It seems the ads are on multiple channels ALL the time. Joe Namath tells us we can get additional benefits like dental, vision, and hearing, and encourages us to make sure we get everything we deserve.

Other than being annoying, what is this commercial really talking about? Let’s break it down and review the parts of Medicare and the types of coverage available. For folks who are about to turn 65, it is especially important for them to know about the details of Medicare and its enrollment deadlines.

Medicare Parts A, B, C and D are the four parts of Medicare that are managed by CMS (Centers for Medicare and Medicaid Services). In our review below, let’s pretend there is no other supplemental coverage.

Part A

Part A provides coverage for inpatient hospital care, skilled nursing care, and hospice care. Part A is premium-free if you are age 65 or older and you or your spouse worked and paid Medicare taxes for at least 40 quarters. 

Inpatient Hospital – Medicare pays all costs for an inpatient hospital stay EXCEPT $1,556. This payment is not an annual deductible. It is a cost for the stay. If an additional stay would happen more than 60 days from the original stay, and the two stays do not relate, then another payment could be due. 

Skilled Nursing Care – Skilled care is not custodial care. It is care that is medically necessary in a hospital-like setting such as rehabilitation, wound care, etc. A limited number of days is available (100 per lifetime). Medicare pays the first 20 days in full and then consumers pay $192.50 per day from 21-100 days in a facility.

Hospice Care – Hospice care is paid in full by Medicare. Room and board are typically a personal cost by the family.

Part B

Part B provides coverage for medical services such as doctor’s office visits, outpatient surgery/therapies, durable medical equipment, labs, x-rays, and emergency room care. There is an annual deductible of $233. After that, Medicare pays 80% of the remaining costs and consumers pay 20% for the remainder for the calendar year.

Part B is not free and the cost in 2022 is $170.10 and can be higher depending on prior years’ income.

Parts C and D

Parts C and D are supplemental health insurance plans that came out in 2006. Although private insurance companies provide the coverage, they are a part of Medicare because CMS sets the rules, the design and regulations.

Part D

Part D is prescription drug coverage. Medicare supplements have been around since the 1980s. They offered different plan designs to cover the medical costs explained above in Parts A and B of Medicare for a premium. These plans typically did not have retail prescription drug coverage. Therefore in 2006, Part D was created to assist with drug costs at the pharmacy. It is a separate coverage with a cost structure designed by CMS and carriers such as United Healthcare, Cigna, Aetna, etc. The cost will vary according to plans.  

Part C

Part C is a plan design that bundles medical coverage with prescription drug coverage.  These are called Medicare Advantage plans. I intentionally left Part C until the end. This is what Joe Namath, JJ Walker, ‘Martha’ in the big glasses, and now William Shatner are now promoting on TV.

Medicare Advantage plans are called “replacement” plans. Although a Medicare eligible person will still pay the Part B premium through Social Security for Medicare, they do not use Medicare Parts A and B for coverage. Medicare pays Medicare Advantage plan carriers a stipend to take care of those enrolled.

A Medicare Advantage plan utilizes a network of providers set up by the carrier. There are typically zero to low premiums for a Medicare Advantage plan so a subscriber will pay copayments for services when rendered instead. Medicare Advantage plans also incorporate value-added benefits like dental, vision, hearing, fitness membership, and a quarterly stipend for over-the-counter products. These value-added benefits are typically what Joe and his friends are talking about. 

In summary, there are two ways to cover medical expenses when you are Medicare eligible.

1) The traditional way is purchasing a supplement from an insurance carrier to pay for medical expenses that Medicare does not. In addition, a prescription drug plan is also purchased.

2) Mutually exclusive to this design is a Medicare Advantage (Part C) plan, again through an insurance company. This design replaces using Medicare, utilizing a network of providers through a copayment type payment design at the time of service.  In addition to bundled medical and prescription drug coverage, these plans offer value-added benefits. 

General FAQ’s:

Is it mandatory to sign up for Medicare at age 65?

• Yes, if retired.
• Not necessarily if still working.

When do I enroll?

You can enroll in a 7-month period that includes 3 months before your 65th birthday, the month of your birthday, and the three months after your birthday.

Who is exempt from the initial enrollment period?

Current workers and spouses of current workers who are covered by an employer group health plan.

What happens if I don’t enroll in Medicare on time?

• You may not have health care coverage.
• You may pay a late-enrollment penalty.

For additional questions, call your financial planner or associate planner at Syverson Strege at 515-225-6000. Or feel free to call me at 515-225-9994 . As an independent agent, I educate prospects and clients on these different health plan designs so that they may find comfort in the plan that best fits their needs.

Note: All costs noted in this article are as of February 2022.