Medicare is one of the U.S. government’s most popular programs, but it’s also one of the most confusing.
It’s an alphabet soup of different programs with different rules: There’s Medicare Part A (hospital and home care), Part B (doctor’s bills and outpatient care), and Part D (prescription drugs). And you also need to understand the difference between original or traditional Medicare and private insurers’ Medicare Advantage plans, known as Part C.
If you’re confused, you’re not alone. But Diane Omdahl is here to help. She just wrote the book Medicare for You: A Smart Person’s Guide, about how to enroll in the program, find the right plans, avoid common mistakes, and get the best health care without overpaying.
Omdahl is also founder and president of 65 Incorporated (a Thiensville, Wisc., service advising people to make Medicare decisions wisely); architect of the i65 software system for Medicare enrollment advice; and a former registered nurse, home health care educator, and director of a skilled nursing facility and a home health care agency. Fortune Well spoke with Omdahl to get her best advice on navigating the Medicare maze.
Fortune: In the book, you write about ‘five things Medicare beneficiaries need to know.’ What are they?
Diane Omdahl: Number one is: Develop a plan. One of the biggest problems is at age 65, people think they’re set and don’t take a look at their situation. You have to figure out what to do about Medicare and come up with a plan.
That merges into the second step: Give yourself plenty of time.
On December 15, at 65 Incorporated, we heard from a woman who needed Medicare starting February 1. I sent her the enrollment instructions. We had an appointment set up on January 10, and she had not yet done the enrollment. And we got a call from her on January 31 because she’s freaking out that she doesn’t have Medicare. What can I do? In some areas of the country, it takes four to six weeks to get a Medicare application to the top of the heap.
What’s the third thing people need to know?
Make your own decisions.
People think ‘I’m just going to get what my husband got or what my best friend got because it works for them.’ But you may not take the same meds, you may not see the same doctors, you may not have the same medical issues. You need to make your own plan.
We worked with one couple and because of the drugs the husband takes, his best Medicare Part D plan was $120 a month. His wife takes one generic; she was just going to get his plan to keep it simple. That would have cost her about $112 a month more than necessary.
Couples don’t have to choose the same plans, right?
Right. I’ve had couples where the husband is super healthy, so he goes on Medicare Advantage and the wife has cancer, so she goes with Original Medicare.
And what’s number four on your list?
Follow the rules. The Kaiser Family Foundation just put out a report saying that Medicare Advantage plans denied 2 million people prior authorization requests in 2021. Some of that is about not understanding the rules.
We had a woman contact us who had a knee replacement without prior authorization. She was being billed $62,000. I said: “If you read the fine print, the plan will not pay if you do not follow the rules. And the rules require prior authorization.”
And number five?
Don’t put your Medicare plan on autopilot during open enrollment.
You mean: If you’re already on Medicare, take the time to compare Medicare plans during Open Enrollment because there may be something better than what you already have?
Right. Two years ago, the WellCare health insurer consolidated its six Medicare Part D plans down to three. People enrolled in the three plans that were dropped were notified that they would be put into a certain plan automatically unless they made a change. Well, the plan they were being put into had a monthly premium of $68.90, and many of these people had been on the cheapest plan that cost $10 or $12. Many people didn’t look at the letter and then they were stuck.
The same goes with Medicare Advantage plans. The drugs they cover, their doctors, their pharmacy networks can change.
What should somebody who has never been in Medicare know and do before they enroll?
Get a bigger mailbox and recycling bin because of all the mail you’ll get about Medicare plans! We basically just tell people to trash it.
Once you’ve decided what you want to do with Medicare, establish or update your financial and medical power of attorney—authorizing someone to make decisions for you if you are unable—because you never know when something is going to happen.
What should people know about making the choice between original Medicare and Medicare Advantage plans?
In the book, I talk about original Medicare with a Medicare supplement plan (Medigap) being a “pay now” system and Medicare Advantage being a “pay later” one.
You have these expensive Medicare supplement premiums costing around $250 a month. But once you pay that, all you face is the Part B deductible. Medicare Advantage plans may be zero premium, but then you face the plan’s out-of-pocket limit. That could be $8,300 this year. If you take a $250-a-month Medicare supplement, that’s what—$3,000 a year?
If you have a Medicare Advantage plan and you travel, people don’t realize that the doctors where they’re visiting have no obligation to see a patient who’s in a network for which they don’t have a contract.
You write that when you’re shopping for Medicare coverage, don’t focus on just the premiums. Can you talk about that a little bit?
There’s a Medicare Part D plan in the Seattle area that costs $1.60 a month. That’s great if you take Tier 1 drugs. But they might not cover Tier 5 drugs.
What’s the difference between the different tiers?
Medicare now has six tiers; the sixth one is not that common. Tier 1 is your cheap, common generic. Tier 2 is your less-preferred generic. Tier 3 is your preferred brand-name drug. Tier 4 is your brand names that don’t have generics available. And Tier 5 is for specialty drugs.
[Writer’s note: Tier 6 drugs include a small number of medications to treat high blood pressure, diabetes, and high cholesterol.]
What should people know about Medicare as it relates to staying in the hospital?
Well, I think you’re probably alluding to the observation status situation [writer’s note: which means you’re in the hospital but not officially admitted]. Sometimes, observation status lasts two weeks.
If you’re a patient, and you’re admitted, you pay your Part A deductible and then everything’s covered. If you’re not officially admitted but in a hospital bed (with observation status), it’s on Part B, so you pay a copayment for doctor’s visits.
The medications, if you’re an in-patient, are covered under Part A. If you’re on observation status, then it’s based on your drug plan. The hospital pharmacy is probably not in your drug plan’s network, so those drugs are out of network. You have to pay upfront, then you have to submit paperwork to get reimbursed.
And what should people know about Medicare as it relates to end-of-life medical care—hospice and palliative care? Does Medicare cover those?
Medicare doesn’t have an official program for palliative care, but many of the measures that are palliative fall under Medicare coverage.
Hospice is different; it is a packaged bunch of services. When you’re on hospice care, it’s all covered by Part A with minimal co-insurances if you meet the qualifications.
Having put my husband, my mother, and my father through hospice, I know how it works. It’s generally a very good program. It gives some relief to the caregiver. It provides counseling after the death.
The doctor has to certify that there’s an expectation of a maximum of six months of life.
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