Medicare and The Service Benefit Plan: Coordinated Benefits for Seamless Coverage

Are you celebrating your 65th birthday this year? Health benefit planning is just as important as financial planning for a healthy and happy future. Learn how the Service Benefit Plan and Medicare Part B work together to fill in the gaps and potentially reduce your out-of-pocket costs (note: overall out-of-pocket costs may not be reduced if you add in the Part B premium), creating a seamless healthcare plan for you.

Plan now, don’t pay later

Did you know that the average out-of-pocket healthcare costs for Americans age 65 and older is expected to double between 2010 and 2040? That’s a jump from about $3,300 to about $7,800 per year. You can plan for your health benefits now, instead of being surprised by unexpected health care costs later.

The ABCs of Medicare

Medicare has four types of coverage:

Part A is hospital insurance that pays inpatient care in a hospital or nursing facility, home health care, and hospice care. Most people can get Medicare Part A without paying a premium.

Part B extends coverage to help pay for doctors’ services, outpatient care, physical and occupational therapy, and some home health care, which are not covered under Part A. Part B is optional medical insurance and requires a monthly premium, which depends upon your yearly income.

Part C or Medicare Advantage combines Parts A, B and sometimes, part D. Medicare Advantage plans are managed by private insurance companies and allow eligible individuals to get Medicare benefits through risk-based plans.

Part D provides coverage for prescription drug benefits and it works with “traditional” Medicare as well as all types of Medicare Advantage Plans. Generally, you will be required to pay a monthly premium and copayment or coinsurance for each prescription filled.

You can find out more about Medicare health plans and their associated costs at http://www.medicare.gov/default.aspx. Also, you can download the Medicare and You booklet on our web site to help you understand how Medicare works with Blue Cross and Blue Shield Service Benefit Plan coverage.

When am I eligible for Medicare?

Most people become eligible for Medicare when they turn 65. Most people enroll in Medicare Part A when they first become eligible because they do not pay a premium for Part A. If you begin to collect Social Security Retirement benefits you must enroll in Part A.

Medicare Part B is optional. You can choose to enroll at the same time you enroll in Part A, or delay enrollment. Everyone pays a premium for Part B. Many people with other health insurance from employment choose to delay Part B enrollment to save the premium cost. And, as long as you have “current employment health insurance” from your employer or that of your spouse, you can delay Medicare enrollment without paying a penalty for delayed enrollment. Once your current employment health insurance ends, you may want to consider signing up for Part B as soon as possible to avoid paying a penalty in the form of a higher premium later and to save certain cost-sharing expenses as discussed below.

If you decide to enroll when you turn 65, your initial enrollment period starts 3 months before the month you turn 65, and ends 3 months after the month you turn 65. Your Medicare coverage will start the month you turn 65 or later if you enroll after your 65th birthday.

Contact Medicare at www.medicare.gov or 1-800-633-4227 if you have questions about your Medicare eligibility and premium amounts.

Should I enroll in Medicare Part B?

If you are eligible for Medicare and you do not have current employment health insurance, you might want to consider enrolling in Part B even with Service Benefit Plan coverage. When you have Medicare Part B and Service Benefit Plan coverage, most of your covered health care expenses are paid in full. Your Service Benefit Plan coverage pays for Medicare Part B deductibles, coinsurance and copayment amounts. The deductibles, coinsurance and copayment amounts under your Service Benefit Plan coverage are waived when Medicare Part B is the primary. So, by having both coverages, you may be able to save money and have peace of mind knowing that your covered health care expenses are paid in full.

February 2011. Edited by Paula Spurway, Blue Cross and Blue Shield Association. Resources: 2011 Blue Cross and Blue Shield Service Benefit Plan brochure; and Will healthcare costs Bankrupt Aging Boomers? The Retirement Policy Program, The Urban Institute, February, 2010: http://www.urban.org/UploadedPDF/412026_health_care_costs.pdf 

Page last updated: December 16, 2011