Are you soon to turn 65 and go on Medicare? Much of the process can be confusing; adding to the confusion, you will be inundated with mailers and phone calls from companies you've probably never heard of.
If you're already on Medicare, you are familiar with some of the process. The "Annual enrollment period" happens every year from October 15th to December 7th. During this time you can change your Medicare prescription drug plan or Medicare Advantage Plan (Part C).
When you go on Medicare, you have many options in regards to the insurance products that are available to you. Let's briefly go through some of those options.
Medicare consists of 4 Parts: Part A, Part B, Part C, and Part D. "Original" Medicare is Part A and Part B. For years many seniors would elect to purchase a Medicare supplement or Medigap policy to help pay for some of gaps in Medicare; for instance the Part A deductible, Part B deductible, the 20% coinsurance, etc. For seniors that chose original Medicare and a traditional Medicare supplement, the Medicare part D plan is also available to them. This will give the comprehensive coverage you need to cover all facets of healthcare. The coverage of a traditional Medicare supplement will bring your potential out of pocket cost, in regards to healthcare, to very little. A Plan G Medicare supplement for instance, pays for all the gaps in Medicare other than the Part B deductible which is currently $203 for 2021. This would effectively bring your total out of pocket max for the year to just $203.
The Medicare Part D program became a Part of Medicare on January 1st 2006 after the Medicare Prescription Drug, Improvement, and Modernization Act was passed in December of 2003. This gave Medicare beneficiaries the ability to buy coverage that would help pay for their prescription medications as Medicare did not pay for prescription drugs previously.
Each year a Medicare beneficiary can change to another plan during the Medicare Annual Enrollment Period. This enrollment period runs form October 15th to December the 7th each year. A typical Medicare Part D plan will have a premium ranging from $15 to $40 per month. Occasionally there are plans that are less than $15 per month and certainly a few that are more than $40 per month however the most competitive plans that will be best for your medication list typically run in the $20 per month range.
You can expect a Part D plan to give you you generic medications for a very low co-pay and sometimes even a $0 co-pay. You can also expect a typical Part D plan to have a deductible that applies to Brand name medications and some "non preferred" medications. The deductibles for Medicare Part D plans are typically $445 as this is the threshold that CMS has set for maximum Part D deductible.
The Medicare website, www.medicare.gov, has a very useful tool that our agency uses extensively to help find the best Part D plan for our clients. It allows us to input your medications you take, the pharmacy you prefer, and gives results and ranks the plans based on your total cost. This very helpful tool allows us to keep our clients in the best plans each and every year.
Another option, which has become an increasingly popular choice, is Medicare Advantage, also known as Medicare Part C. Medicare Advantage is a privatized Medicare plan, regulated by CMS (Centers for Medicare and Medicaid Services), and giving the Medicare beneficiary coverage that is "as good or better than original Medicare." Many Advantage plans include the Part D benefit giving you all your medical coverage with one company and one ID card, opposed to the aforementioned option where an individual would have their Medicare card, the Medicare supplement card, and a Medicare prescription drug card.
A person obviously wants to give themselves the best coverage for the best price, so you may be wondering, which route is best for me? The answer to that question depends on many factors. The traditional Medicare supplement has excellent coverage and leaves you with very little to zero out of pocket expenses however, the premiums are fairly expensive, especially when you consider you are paying the Medicare Part B premium as well.
In regards to cost, a person on original Medicare, traditional Medicare supplement Plan G, and a prescription drug plan, would break down like this:
Medicare Part A: Typically $0
Medicare Part B: $148.50 per mo (2021 for most Medicare beneficiaries)
Medicare Supplement Plan G: $125 per mo (this premium can vary based on age and zip code)
Medicare prescription drug plan: $20 per mo (these premiums can differ based on plan you choose and state in which you live in)
This gives you a total monthly premium of $293.50 per month. When comparing your monthly premium expenditures on this more traditional route with that of a Medicare Advantage plan, you will see some major differences as many Medicare Advantage plans have a $0 premium per month. Let's break that down a bit.
If you elect to go with a Medicare Advantage plan, you will be removing yourself from original Medicare (Parts A and B), and going on some private companies Medicare plan that has been CMS approved. You will likely have a very low premium if not a $0 premium, however, you will continue to pay the Medicare Part B premium. This fact confuses many people. Why would you still pay for Medicare Part B if you are no longer on that program and they do not pay your claims. You may also be wondering, how is it that a company can offer a Medicare Advantage plan for a $0 premium? Those two questions involve the same answer in a round about way.
Medicare Advantage plans are subsidized by the federal government. I'm not certain of the amount of subsidy the insurance company receives for your enrollment into their plan, but it would be north of $600 per month. In order to help pay these subsidies, CMS requires that you continue to pay your Medicare Part B premium regardless of the fact that you have chosen a privatized Medicare plan and will no longer be on the Medicare Part B program.
Obviously the coverage between the more traditional route of having original Medicare, a supplement, and a drug plan, is as different as the premiums are different.
With a Medicare Advantage plan you will have co-pays for almost every type of healthcare procedure. Many plans will give you a $0 co-pay for your primary physician visits, but say a $40 co-pay for specialist. Also, you will have fairly high co-pays for in-patient hospital stays and out patient services such as surgery.
Many seniors weigh the differences and, especially if they are in relatively good health, chose the Advantage route as it saves them quite a lot in premiums and they can use some of that savings to pay for a few various co-pays here and there. Other seniors like the stability and the "eliminating the unknown" aspect of the more traditional route with a Medicare supplement. The option you chose will most likely be what you feel most comfortable with . There is no "right or wrong" answer. It's much more about you understanding the differences and making the choice that you think best fits your needs.
If you would like professional help with your Medicare, we would be happy to assist you. Our services are completely free to you and we're contracted with over 40 companies so we can offer our clients all the best plans that are available.