Medicare is a federal program that provides individuals 65 years or older healthcare coverage at a small cost. Original Medicare coverage is broken into two parts-Part A and Part B-and is accepted by nearly every doctor and hospital in the country. Medicare Part A covers inpatient or hospital stays while Part B covers outpatient or medical care.
Together, Part A and B cover about 80% of the typical healthcare costs seniors face, leaving a few significant gaps in coverage.
Medigap, also called Medicare Supplement Insurance, is sold by private insurance companies to fill the “gaps” in Original Medicare coverage (Part A and Part B) that you would otherwise pay out-of-pocket. Covers the 20% Original Medicare doesn’t cover. These plans help cover costs like deductibles, coinsurance, and copayments, and some plans also cover services like emergency care abroad. They do not include dental, vision, hearing or drugs. You must purchase separate plans and pay premiums for those. You must have both Medicare Part A and Part B to purchase a Medigap policy, and you pay a monthly premium to the insurance company in addition to your Part B premium. Coverage is guaranteed renewable as long as premiums are paid, meaning your policy continues year after year (CMS).
Medicare Advantage (MA) plans are offered by private insurance companies approved by Medicare. There is usually no monthly premium associated with these plans. They cover hospital insurance (Part A) and medical insurance (Part B), and most plans also include prescription drug coverage (Part D). Unlike Original Medicare, MA plans often provide additional benefits such as dental, vision, hearing, and free gym memberships. These plans are sometimes called Part C and are not supplemental insurance; members typically use a network of doctors and hospitals contracted with the plan.
Medicare employs a star rating system to assess Medicare Advantage plans (Part C) and prescription drug plans (Part D). These ratings, which range from 1 to 5 stars, indicate the quality and performance of the plans, with 5 stars denoting the highest level of service. Annually, the Centers for Medicare & Medicaid Services (CMS) assigns these ratings based on several performance measures, including:
– Member Satisfaction: Insights from beneficiaries about their experiences with the plan.
– Health Outcomes: The effectiveness of the Medicare Advantage plan in managing chronic conditions and supporting preventive care.
– Customer Service: The level of responsiveness and support offered to members.
– Quality of Care: Compliance with clinical guidelines and quality measures.
– Enhanced Coverage: 5-star plans typically offer additional benefits beyond standard Medicare coverage, such as lower copayments and reduced premiums.
– Year-Round Enrollment: Beneficiaries can enroll in 5-star plans at any time during the year, not just during the annual enrollment period, using a Special Enrollment Period (SEP).
– Financial Incentives: These high-rated plans receive quality bonus payments from CMS, which can be utilized to improve member benefits.