The ABCs (and Ds) of Medicare

May 8, 2024 | Nearing & In Retirement

Healthcare costs are a major concern in retirement, but Medicare can help. With nearly 97% of seniors covered by Medicare, understanding your options is crucial whether you’re already retired, planning ahead, or helping family members. This informative video explains the four parts of Medicare (A, B, C, and D) so you can make confident decisions about the coverage that best fits your needs.

Hi, I’m Brad Skluzacek, Senior Vice President and Wealth Advisor at GreenUp Wealth Management. Today we’re going to be talking about the ABCs and Ds of Medicare. So to help visualize, I brought in my daughter’s ABC board as a prop. Now the English alphabet as we know it standardized in the 16th and 17th centuries. 

In 1966, Medicare Part A and Part B were created. Shortly after that, in 1997, Part C was created. In 2003, Congress updated Medicare by creating Part D. So we have four parts: A, B, C, and D. To start, we’re going to look at Parts A and Parts B. 

Part A is going to be your hospital insurance. So think about your hospital stays, your skilled nursing care, your hospice care, and even some home health care. And Part B covers medical insurance. So think of outpatient care, your doctor’s visits, preventative services, durable medical equipment, and some home health care. Now an alternative to Medicare’s Part A and B is Medicare Part C, also known as Medicare Advantage. Let’s look at the differences. 

Medicare Advantage was created by the Balanced Budget Act of 1997, which is a Medicare approved plan from a private insurance company. Typically, this plan is going to bundle Part A and Part B coverages. It will often include additional benefits such as vision, dental, and prescription drug coverage. 

Typically, Medicare Advantage requires you to use a network of healthcare providers that could have different costs and rules than original Medicare but may have lower out-of-pocket costs depending on how much you use it. By 2023, half of all U.S. seniors were enrolled in a Medicare Advantage plan. Medicare Advantage Part C is popular because of the extra benefits and lower upfront cost, but there are some drawbacks. 

The first potential drawback is limited provider networks. A restricted list of doctors and hospitals can limit your choice of care and make it harder to see a preferred specialist. The next drawback is that prior authorization is required for certain treatments and procedures. Another drawback is higher out of pocket expenses. Premiums may be lower than traditional Medicare, but out of pocket costs for deductibles, copays, and coinsurance can quickly add up, especially if you require frequent or specialized care. Finally, there can be changes in networks and benefits. Medicare Advantage plans can change their networks and benefits annually. 

The next letter in our Medicare alphabet is Part D, for prescription drug coverage. It’s also included in many Medicare Advantage plans. Let’s see what Part D actually covers. Medicare Part D is a separate plan from a separate insurance company. There are many Part D plans to choose from, and these policies are just like any other health insurance policy. They have a monthly premium, deductibles, copays, and coinsurance, and the premium is the amount that you pay each month to have the plan, even if you do not take any drugs. 

To summarize, Original Medicare is a government sponsored program consisting of Part A and Part B. Medicare Advantage is an alternative offered by private insurance companies that covers your hospital and medical coverage, as well as additional benefits. You have a choice between Medicare Advantage and Original Medicare based off your preferences and needs. Lastly, Part D is drug coverage. 

Now you know all about the ABCs and Ds of Medicare. There’s lots of options, a lot of complexity. Visit medicare.gov, do your homework, or talk to an expert to review your options. Since pricing and plans change regularly, it’s a good idea to review your Medicare coverage every year during open enrollment period, between October 15th and December 7th. I’m Brad Skluzacek. Thanks for watching!

Author

  • Brad Skluzacek CFP® CPWA®

    Senior Vice President | Wealth Advisor | Kansas City -- Brad is a Certified Financial Planner who has been in the financial services industry for over a decade. Having served clients in many roles, ranging from Personal Banker to Financial Advisor, Brad brings a vast level of expertise providing a truly elite wealth management experience for his clients.

    brad.skluzacek@greenupwealth.com Skluzacek CFP® CPWA® Brad

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