Medicare can be a beast to understand, especially for those enrolling for the very first time.  First, one needs to be able to decipher the Medicare alphabet and figure out what each letter covers and doesn’t cover. Then, you have to look at your current health status, look at what type of travelling you plan to do or where you will live throughout the year, and finally, do some math calculations.  A person can spend some serious time trying to figure out what the best Medicare options are for themselves.

Are there people out there that can help you make your decision?  Of course, there are.  There are agents who represent certain companies who offer Medicare plans, but there are also health insurance brokers who can help you navigate the Medicare maze.  Before we look at the difference, let’s review the Medicare basics.

Back on July 30, 1965, President Lyndon Johnson signed the Social Security Amendments of 1965 into law which created both the Medicaid and Medicare programs.  Medicare rolled out with two different parts to offer health insurance for elderly Americans 65 years old and up.

Part A:  This covers the majority of hospitalization costs as well as up to 100 days in a rehab or nursing home facility if the stay is immediately after discharge from the hospital.  For most people, there is no monthly premium but there is an annual hospital deductible ($1,484 for the year 2021) that is subject to yearly increases to keep pace with the rising cost of medical care.

Part B:  This covers the majority of doctor’s visits, medical testing and outpatient services.  This is the portion of Medicare that you will see the monthly premium be subtracted from your Social Security check.

Part C:  In 1997, Congress gave the green light to allow private-sector competition to the government run Medicare program.  Part C refers to the HMO and PPO style offerings coming from private health insurance companies often called Medicare Advantage plans.  By law, they must offer enrollees identical Part A and Part B, but then the health care companies can add whatever other features they want and can charge different premiums and deductibles.

Part D:  Prescription drug coverage became an additional offering in 2006 and is purchased directly from private insurance companies.  It is not required, but it can save people a bunch of money on their medications.

Medigap plans A – N:  These are standardized plans that help to fill in the “gaps” of coverage created by Parts A and B not covering every single expense as it relates to a person’s health care.  These plans can pick up copays and deductibles and help pay the expenses of a skilled nursing home.  They can also pay for care given in a different state or country if a person enrolled in a Medicare Advantage plan.  Click on this link to compare the different Medigap plans:

https://www.medicare.gov/supplements-other-insurance/how-to-compare-medigap-policies

Surveys indicate that approximately 80% of Medicare enrollees purchase some type of Medigap policy to protect themselves from a serious and/or prolonged health event.

Now let’s get to the topic of this article – who can you work with to help you find the right Medicare plan for your particular needs?

For those of you who have attended the class I teach at Western Michigan University, you might remember the one slide where I discuss the difference between an insurance agent and an insurance broker.

A health insurance agent works for and represents the company that has their logo on the building, the pens and sticky pads on their desk, and maybe even the shirt the agent is wearing.  When it comes to Medicare, there is nothing wrong in sitting down with a health insurance agent as the that person will help you understand all the different parts and pieces of Medicare.  They can also look at the various Medigap plans to see if any of them would be appropriate options to create a better overall health insurance option for you.

What’s the drawback to working with a health insurance agent?  If you’re looking at Medicare Advantage plan or a particular Medigap plan, the agent will be offering you the product that comes from the company they represent.  I’m not saying that’s a bad thing, but it doesn’t necessarily mean their product is the best one out there for your particular health insurance needs.  Let’s just say they are a little biased.  The agents have a marketing plan that they follow pushed down to them by the company they represent.

On the other hand, you might choose to get your help from a health insurance broker.  Brokers can do the exact same thing that a health insurance agent can do – research prescription coverage options, see what the best Medigap plan is for your particular situation, or check to see which networks your doctor belongs to so you can continue to see them without paying “out-of-network” costs.   A health insurance broker also is not beholden to one company.  A broker, by definition, works with multiple companies and can shop around for the best price which will potentially save you money throughout the year.

When it comes to working with a health insurance broker, there are certain things they cannot do with you when discussing Medicare coverage:

1.  No cold-calling is allowed.  The only way they can meet with you at your home is with an appointment
2. Not allowed to transition into selling you unrelated items like life insurance or property and casualty insurance
3. Offer you incentives or cash for signing up with them
4. Use high pressure sales tactics.

There is also a third option in finding somebody to assist you in figuring out all the parts and pieces of Medicare.  There is something called the State Health Insurance Assistance Program (SHIP) that is a federally funded program of counselors – not agents or brokers who can earn commissions.  These counselors can also assist you in finding solutions to your particular health insurance needs.  For the state of Michigan, you can call SHIP at     1-800-803-7174 or go to their website  http://www.mmapinc.org/

The bottom line with Medicare is that if you need help understanding your options and how to get the best coverage, there are resources available and people who are looking forward to helping you navigate the Medicare system.

 

This blog is created and authored by Chuck Henrich (Content Creator) and is published and provided for informational and entertainment purposes only. The information in the Blog constitutes the Content Creators own opinions and it should not be regarded as a description of services provided by Southwest Michigan Financial, LLC. The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.  It is only intended to provide education about the financial industry.  The views reflected in the commentary are subject to change at any time without notice.

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