Medicare Supplements and Excess
Make sure you cover this potentially large
For people new to the world of Medicare, many terms pop up that are relatively new and sometimes, just plain confusing. Part A? Part B? Excess? The last one's very important to anyone who's trying to avoid large out of pocket exposure and risk even with Traditiional Medicare in hand. Even some Medicare supplements might not address the core risk of Excess. Before we dive into how best to address this risk, let's understand what it is first.
Excess comes into play along side co-insurance as it pertains to Medicare. So what's co-insurance? Once you have met your deductibles (separate ones for Part A hospital and Part B physician), you then start paying a percentage of the bills. This is co-insurance and it's traditionally 20% that you will pay while Medicare pays the 80%. Most Medicare supplements will pick up this 20% co-insurance once your deductibles are met but that's only part of the equation. To understand the other part, Excess, we need to quickly talk about how providers, doctors and hospitals contract with Medicare.
In order for a provider to get paid my Medicare, they need to accept Medicare rates or reimbursements. This is typically called "Accepting Medicare". Most providers accept Medicare and almost all hospitals accept Medicare's schedule of reimbursements rates but most is not all. There's a little caveat in the provider contracting requirements that bare noticing since it can directly affect your out-of-pocket exposure. Providers are given an ability to charge up to 15% higher than the standard Medicare re-imbursement rates. There is no cap on this 15% exposure and that's the critical piece dealing with excess. What if you have a $20K bill and the provider charges excess? This means you're on the hook for an additional $3000 even with Part A, Part B, and some Medicare supplement plans in effect. After all that coverage, you're still going to pay $3K because of this excess. Excess is such a strange twist and you don't really find this term with pre-65 health insurance so it usually catches people off guard. Hopefully, our little article here might save someone $1000's of dollars.
Now, some people may say, "Hey, my doctor accepts Medicare and most doctors accept Medicare so what's the big deal"? Keep in mind that you're making a decision for decades when choosing your Medicare supplement insurance plan. Take a look at the financial pressures on Medicare already. There has been a concerted push to reign in Medicare costs by slowing reimbursement to providers and this will one have important effect. More and more providers will choose (or be forced) to charge excess. Over the last decade, we've already seen the percentage of providers that charge excess increase each year and that trend will only continue if not accelerate. So what do we do to address this future un-capped exposure? F Plan.
The F Plan is the most popular Medicare supplement insurance plan for a host of reasons but the biggest one is this...it's the least expensive medicare supplement in plan that covers Part A, B deductibles, co-insurance, and..drumroll...excess. The vast majority of people that choose medigap coverage go with the F plan and we can't argue with the masses in this case. Medicare excess will only be more important with time and any cost that's un-capped, is better handled with insurance. In this case, the F plan insurance plan.