Welcome to Medicare School Daily, where we help you understand Medicare, save money,
avoid mistakes, and above all else, get the most out of your Medicare benefits. I'm doing
a series right now called Avoiding Medicare Mistakes. And today's mistake and topic I'm
going to address is this question here: thinking that part A and B is enough. There are some
people who choose to enroll into Medicare A and B only, and so let's talk about this.
When you decide to go on Medicare folks, what you have to realize as you're making decisions
about your health care coverage. And there are several elements of that decision. Number
one, you're deciding based upon what you enroll into, what services are you going to be eligible
for, what are the providers that you can go to, the doctors and the hospitals and those
people that aree going to take care of your health care needs, what will your premiums
be? There's very few things on Medicare that are going to be for free. So you're going
to have premiums involved. And then also you're going to have beyond premiums, out-of-pocket expenses.
This would be deductibles and coinsurance and copays. And so when we make our decision
to go on Medicare, we're deciding what plans we're going to use, all of these things are
going to be affected by that decision. Okay, so we have three different choices before
us when we enroll into Medicare. Number one, you can decide to enroll into Medicare A and
B only, meaning you decide you're not going to have any other insurance beyond just the
A and B. And some people will choose that. Other people will say, no, I don't really
like that option. I think I'm going to add to that A and B only a supplemental plan and
a prescription drug plan. OK? So some will choose option number two, all those services
combined and then others will choose an advantage plan.
Now, what happens when we have an advantage plan is we don't have a supplemental plan
and separate drug plan. We have a replacement plan, and then they add to that a prescription
drug plan. Part of the package. All right? So those are three options. So I'm not gonna
address this in here. The one I want to address during this video is those who choose to have
Medicare A and B only. And the question is always, why would someone choose to have A
and B only? Well, here are the reasons that people choose A and B only. Number one, because
it is the cheapest as far as monthly premiums go. Right? So it's the cheapest in premiums.
The reason for that is because Medicare A is zero premium, as long as you paid into
Medicare 40 quarters, they give you A for free. Now B is not free, but B this year costs
$144.60 a month.
And if you're on Social Security, they take the B premium right out of your Social Security
check. If you're not, they'll bill you for that times three. So you'll pay that amount
times three, which would be a quarterly billing. All right? And so if I have A and B only,
the only thing I have to pay is the $144.60. And so it's certainly cheapest as far as monthly
premiums go. Now, I'm not saying the cheapest overall if you have any health problems, but
as far as premiums go, it certainly is. Now, the second reason people do this is because
it's the easiest choice. They enroll into A and B, and they're done. In other words, they
haven't had to put much thought or planning into what is the best supplemental plan for
them or maybe the best advantage plan or the best prescription drug plan. And so those
that choose the easiest route just go A and B only and don't make any other insurance
decisions. Now, may I remind you, is the easiest way, always the best way? And
typically it's not, but it is one of the reasons people do that. And then thirdly, I want
you realize, though it's the cheapest and also the easiest, it is also the most risky
when it comes to financial exposure.
See, the problems with A and B only is the financial risk that's involved in that. And
this chart shows you why. Now, I'm not going to spend a lot of time getting into this chart,
but I want to make sure you understand that when you stay in original Medicare A and B
only, A as hospital inpatient, B is medical called outpatient type services. And so you'll
see that you have these gaps. You have these financial responsibilities, these liabilities.
Medicare pays first, but they don't pay for anything fully, and they're going to pass
some of those expenses on to you. So these are your liabilities or your gaps. And so on the
A side of Medicare I have three; on the B, I have three on. On the A of Medicare, if I
go to the hospital, I have to pay a deductible. Now, that deductible is my full out of pocket
for up to 60 days in the hospital. But if I'm ever in longer than that, then I have
daily copays that you're responsible for. So if I have A and B only, you're gonna have
to pay for those. If you go to a skilled nursing facility, which would be after a stroke or
maybe a hip replacement, Medicare agrees to pay everything for the first 20 days. But
if I'm in longer that, now I have a daily copay for the next 80 days.
So those are my gaps on the A. On the B we have a deductible that is once a year,
and after that deductible is met, then Medicare is going to pay 80 percent and you pay 20
percent. That's called coinsurance. Now the problem with your coinsurance, it's totally
unlimited, and the biggest problem is that's how the docs are paid. The surgeons and anesthesiologists,
the primary care doctors, specialists are all paid through B of Medicare and your part is 20 percent.
And if you had A and B only, that 20 percent never, ever stops. And then the last gap would
be if you go to a doctor that takes Medicare patients, but does not take Medicare approved
reimbursement rates as payment in full, a doctor like that adds to the bill; when they
add to the bill that addition is another 15 percent. And when that happens, you have to
pay for that. All right? So those are your gaps in original Medicare A and B. So if we had
A and B only, I'm totally going to be responsible for those. So as you can see,
there's a huge financial risk involved in having A and B only. But there's also another
risk involved, and that is called the Medigap eligibility.
Now, what this means is that when a person goes on Medicare A and B, they're given a
six month period of time where you can actually buy any Medigap policy that is offered in
your state without any underwriting required. In other words, you could have serious preexisting
conditions, and that insurance company has to take you because during the six months
they can ask you no health questions. They have to approve your policy. So let's just
suppose I'm going to start my Medicare A and B on January 1 2021. Remember, I have six
months. No underwriting reason is required to get a Medigap policy, and so that six months
would go all the way through the end of June. And that just simply means that in 7/2121,
my six month period now is over.
And from July 1 2021, if I ever wanted to pick up a Medigap policy, now I have to go
through underwriting. The insurance company is going to ask you 25 health questions. They're
going to check all your medications and see what you're being treated for; probably get
a statement from your doctor as to your overall general health. And so that whole process
is different. But the first six months, none of that applies. You can have anything that
you want, but after six months, now I've lost eligibility and I have to go through underwriting.
If your health is still good, that may be a possibility. But if you have some serious
health issues now, you're not ever going to get a Medigap policy. All right? So that's
the second risk that you run. And then lastly, Part D, which are drug plans, and advantage
plans, those are called C plans. You also have certain enrollment opportunities. And
so that's a little bit different than Medigap policies. Where the Medigap, we had six months
to get what we want, with drug plans and advantage plans we only have three months.
So in this example, we have January, we have February and we have March. And we can enroll
into a drug plan or at an advantage plan in that time. But if I have not done so within
that three month period, which means now from 4/1, in my example, 2021 on, if I want to pick
up a drug plan or advantage plan, I cannot until open enrollment period for Medicare,
which is October 15th through December the 7th. So I can add a plan during this time,
but that plan will not start until January 1 of the next year. OK? And so if I don't
take one the first three months, and I choose to have A and B only, now I can't get a drug
plan or advantage plan coverage until January 1 the following year. So as you can see, you
certainly can make the choice to have A and B only, but there are some consequences and
some of those consequences can be very painfully financial for you. And limit your options
in the future as far as Medicare decisions are concerned.