plans. These plans, offered through private insurance companies, are required to offer benefits that meet or exceed the standards set by Original Medicare. The plans must be approved every year by CMS. These plans are typically contracted HMO and PPO plans that offer services at fixed copays and offer networks of doctors and hospitals that accept the plans benefits. This is a big "advantage" over Part A & B as it limits the exposure of medical expenses to the enrollee by setting a maximum out of pocket (MOOP) for medical services. The plans are allowed to offer both the medical services along with many ancillary services, such as dental, vision, hearing, over-the-counter, meals, transportation and other benefits. These plans are typically referred to a MA (Medicare Advantage) or MAPD (Medicare Advantage with Prescription Drugs).

Part D - Prescription Drug Plans

Medicare Part D went into effect on January 1, 2006 to offer services to cover the costs of self administered prescription drugs. In order to enroll in Part D, a beneficiarry must have Medicare Part A, and be eligible (but not necessarily enrolled) for Part B. Part D is not standardized, but it is heavily regulated by CMS. There are approximately 150 different defined categories of drugs, and each plan must cover at least 2 drugs in each category. They are allowed to select which drugs they choose to cover. There is a late enrollment penalty applied to the plan premiums for those that go a period of time without a Part D plan. The penalty is 1% per month without coverage applied to the national average Part D premium every year. Enrollees are not penalized if they had other qualifying coverage over that period.

What is Medicare Supplement?

Medicare Supplement Insurance (Medigap) is an extra insurance plan you can buy from a private insurance company to help pay your share of costs in Original Medicare. You can only buy a Medigap plan if you have Medicare A & B, and you cannot be enrolled in a Medicare Advantage plan. If you have a Medigap policy and get care, Medicare will pay its share of the Medicare approved amount, then your Medigap plan with pay the provider directly for the covered benefits and the beneficiary is responsible for any costs that are left. All Medigap policies are standardized. This means, they offer the same basic benefits no matter where you live or which insurance company you buy the policy from. There are 10 different types of Medigap plans offered in most states, which are named by letters: A-D, F, G, and K-N. Price is the only difference between plans with the same letter that are sold by different insurance companies.

What is Medicare Advantage?

Medicare Advantage (MA, MAPD or Part C) are plans offered by private insurance companies that you use rather than using Original Medicare (Part A & B). These plans typically offer low to no premium, in addition to your Medicare Part B premium. They offer low copays for medical services and set a maximum out of pocket (MOOP) that you can spend on the plan. Most plans include a Part D prescription drug plan, but there are plans that do not offer prescription benefits. Since the government allows the company to make their plans within a guideline, they are allowed to offer many ancillary products included in the plan. Most plans will offer benefits that may include dental, vision, hearing, meals, over-the-counter credits, transportation, fitness club memberships and more. Most of our clients realized substantial cost savings, along with more benefits, than what they recieve with Medicare A & B with Medicare Supplement insurance.

What is Part D?

Medicare Part D (PDP) is the prescription drug plan that went into effect on January 1, 2006 and is regulated by CMS. They are offered by private insurance companies in two different ways, either stand alone or included in a Medicare Advantage plan. Stand alone plans have an additional premium, while plans inside Medicare Advantage plans typically do not have an additional premium. The plans limit the cost of medications by allowing the client to pay for medications either through a fixed copay, or a coinsurance percentage. The plans are organized into tiers, typically separating generic, name brand and specialty medications. These tiers offer different levels of copays based on the actual cost of medications. Some plans have deductibles as well, where the beneficiary has to pay 100% of the cost of medications up to the deductible amount before the tiered copays begin. There is also a late enrollment penalty for clients who go a period of time without any type of qualifying prescription coverage. The penalty is 1% per month that you don’t have coverage, with that percentage applied to the national average premium. This amount changes every year as that average changes. EX: If a person goes 28 months without drug coverage then signs up for a plan, with a national average premium of $32 per month, then they would pay a 28% penalty the rest of their life, and in this particular year the penalty would be $8.96 per month ($32 * 28%).

What is the “donut hole”?

The “donut hole”, or coverage gap, is a stage of the Medicare Part D prescription plans. When the government created the original model for the prescription plans, it was a staged percentage based plans. From $0-$250 per month you would pay 100% of cost (deductible). From $250-$2,250, you would pay 25% of cost (initial coverage). From $2,250-$3,600, you would pay 100% of cost (donut hole). Above $3,600 you would pay 5% (catastrophic). The limits are based on the actual cost of the drugs, not what you pay. The drug plans told the government that they did not want a percentage system, they wanted to offer copays. The government allowed them to do this within the original model. They made the deductible phase optional, but the donut hole and catastrophic phases had to remain. Originally, when the cost of medications reached $2,250, clients would begin paying 100% of the cost of medications, which was devastating to many people. Beginning in 2010, the governement began reducing that percentage from 100% to what it is today, 25%. The cost limit on the phases in 2024 are $0-$545 (deductible), $545-$5030 (initial), $5030-$8000 (donut hole) and $8000+ (catastrophic). In 2025, the donut hole is planned to be eliminated with a $2000 cap on customers drug expenditure.

What is the advantage of working with a broker rather than a captive agent?

Working as a captive agent means that the agent works for the insurance company. This benefits the agent because they are provided resources (leads) by the company and typically will involve a base pay plus commissions for business they write. Captive agents can only write business for the company they work for, so they are not able to provide all the plans available to the client. If a captive agent moves to another company, then your policy stays with the company, not with the agent and you will be passed to another agent within the company. A broker works for the client. The companies do not control the products being offered by a broker, they are simply the liason to the product. With a broker, you get the opportunity to have your agent shop all plans available with all companies to find the best solution for each unique situation. Since brokers have this ability to shop all the companies, you will save more money and have more taylored benefits over time. With a broker, your policy is owned by the broker, so you will have the same agent to work with no matter what company your policy is with. Brokers are paid directly by the insurance companies, so there is no addtional cost or fee to the client.

Our primary focus is the client.