How well do you understand your Medicare policy?

65 is a significant year for many seniors as it may be the first year that you’re eligible for Medicare. Medicare is the government health insurance program that provides hospital (Part A) and standard medical (Part B) insurance to people 65 and older, called Original Medicare. Original Medicare has no annual out-of-pocket limit, and for Part B services, you’ll have to pay 20 percent of the costs after the deductible. That’s why many seniors with Original Medicare also purchase Medicare Supplement Insurance (also referred to as Medigap) or Medicare Advantage which can help cover those out-of-pocket costs. 

Your available coverage in addition to Original Medicare could include:

• Medicare Supplement Insurance (Medigap) plans: Medicare Supplement insurance plans help pay out-of-pocket costs such as copayments, coinsurance and deductibles. 

• Medicare Part D: Medicare Part D is prescription drug coverage. Original Medicare generally doesn’t cover most of the prescription drugs you take at home which is why some Medicare beneficiaries chose Part D coverage.

• Medicare Advantage is an alternative way to get your Part A and Part B benefits from a private insurance company. Medicare Advantage plans must cover everything that Medicare Part A and Part B covers, with the exception of hospice care, which is still covered by Medicare Part A. While premiums may be low, you can often end up paying more out of pocket.

Medicare Supplement Insurance (Medigap)

Medicare Supplement plans complement Original Medicare. These plans cover most of your out-of-pocket costs with Part A and Part B. To be eligible to enroll in a Medicare Supplement insurance plan, you must be enrolled in both Medicare Part A and Part B. Original Medicare pays its share of the approved service, and then your Medigap policy helps pay your share. You can’t get a Medigap policy if you have a Medicare Advantage Plan, you’d have to switch back to Original Medicare. Medicare Supplement insurance plans sold today don’t include prescription drug coverage. But you can sign up for a stand-alone Medicare Part D prescription drug plan to get that benefit.

So, your coverage could consist of:

• Medicare Part A, hospital coverage

• Medicare Part B, medical coverage

• Medicare Supplement insurance

• Prescription drug coverage under Medicare Part D

There are 10 different Medicare Supplement plans approved by Medicare, each with a different level of provided benefits. Three plans — Plan F, Plan G, and Plan N — are the most popular (accounting for over 80 percent of all plans sold).The best Medicare Supplement insurance plan is going to be the one that provides you the appropriate coverage for your specific needs. To determine this, you should take into account a number of factors. For example, a chronic illness or condition should be taken into consideration when choosing your plan. However, if you are maintaining a healthy lifestyle and do not require many visits to the doctor, you can find options that provide less needed care. The best time to get a policy is during your Initial Enrollment Period, which is 7 months. It starts three months before you turn 65, includes the month of your 65th birthday, and ends three months after your 65th birthday. During this time, you can buy a guaranteed issue Medigap policy sold in your state, Plan G if you turned 65 after 2020, without having to pass any medical underwriting or stating pre-existing conditions.  

Medicare Advantage

Advantage plans replace Original Medicare (Part A and Part B). When you buy a Medicare Advantage plan, the insurance company — which is not a part of Medicare — provides all your health coverage. Advantage plans provide the benefits of Part A and B, and most also include Part D- or prescription drug coverage. If you opt for Medicare Advantage, you typically continue to pay your Part B premium as usual, but you will pay little or no additional premiums for your coverage. To keep premiums low, Advantage plans generally require you to get your care from a network of doctors, hospitals, and other providers, and you typically need pre-authorization for specialized care. People in Medicare Advantage often don’t realize that they may pay more out of pocket for services. Most people that buy Advantage plans never consider the cost of health care, only the premium.

Medicare Advantage plans are great plans as long as you are healthy. But if you have chronic conditions or severe health needs, you may want to think twice about Medicare Advantage because of the requirements for pre-authorization and staying in-network. If you need to see multiple specialists and you have to get referrals for each appointment or fight to overturn denials, it can be really challenging. For those who live in rural areas, AKA Southeastern Oklahoma, where there are fewer doctors and hospitals, narrow Medicare Advantage plans can cause difficulty gaining access to care due to limited benefits and restrictive provider networks. A recent study in Health Affairs found, people living in rural areas were nearly twice as likely to leave an Advantage plan for a Medicare Supplement plan as those living in urban or suburban areas.

How to Consider Your Options

1. Compare your total out-of-pocket costs. One part of your expenses will be the monthly premium costs, where Medicare Advantage can look like the cheaper option. But it’s essential to look beyond the premium amounts and understand your potential out-of-pocket costs. Those can include copays as well as coinsurance, or a percentage of your total bill. If you have a chronic condition, and you have to pay 20 percent in coinsurance for each visit, you might spend thousands of dollars, which will more than offset any savings in premiums.

So examine your benefits statements and medical bills for the past year, then add up what you paid in deductibles and copays to get the true costs of your plan. Then consider what you might pay the following year, if you have, say, a knee replacement or have an accident. For many people, opting for a Medigap plan offers more financial security.

2. Consider the consequences of switching. When you initially enroll in Medicare at age 65, you have a guaranteed issue right to purchase Medigap Plan G. And insurers are required to renew your Medigap coverage each year as long as you continue to pay your premiums. But if you try to buy a Medigap policy after the initial enrollment window, insurers may be able to turn you down based on your health, or charge you higher prices, due to a pre-existing condition.

And if you opt for a Medicare Advantage plan when you first enroll or for the first time after having had Original Medicare with a Medigap policy since turning 65, you generally have a 12 month trial period when you can switch to Original Medicare and have guaranteed access to a Medigap (Medicare Supplement) plan. 

3. Take advantage of helpful resources.

Speak to someone in our office about all your different options and let our expertise help guide you toward a plan that makes sense for your budget, lifestyle, and health needs. You don’t have to understand it all. That’s what we’re here for. You don’t pay more to go through your trusted community agent than you would to go somewhere online. Plus, it’s free to get advice and guidance from us and we can review your plan with you yearly to asses if any changes need to be made. Call me, Michael Andrews, at (918) 774-5899. 

Sources

https://www.consumerreports.org/medicare/pros-and-cons-of-medicare-advantage-a6834167849/

https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2020.01435