I know, you think the lead-in to this blog is a cheap trick to get you to take a stupid quiz with the promise of a reward, that turns out to be a free 30-day trial for something you don’t need. Well, you’re wrong, this quiz concerns your knowledge of Medicare and some of the rules that may well affect your pocketbook. The reward is . . . I’ll give you the answers to the quiz at the end and you’ll be rewarded with some information that hopefully will help you stay healthy and may even save you some money. Some of the questions are multiple choice; others will force you to come up with the right answer without having a choice. So, here we go, good luck!
- What is the difference between Medicare and Medicare Advantage plans?
- What is the difference between Medicare and Medicaid?
- What Part of Medicare covers prescription drugs?
a. Part D
b. Part C
c. Part B
d. Part A
- When is Medicare Part D open enrollment?
- Is there a yearly out-of-pocket spending cap on Part D?
- This is the very important and more difficult bonus question –
What is the difference between a co-pay and co-insurance?
The answers are below.
Answer to 1 – Medicare and Medicare Advantage are two different ways that the Medicare benefit is administered. Medicare (also known as Medicare Fee For Service (FFS)) provides beneficiaries 65 and over with healthcare and is paid directly by the government. Medicare Advantage, often called Medicare Part C, is administered and controlled by a private health insurance company which is paid a fixed amount per beneficiary. Most seniors in America have the option to choose between standard Medicare and Medicare Advantage. Most seniors now choose to participate in Medicare Advantage instead of Medicare FFS as they become eligible because it offers additional benefits and predictability in costs. Many seniors who opt for standard Medicare also choose Medicare supplemental insurance that offers lower out-of-pocket costs and expanded benefits but costs extra money. It is worth taking the time, and seeking help when needed, to make the correct choice for your particular health requirements and the different plans offered in your area.
Answer to 2 – As explained in question 1, Medicare is the benefit offered to those turning 65. Medicaid provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults and people with disabilities. Medicaid is administered by states, according to federal requirements. The program is funded jointly by states and the federal government.
Answer to 3 – Part D is Medicare’s prescription drug program. It was not part of the original Medicare benefit that was signed into law in 1965. Part D was signed into law in 2003 and began offering coverage in 2006.
Answer to 4 – You can change your Part D prescription drug insurance plan every year during the open enrollment period from October 15 to December 7 for the following year. When you turn 65 you need to apply for Medicare Part D sometime between the three months before the month in which you turn 65 until three months after if you aren’t covered by private prescription drug insurance. If you delay signing up for Part D, you will be charged a 1% higher premium for each year you delay. This is a lifetime penalty, so it is important to understand and follow the Part D enrollment rules.
Answer to 5 – Some Medicare Advantage plans have a yearly out-of-pocket cap on prescription drug costs. Regular Medicare does not have a yearly cap on out-of-pocket costs for prescription drugs. One of the changes to Medicare that has been discussed lately is putting a yearly cap on these Part D out-of-pocket costs. As I’ve discussed in earlier blogs, this is a great idea and one I feel seniors throughout America should be urging their representatives in Washington to implement.
Answer to 6 – This bonus question deals with a nuance in healthcare insurance that most people don’t understand but can have a big impact on your out-of-pocket costs.
A co-pay is the amount you may have to pay every time you go to a doctor or the amount you may have to pay when you have some sort of test performed or when you have a prescription filled. It is a fixed amount and is detailed in the Medicare benefit explanations, Medicare supplemental insurance guides or Medicare Advantage plan explanations. These co-pays should be part of your consideration as you choose which plan works best for you. The good part of co-pays is that they remain the same and are not impacted by the amount of the procedure or prescription drug cost. The cost may be more for a visit to a specialist or if the prescription is a generic or a brand name drug, but they will be fixed and will be documented in the plans guidelines.
Co-insurance is an out-of-pocket cost that may be charged every time you use a healthcare service. The difference between co-insurance and a co-pay is that the out-of-pocket cost for co-insurance is calculated as a percentage of the cost of the healthcare goods or service provided. If your co-insurance is 15% then you must pay 15% of the cost of the procedure, test, office visit or prescription drug. This cost is not fixed and could run into large out-of-pocket costs depending on the cost of the goods or service provided. The differences between co-insurance and co-pays need to be understood as you consider different options under Medicare.
I hope you did well on this little pop quiz. More importantly I hope you learned some things that might help you choose the best healthcare for your situation and maybe even save you some money.