Medicare explained as open enrollment looms

With open enrollment coming up, Drew Sammons explains Medicare

With open enrollment looming on the horizon, Drew Sammons of Selective Financial provided details on Medicare which can be confusing to many older adults. Medicare is a federal health insurance program for people who are 65 or older which is designed to cover the cost of medical expenses. People younger than 65 who suffer from certain chronic illnesses or are disabled may also qualify for Medicare.

“Medicare has three parts although there are two parts that are the most well known,” Sammons said. “Part A is for hospitalization and covers costs if you are admitted overnight in the hospital. There is no cost for Part A for those who have worked or have a spouse who has worked in the United States for 10 years.”

Sammons continued that Part B covers medical costs outside of the hospital, but it is not free unless someone is very low income which qualifies them for Medicaid. The cost for Part B varies depending on income levels. Neither Part A or Part B covers prescription drugs unless Part D is purchased.

“Part D is a standalone plan and covers the cost of your medications at the pharmacy,” Sammons said. “If you are working when you turn 65 and have employer coverage, you may not want to use Part B or Part D because that may already be covered. However, this also depends on what your current plan covers. It is possible a Medicare Part D plan covers more medications than your employer plan.”

Sammons pointed out that he skipped the letter “C” as that is a completely different form of Medicare known as Medicare Advantage Plan. For some, a Medicare Advantage Plan offers better coverage as Medicare only covers 80 percent of outpatient charges. That means someone who is only covered with Medicare would need to pay 20 percent of the bill which could be significant for a catastrophic illness.

“Just to confuse things further, there are plans known as Medigap plans that are used to fill gaps in coverage,” Sammons said. “That means you can get a Plan A, or Original Medicare, plan and a Medigap plan that would cover the remaining 20 percent. But it is important to remember that Medigap and Medicare Advantage plans are offered by individual insurance companies.”

Open enrollment begins October 15 and ends December 7. It is during this time that anyone on Medicare can change portions of their plan, such as prescription drug plans, with no health questions asked. It is also when someone over 65 can enroll in a Medicare Advantage Plan. A Medigap plan can be changed outside of open enrollment, but there could be medical questions to answer and coverage can be denied.

“Most Medicare Advantage Plans offer prescription drug coverage,” Sammons said. “There is also a special line of coverage for veterans who may have coverage through the Veteran’s Administration. The main question I get asked is “which plan is better” and I simply cannot answer that as there are many varibles. It is like aksing if chocolate or vanilla is better because if no one likes vanilla, there would be no vanilla. The same is true of choosing health insurance.”

Sammons explained that there are some advantages to choosing a Medical Advantage plan over Original Medicare, but there are also disadvantages. Medicare has an extensive network while the advantage plans may have a limited network. Hospitals or doctors may also stop accepting certain types of advantage plans. Sammons stated that Bayhealth just announced that they would no longer accept two of the biggest advantage policies, for example.

“One of the benefits to an advantage plan is that the monthly cost is usually lower than Part A, Part B and supplemental plans that cover prescriptions, vision and dental,” Sammons said. “I have had clients paying as much as $200, $300 or $400 a month just to cover supplements while the same coverage under an advantage plan may be only $30 or $40 per month.”

One thing Sammons warned about was even with an advantage plan, consumers should review prescription drug coverage before they purchase. Insurance companies drop drug coverage all the time, so it is important to know if important prescriptions are covered. There are also deductibles that vary depending on plans and those should be reviewed as well.

“Hospitals are getting more and more involved in the business of insurance, Sammons explained. “For example, Johns Hopkins now has their own advantage plan. Insurance companies sit down and negotiate prices with hospitals as well and if those negotiations don’t go well, the hospital may drop that plan.”

Dr. Mitch Edmondson, a retired family practitioner, explained that he taught a class to doctors about insurance because it was something they did not learn in school.

“If you’re going to doctors every month and have to pay a $50 deductible each time, that could add up. Also, the most dreaded words for a physician are “prior authorization.” The insurance company says it is covered and you need this diagnostic test, but the doctor has to get prior authorization,” Edmondson said. “The reason for this is doctors want to keep costs down. They want to make sure this test is necessary and a lot of insurance companies have gotten into trouble because they deny, deny, deny until the patient says they will just pay for the test. This doesn’t happen with Original Medicare and Medigap plans but it does with Medicare Advantage plans.”

Edmonson also pointed out that everyone has a right to a second opinion and even the American Cancer Society recommends a second opinion after a cancer diagnosis. With Original Medicare and a Medigap plan, a patient can go to Sloan Kettering or Fox Chase and be seen within days. Sammons agreed, stating that in most cases Original Medicare and Medigap coverage offered more flexibility.

“You may have noticed there are fewer Medicare Advantage plans on television than there were in the past and that is because they are advertising call centers with operators who know nothing about these plans,” Sammons said. “They sign up older people and then they never talk to them again. A few years ago, I would not recommend an advantage plan, but they have improved significantly. The key is to review your medical needs to see what plan best works for you.”

Edmonson pointed out there are Accountable Care Organizations whose main focus is to improve health outcomes. It is illegal for doctors, hospitals and other medical professionals to collude on prices, but Congress passed a law in 2010 that allowed healthcare organizations to work together to improve quality and bring down costs.

“What we had to do is meet quality factors,” Edmondson said. “How many of your patients are getting flu shots? How many of our diabetic patients were under control? How many patients were compliant with medication? As a physician, what I did was every time one of my patients was in the emergency room, I saw them afterward and said “let’s address your problem,” telling them they went to the ER if they had a broken leg or chest pain, but not for a cold. These are the kind of things that have proven to improve health outcomes and bring down costs.”

Sammons stated that anyone who would be going on Medicare for the first time in 2025 should reach out to an independent insurance agent to discuss options. They can also call 1-800-772-1213 for more information.