Medicare covers a lot, but many older Americans who enroll in the health care program need other insurance as well.
Some people 65 and older still work and have access to their employer’s health benefits. Others can still access health benefits during retirement.
Still, others qualify for veterans benefits or even Medicaid — all while still qualifying for Medicare benefits.
When you have several layers of insurance coverage available, how do you know which plan should be paying for which services? Some kind of coordination of benefits will be a must.
What Medicare Covers for Older Americans
About 44 million Americans use Medicare for health insurance. The federal program has grown more complex over the decades.
When President Lyndon B. Johnson signed Medicare into law in 1966, the program paid for hospitalization and a few post-hospital services.
Now the program also pays toward outpatient care including physician visits, and many prescription drugs, along with hospital stays and short-term care after a hospital stay.
What Does Medicare Cost?
Originally, Medicare patients paid no premiums for the coverage because payroll taxes and other public money covered the bill.
Even now, most people who enroll only in Medicare Part 1, which covers hospital visits, pay no premiums.
Medicare Part B and Part D members pay premiums; often these monthly payments cost significantly less than a comparable private insurance plan.
Medicare enrollees also pay deductibles and copays. Again, enrollees can typically save on fees compared to a private plan.
Despite these cost savings, Medicare patients may have a hard time closing the gap between what Medicare pays and what they need. Also, Medicare doesn’t pay at all for some services.
What Medicare Does Not Cover
While the list of services Medicare covers has grown over the half-century since Congress passed legislation creating the program, some forms of care still fall outside the program’s umbrella.
For example, Medicare does not cover:
- Routine eye exams
- Hearing aids
- Dental care
- Cosmetic surgeries
- Long-term care
Even when Medicare does pay, it does not always pay 100 percent of the bill. Along with deductibles and copayments, a patient could be responsible for about 20 percent of a medical bill in some cases.
To put it into context, 20 percent of a $200,000 hospital bill would be $40,000 — still a significant bill, especially when you’re retired.
How Will You Fill the Medicare Gap?
To cover their portion of a large medical bill, or to pay for services Medicare doesn’t cover, Medicare enrollees need another source of coverage.
Possible sources of payment include:
- Paying Out of Pocket: If patients have the savings to cover copays, deductibles, and services like vision, hearing, or dental, they may choose to pay out of pocket for some of these services, especially if they plan to stick to preventive care.
- Using Medicare Advantage: Private insurers offer Medicare Advantage Plans in conjunction with the federal government. These plans must cover everything Medicare would cover (except Part D prescription coverage). These plans can also add dental, vision, and other similar coverages.
- Buying Supplemental Coverage: Medicare enrollees can buy supplemental coverage specifically to fill the gaps in coverage Medicare leaves open.
- Using Existing Insurance: Others can keep their existing health insurance policies either through their employers or through their retirement benefits. Using Medicare and private insurance in tandem can often cover most, if not all, necessary expenses.
With Americans working longer than in decades past, many new Medicare enrollees still have private insurance through their jobs, making this option the simplest solution.
However, coordinating two forms of primary health coverage can get complicated: Which service pays first? Which service then steps in to cover any remaining costs?
Coordinating Private Insurance With Medicare
A patient with two or more forms of insurance needs a hierarchy to determine which plan should pay first. Insurance agents often use the word “payer” when they’re talking about an insurance plan, so we’ll do the same.
You’ll need to share this hierarchy with the billing departments of your health care providers:
- Your Primary Payer: When you go to the doctor or receive medical services in a hospital setting, the billing office will first send the claim to your primary insurance.
- Your Secondary Payer: After your primary payer has paid the amount your plan allows, the bill moves on to your secondary payer who will often cover the remaining balance.
Some people have more than two payers — Medicare, a private health plan, and a supplemental health plan, for example. In such cases, the third payer may need to pay only if it covers a procedure the primary or secondary insurance plans won’t cover.
How will you assign your primary and secondary payers? That depends on which kinds of coverage you have along with Medicare…….Read More>>