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Understanding Medicare- Part Two

This continues from – Part One

Medicare Part B (Professional Services): There is a monthly premium for Part B, and it is commonly deducted straight from social security payments. Part B is the medical insurance portion of Medicare that extends to essential doctors’ visits, preventive care services, hospital outpatient services, lab tests (including X-Rays and other imaging tests), and some home health services that are deemed essential for rehabilitation. Part B usually covers only 80% of doctor fees, the balance requiring supplemental insurance or private pay. For some preventive and other services covered by Part B, you may have to pay a deductible, coinsurance, or both. The deductible for 2014 is $147.

Medicare Part C (Medicare Advantage): For Part C Advantage Plans, you acquire a policy from one of hundreds of insurers by paying a monthly premium (in addition to your Part B premium). These are private health insurance plans for anyone eligible for Medicare. Thus HMOs (Health Maintenance Organizations) and PPOs (Preferred Provider Organizations) are the best known types among other Advantage Plans. HMOs are less expensive but require the subscriber to use doctors, specialists and hospitals that are in the insurer’s network, while PPOs give you a choice of staying within the network or going out to your own doctors. If you go out of network, you may have higher annual deductibles and copays.

Medicare Part D (Prescription drug Coverage): If you are 65 or over, you are only too familiar with the out-of-pockets you spend every month on prescription drugs. Also, you are not alone if you take half a dozen medications or more every day. Part D was structured around the “donut hole” which consisted of a coverage gap that followed an initial coverage period during which the enrollee paid only 25% of drug costs all the way until the total costs paid (by both the enrollee and the insurer) reached, in 2014, the amount of $2,850. When that figure was reached, the enrollee would go into the coverage gap where, in 2014, they receive a 52.5% discount on brand-name drugs and a 28% discount on all generic medications.

So, while you’re spending your way to $2,850 in any given year, including what your insurer is spending, you are only paying 25% for your medications. You are then in the donut hole, and from that that point on, your brand-name drugs will only cost you 47.5%, whereas your generic drugs will cost 72%. These discounts are courtesy of the ACA, for before now, you used to have to pay 100% of the cost of medications once you were in the donut hole.

In addition, The ACA provision for Medicare Part D has it that what enrollees pay in the coverage gap will be reduced annually until enrollees pay only 25% by 2020.

Other ACA-induced improvements to the Part D program included a reduction in the initial deductible from $325 to $310 in 2014, and if drug costs paid reached the sum of $6,455 in in 2014, it would trigger the catastrophic phase of the coverage in which Medicare would pick up almost 100% of drug costs. This annual amount was reduced from $6,733 in 2013.

Finally, while many of us still don’t understand how Part D was formed, we try to derive some comfort from the fact that the donut hole form of accounting has no equal or parallel anywhere else in the world.

  • The Impact of the ACA on Medicare

Much has been said about the ACA’s future and its impact on the government’s healthcare insurance programs. We would therefore like to replace some myths and clarify other facts.

  • The ACA is NOT replacing Medicare

Addressing some myths that were floated over the last few months, Medicare is not coming to an end. Medicare’s benefits are guaranteed and are here to stay. On the contrary, the ACA extended the Medicare Trust by 12 years until at least 2029. More specifically, Medicare is not part of the health insurance “Marketplace” set up by the ACA so, if you are 65 or over, you don’t need to replace Medicare coverage. With medicare you are already covered, and you can carry on seeing the same doctors you’re used to.

  • The ACA hopes to bring down Part B premiums

By bringing about reductions in fraud, abuse and waste, and by preventing instead of caring for disease, it is estimated that Medicare costs can be kept in check. This will provide you with future savings on premiums. For example, it has already been noted that the premium for Part B for 2014 remained the same as that for the preceding year at $104.90 a month.

  • Part D gets a significant boost

If you’re 65 or over, you know how important Part D Prescription Drug coverage is. The government recently announced that the cost of prescription drugs, as well as that of main parts of Part D, went down by 4%. In addition, when you enter the donut hole in 2014, you will pay only 52.5% (compared to almost100% in prior years).

  • More free care for Medicare beneficiaries

The ACA provides you with many preventive care provisions free of charge and without dipping into co-pays or deductibles. With the ACA, your healthcare system finally woke up to the realization that preventive care is the biggest cost-cutting tool for healthcare. These free services include immunization vaccines, mammograms, colonoscopies, tobacco use screening, depression, alcohol abuse and diet counseling, blood pressure and cholesterol screening, and a thorough yearly wellness exam.

  • More accountability to Medicare beneficiaries

The ACA made it possible for doctors and other providers to organize into Accountable Care Organizations (ACOs). These answer to Medicare regarding the services they provide to Medicare beneficiaries, and they define processes to promote scientific research.

Incentives were provided whereby accountable organizations that meet Medicare’s quality requirements share in the cost savings they achieve for the Medicare program.

Continue reading in “Understanding Medicare” Part Three...

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