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What is Medicare Part C

October 08, 2019

Continuing in our series regarding the Medicare insurance program we will discuss what is Part C. To refresh readers, Medicare is a government insurance program which offers limited coverage through Part A for hospitalization, skilled nursing, and hospice services; and limited coverage through Part B for outpatient services and doctor visits for Medicare beneficiaries. We can refer to this insurance as Original Medicare (OM).

Due to the limitations of OM, a beneficiary could possibly be subject to substantial financial obligations if this is the only coverage in place. There is additional insurance coverage available through private insurance carriers. Beneficiaries may add coverage in a few different scenarios.

One scenario is to add a Part D prescription drug plan to OM. Another is to add a Medicare Supplement commonly referred to as a Medigap policy and a Part D plan to OM. We will discuss these scenario options in further detail in upcoming articles. A third option is to enroll in a Medicare Advantage plan or Part C.

When you enroll in a Medicare Advantage (MA) plan you are not giving up OM but rather choosing to receive your health insurance services through a private insurance carrier. Advantage plans are regulated by Center for Medicare & Medicaid Services (CMS) and are required to offer benefits which overall are at least as good as the benefits of OM. When on a MA plan, you will only need to carry one insurance card for hospital, pharmacy, doctor visits and outpatient services. There are many variables to consider.

MA plans may be Health Maintenance Organizations (HMO), Preferred Provider Options (PPO) and a few others which we will not get into today. In San Joaquin county for the year 2020, there is only one PPO and all the rest of the MA plans available will be HMO’s. These plans vary from county to county. For example, an ABC Insurance Advantage plan in San Joaquin may not be the same as an ABC plan in Stanislaus county. ABC may have a plan in one county but not in another county.

All plans must be approved every year by CMS and are rated by the Star System. This system of rating plans measures plan performance on over thirty metrics ranging from customer service issues, prescription drug service to grievances and appeals. Plan performance determines the plan’s Star Rating. Higher Star Rating means higher reimbursement from CMS. The range is from one to five stars. This also helps beneficiaries determine if one plan has performed better over time versus another plan. If a plan has no Star Rating, then it is likely brand new to the marketplace and will not receive a rating until after at least one year of service. CMS also uses this system to help regulate plans and if a plan is performing poorly there may be repercussions up to possible termination by CMS.

Advantage plans vary in terms of premiums, deductibles, co-payments, networks, co-insurance, maximum out of pocket spending and more.

Many plans have a no monthly premium, and some go well over $200 per month. Many people wonder how a plan can have no premium. When enrolled in an Advantage plan, the insurance carrier handles billing CMS does not. CMS does pay the insurance carrier a specific amount each month for each beneficiary that is enrolled in the plan. Remember that someone is always getting paid as there is no free lunch! In fact, all beneficiaries will continue to pay their Part B premium to CMS usually through a social security deduction, no matter what option they choose.

Some may have prescription drug coverage, and some may not. Medicare Advantage (MA) plans that include prescription drug coverage are referred to as Medicare Advantage with Part D or MAPD. Here in San Joaquin county all plans have prescription drug plans included and are considered MAPD. Plans in this county vary from no deductible, while some have a $435 prescription drug deductible.

There is a difference between co-payment and co-insurance. If you are charged a flat amount for a service, for instance $20 to see your primary care physician, that is considered a co-payment. However, if you are charged 20% for durable medical equipment that is considered co-insurance.

Maximum out of pocket or MOOP is a term describing the maximum amount of money a beneficiary will be liable for during the calendar year while on a MAPD plan. This term is often misunderstood. First, it is not a deductible. Second, know that there is no MOOP if you are on OM only. Many costs are not including in the MOOP for example, your monthly premium, your Part B premium, prescription drug costs, dental, vision or for services received out of network. What is included are CMS approved expenses for Part A & B services received in network. The highest MOOP in network for 2020 in San Joaquin county is $6700 and the lowest is $2850.

Knowing your network for the plan is critical. With MAPD plans you must stay in network for the service to be covered. You must get a referral to see a specialist or have a test completed. PPO plans will allow you to see a service provider outside of network, but you will likely pay a higher amount for the service if you do not use the preferred provider network.

It is recommended to ask all your services providers whether they are in network or not. Here is an example which illustrates why this is important; if you are hospitalized and have a surgery performed, the hospital and the surgeon may be in network, but the anesthesiologist may not be. In this case the beneficiary will likely be billed directly by the anesthesiologist as an out of network expense. You can avoid possible financial hardship and stress by doing some due diligence in advance.

The Part C option for your Medicare insurance coverage offers many benefits and we covered a small sampling in the article. Like any program there are pros and cons. As a beneficiary you should do as much research and due diligence as possible. We believe it comes down to the 3 C’s; cost, choice and change.

Cost is determining if the plan gives you the overall financial protection you wish to have. Does the plan offer you the choice of service providers which meet your health care needs? Are you comfortable with possible changes annually as MAPD plans may vary in benefits, costs, and choices every year? The Annual Election Period begins October 15th, 2019 which is next Tuesday and continues through December 7th, 2019. Until we talk again, be well.

Registered Representative offering securities and advisory services through Independent Financial Group, LLC (IFG), a registered broker-dealer and investment advisor. Member FINRA/SIPC. Dedicated Financial & Insurance Services and IFG are unaffiliated entities.