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3 Important Medicare Tips When Choosing a Plan

Medicare has specific enrollment periods, which allows eligible individuals to compare Medicare plan options. Understanding your Medicare insurance is an important financial decision to help control medical expenses in retirement. Every year, Medicare makes changes to the expenses associated with specific benefit coverages, which you should study. Whether you are experienced with the Medicare process or newly eligible for Medicare (Initial Enrollment Period), evaluating insurance plan options is important. These changes to the Medicare insurance benefits can be frustrating, particularly once you have become accustomed to your plan and service providers. These changes could affect the network, your deductibles and co-payments you might have to pay. I would like to share 3 tips to help you evaluate Medicare insurance plans based on your circumstances and, hopefully, help increase your financial confidence.

The first Medicare tip to consider is the location where you might receive care. Do you generally stay in or near your hometown versus traveling, either domestically or internationally? If you don’t do extensive traveling, you have broader Medicare insurance options ranging from a combination of plans or one that covers many healthcare services. Traveling domestically within the United States, the Medicare coverage options aren’t as broad and it is best to look at plans that have access to a large network of physicians and pharmacies. Generally, Medicare doesn’t cover care outside the United States. If you are a global trekker, there are supplemental Medicare options that have access to a global network or provide reimbursement that should be adequate with proper planning.

The second Medicare tip to consider is the level of healthcare you might need. You should start by asking yourself these three questions: (1) How frequently do I see a doctor?, (2) How are my medications are covered? and (3) Do you have concerns about copays and deductibles? Answering these three questions can help you narrow down plan options, in terms of which plans help you manage the access and treatment you receive. Depending on the level of health care you may need, Original Medicare may or may not be enough and you may need to consider private insurance products. If you choose to only use Original Medicare, you will still have to enroll in Medicare Part D, which is specifically for prescriptions.

The third Medicare tip to consider is the financial aspect, in regards to predictability of expenses you might incur. Medicare has different expenses associated with varying healthcare services. So, it is important to understand how an insurance program can help you get better control of healthcare expenses. These are three financial questions to ask yourself: (1) Am I ok with less predictable costs without an out of pocket limit?, (2) Would I prefer more predictable costs with an out of pocket limit?, and (3) Do I have a budget to help me control costs? Healthcare expenses during retirement for individuals on Medicare could take a large percentage of your budget. A recent National Healthcare Expenditure report estimates the per person personal health care spending for the 65 and older population was $19,098 in 2014.

The answers to these questions might change over time as your circumstances change. Your health could improve or worsen. Your income or financial situation could also change. Use these tips to help you with your open enrollment period in addition to the resources that Medicare has to offer. The Medicare website has screening tools that help you screen plans very effectively. You can compare Medicare insurance plans by rating, premiums, drug coverage, out of pocket limits, network and unique features and benefits they have to offer. You could also work with an insurance agent or a financial adviser to help you with specific planning needs. You can go direct to an insurance carrier or an insurance broker to assist with medicare products specific to your needs. Working with a financial adviser that is also insurance licensed could help with insurance planning along with the long term financial aspect.

Coverage Analysis

Original Medicare Part A- Generally zero premium. There are cases where someone might have to pay for this coverage.

Hospital Insurance- hospital inpatient care, skilled nursing, hospice care & home health care.

Original Medicare Part B- The standard premium for 2019 is $135.50. The premium may differ with certain income levels.

Medical Insurance- outpatient care and services from doctors and other health care providers, medical equipment and preventative services (screenings & wellness visits, immunizations and vaccines).

Medicare Part D Medicare Prescription Drug Coverage - Premiums for prescription coverage will vary. Some higher income earners may be subject to part D IRMAA.

Prescription Coverages - operated by private insurance companies and governed by set rules by Medicare.

Medicare Advantage Plans- There are different plan choices and premiums vary from $0.00 to more. Medicare Advantage Plans are an “all in one” alternative to Medicare. They provide Hospital (part A) and Medical (part B) coverage and can also include Prescriptions (part D).

Medicare Supplements “Medigap” Plans- The premium is in addition to the Part B premium and will vary on the type of plan you choose.

For the 2020 enrollment period, there are 10 plan types, however, plans C & F won’t be available for people newly eligible after January 1st 2020. See grid below.

Dental, Vision & Hearing- Not covered by Medicare. Private insurance options are available, such as Medicare Advantage Plans or Stand Alone Plans.

Long Term Care- Not covered by Medicare. Long Term Care Coverage is available through private insurance.

Comparing Medigap coverages (Source “Medicare & You 2020”).

If a percentage appears, the Medigap plan covers that percentage of the benefit, and you’re responsible for the rest. Visit later this fall to see the 2020 benefit amounts.

* Plan F also offers a high-deductible plan in some states. With this option, you must pay for Medicare-covered costs (coinsurance, co-payments, and deductibles) up to the deductible amount of $2,300 in 2019 before your policy pays anything. (Plans C and F won’t be available to people who are newly eligible for Medicare on or after January 1, 2020. See previous page for more information.)

** For Plans K and L, after you meet your out-of-pocket yearly limit and your yearly Part B deductible ($185 in 2019), the Medigap plan pays 100% of covered services for the rest of the calendar year.

*** Plan N pays 100% of the Part B coinsurance, except for a co-payment of up to $20 for some office visits and up to a $50 co-payment for emergency room visits that don’t result in an inpatient admission.

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