It pays t know your ABCs…and Ds
MEDICARE PROVIDES affordable health care for adults age 65 and over. For all its benefits, applying for Medicare and Medicare-approved plans gets more complicated every year.
In addition to Medicare Part A and B, which collectively provide hospital, physician and outpatient services, older adults can also apply for Part D, a prescription drug program. To help cover out-of-pocket expenses, adults can choose a Medigap policy offered by a Medicare-approved insurer. In the alternative, there’s Medicare Advantage (aka Medicare Part C), which offers the same coverage as Part A, B and usually D.
To decide which combination suits your needs takes patience, time and an affinity for numbers and research. “Seniors face more complex health insurance choices than most of us,” says Juliette Cubanski,
Associate Director of the Program on Medicare Policy at Kaiser Family Foundation, a non-profit that provides information on national health issues. “Compare as many plans as possible, and don’t rule out a company you haven’t heard of.”
CONSIDER YOUR OPTIONS
First, determine whether you want traditional Medicare or Medicare Advantage. Traditional Medicare has no network restrictions on physician and specialist choices. But it also has no annual out-of-pocket limit. If you have significant medical expenses, you’ll pay your share indefinitely.
Medigap helps cover these out-of-pocket costs. Medigap policies cover copayments, coinsurance and deductibles. “Medigap offers greater predictability,” says Cubanski. “It provides peace of mind because your costs are largely covered.”
As an alternative to traditional Medicare, many adults opt for Medicare Advantage. Of the 51 million Americans covered by Medicare in 2016, 31 percent are enrolled in a Medicare Advantage plan — three times more than in 2004.
Medicare Advantage plans have provider networks and out-of-pocket costs. But most plans provide drug coverage, and all of them limit out-of-pocket spending to no more than $6,700 annually. Medicare Advantage is a comprehensive solution that may or may not save you money.
CHOOSE A PLAN THAT’S RIGHT FOR YOU
Choosing a plan is about as challenging as filing your taxes, but diligence pays off. With Medicare.gov’s Plan Finder, you can compare prescription drug plans, Medicare Advantage Plans and Medigap plans to find the benefits you need at a price you can afford.
When reviewing plans, consider premium costs as well as other expenses. “Deductibles and cost-sharing amounts can be a more determining factor in how much someone pays for coverage,” says Cubanski.
BE WILLING TO CHANGE
If you find your plan isn’t working for you, you can switch coverage during the annual open enrollment period. You’ll spend another afternoon comparing costs, but you may save hundreds of dollars in medical expenses.
“Our research suggests people leave money on the table by not switching plans,” Cubanski says. “People should at least take the opportunity to evaluate plans. The more experience you have with Medicare, the more you know what you like and what you’re willing to exchange for better value or lower cost.”
If prescription drug costs get out of hand, Cubanski recommends talking to your pharmacist and doctor before switching plans. They may recommend an alternative medication or a generic option that can help you save money.
If the enrollment process becomes too overwhelming, Cubanski recommends State Health Insurance Assistance Programs (SHIPS), which offer in-person counseling for Medicare beneficiaries and their families. “SHIPs exist to help people understand their Medicare coverage options and make informed decisions,” Cubanski says.
When choosing a health insurance plan, evaluate your options thoroughly. Seek advice from friends, but remember insurance is an individual choice. As Cubanski says, “What works for your neighbor may not work for you.”
HEALTH PLANS AT A GLANCE
MEDICARE PART A
Covers hospital and skilled nursing facility stays, hospice care and some home health care. No cost. Federally administered.
MEDICARE PART B
Covers doctor’s services, outpatient care, medical supplies and preventative services. Currently $139 per month or $109 if deducted from social security payments. Federally administered.
MEDICARE PART C
Medicare Advantage. Provides Part A and B and usually Part D coverage. Administered by private insurance companies. Premiums vary.
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