Medicare is one of the U.S. governments most popular programs, but its also one of the most confusing.
Its an alphabet soup of different programs with different rules: Theres Medicare Part A (hospital and home care), Part B (doctors 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 youre confused, youre not alone. But Diane Omdahl is here to help. She just wrote the book, Medicare for You: A Smart Persons 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 1 is: Develop a plan. One of the biggest problems is at age 65, people think theyre set and dont 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 shes freaking out that she doesnt 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.
Whats the third thing people need to know?
Make your own decisions.
People think Im 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 dont have to choose the same plans, right?
Right. Ive 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 whats Number 4 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 5?
Dont put your Medicare plan on autopilot during Open Enrollment.
You mean: If youre 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 didnt 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 youll get about Medicare plans! We basically just basically tell people to trash it.
Once youve 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 plans out-of-pocket limit. That could be $8,300 this year. If you take a $250 a month Medicare supplement, thats what$3,000 a year?
If you have a Medicare Advantage plan and you travel, people dont realize that the doctors where theyre visiting have no obligation to see a patient whos in a network for which they dont have a contract.
You write that when youre shopping for Medicare coverage, dont focus on just the premiums. Can you talk about that a little bit?
Theres a Medicare Part D plan in the Seattle area that costs $1.60 a month. Thats great if you take Tier 1 drugs. But they might not cover Tier 5 drugs.
Whats 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 dont have generics available. And Tier 5 is for specialty drugs.
(Writer 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 youre probably alluding to the observation status situation (writer note: which means youre in the hospital but not officially admitted). Sometimes, observation status lasts two weeks.
If youre a patient, and youre admitted, you pay your Part A deductible and then everythings covered. If youre not officially admitted but in a hospital bed (with observation status), its on Part B, so you pay a co-payment for doctors visits.
The medications, if youre an inpatient, are covered under Part A. If youre on observation status, then its based on your drug plan. The hospital pharmacy is probably not in your drug plans 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 carehospice and palliative care? Does Medicare cover those?
Medicare doesnt 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 youre on hospice care, its 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. Its generally a very good program. It gives some relief to the caregiver. It provides counseling after the death.
The doctor has to certify that theres an expectation of a maximum of six months of life.
