AFFORDABILITY NOV 07, 2017
Sixty-five
is a big birthday. That’s when most people become eligible for Medicare, the
government health insurance program for seniors and those with disabilities.
After
receiving health insurance through an employer for several decades, you might
assume that the transition to Medicare will be seamless. After all, how
different can it be from the health insurance you get through work?
While
there are some similarities, the two types of coverage are vastly different in
many ways, and those differences often catch people off guard as they’re
preparing to transition into retirement.
To help
you navigate the transition to Medicare, here are five of the most important
differences between getting health care from your employer versus from
Medicare.
1. Open
Enrollment…With a Twist
For
employees at private companies, open enrollment takes place at a specific time
each year, chosen by the company, and typically lasts anywhere from a couple
weeks to a month.
Once
you become eligible for Medicare, you’ll have the same enrollment opportunities
as other Medicare beneficiaries—all 59 million of them. You’ll also find that
Medicare offers a few different types of enrollment periods. It’s important to
understand who’s eligible for each.
The initial enrollment period to
sign up for Medicare lasts seven months, starting three months before your 65th
birthday and ending three months afterward. If you miss the deadline to sign
up, you can do so during the next general enrollment period,
which runs from Jan. 1 to March 31 every year. However, it pays to sign up on
time, as you may have to pay penalties if
you sign up late.
Medicare
offers a host of what’s called Special Enrollment Periods (SEP) designed to
accommodate a variety of different personal circumstances. For instance, if you
decide to keep working beyond your 65th birthday and delay your initial
enrollment in Medicare, you’ll be eligible for an SEP when you retire. Check
out tip No. 3 below for another example of how SEPs work.
Just
like when you were working, you’ll get an annual opportunity to switch to a new
plan that might better meet your needs. You can change plans each year during
Open Enrollment between Oct. 15 and Dec. 7.
And as
you’re signing up for Medicare, remember: While many employer-sponsored plans
allow employees to cover their spouses, partners and dependent children, Medicare is for individuals only.
2.
Options Galore
When
you’re working for a company, you usually get to choose from one of a few plans
at open enrollment time. That’s because your employer has already considered a
wide range of options and narrowed them down to a few plans it believes will
work best for you and your co-workers.
But
when it comes time to choose a Medicare plan, you’re the boss. And you might
find yourself faced with more than a dozen options! In fact, the average person
eligible for Medicare will have a choice of 19 Medicare Advantage plans (Part
C) offered through private insurers, as well as Original Medicare (Parts A and
B) through the federal government.
When
you factor in all of the Medicare supplement, or “Medigap,” and Part D
prescription drug plans available as well, your options can quickly multiply to
two dozen or more, depending on where you live.
“When
you go into Medicare, there are a whole bunch of plans with different carriers
and different networks,” said Forrest Burke, CEO of UnitedHealthcare Retiree
Solutions. “Within Medicare Advantage, you may have a choice of HMOs or PPOs.
With traditional Medicare, you may opt for Medicare supplemental insurance, and
there are different carriers for Medicare Part D insurance.” (Check out
this glossary to
understand the differences between HMOs—health maintenance organizations—and
PPOs—preferred provider organizations.)
“You
certainly have a lot more choice,” Burke continued. “While choice is generally
a good thing, it may be overwhelming when you’ve had only a curated plan or two
to choose from for most of your adult life.”
Feeling
overwhelmed? Learn more about how to choose a Medicare plan
that’s right for you.
3.
Location, Location, Location
When
you get your health insurance through your job, it stays with you no matter
where you go. Get transferred from Indiana to Georgia? You’ll keep your
insurance plan. The same holds true for Original Medicare.
But if
you choose a Medicare Advantage plan—that is, a plan offered through a private
insurer rather than the federal government—you may have to sign up for a new
plan when you move. That’s because health insurers offer Medicare
Advantage plans in defined regions. For example, a health insurer could offer a
plan in five counties in a metropolitan area, and a different plan in three
other counties in the same metropolitan area. So if you move from one side of
the city to another, you might find that you’re no longer eligible for your
current plan.
If you
opt for Medicare Advantage and later decide to move to a new home, you’ll have
to check whether or not your new address is in your plan’s service area. If
not, you’ll simply have to tell your plan that you’re moving and choose a new
plan that is available in your new location. You’ll qualify for an SEP to make
that switch outside of Open Enrollment. The exact start and end dates of your
SEP depend in part on when you notify your plan of your move, but typically it
begins the month before you move and ends two months afterward. If you don’t
sign up for a new plan within that time frame, you’ll automatically be enrolled
in traditional Medicare.
The
process works a little differently for Part D and Medicare supplement plans, so
it’s best to call your plan before your move to understand the steps you’ll
need to take to maintain your coverage at your new home.
Moving
to a new home is just one life change that could qualify you for an SEP. You
can find more details on SEP eligibility criteria here.
4.
Access to Doctors
Most
employer plans have what’s known as a network—a group of
health facilities, doctors and suppliers with whom the insurance company has a
contract to provide health care services. Under most plans, consumers will pay
less when they see a doctor or visit a facility included in their plan’s
network.
Many
Medicare Advantage plans also have networks of doctors and care
providers. Some plans may require you to choose a primary care
physician and get referrals to see specialists.
But
under traditional Medicare, there are no limits on which physicians you can
see. Any doctor or hospital that accepts Medicare coverage is fair game. For
some people, having that flexibility in provider access is their main priority
and the primary reason they choose Original Medicare.
But
networks have certain advantages. Chief among them: It’s in the best interest
of health plans to include high-quality doctors in their networks. Why?
Patients who receive high-quality care tend not to require as much follow-up
care and are less likely to end up in the emergency room or hospital, which
means lower costs for the health plan.
“High-quality
doctors get it right the first time,” Burke explained.
Care
coordination is another advantage. It’s the network structure of Medicare
Advantage plans that enables plans to coordinate their members’ care, which can
improve the odds that members will have a good outcome when they receive care
and also make for a smoother, more seamless health care experience.
And you
might find the network structure of a Medicare Advantage plan familiar
territory after getting used to staying in network under your employer plan.
5. What
You’ll Pay…and How Much You’ll Notice
Every
employer-sponsored plan has different premiums, deductibles, copays
and/or coinsurance. The same is true for Medicare plans offered by
private insurance companies.
While
you’re working, your employer automatically deducts the monthly cost of your
health coverage (the premium) from your paycheck. Likewise when you’re on
Medicare and also receive Social Security benefits, your monthly Part B premium
will most likely be deducted from your Social Security check. Part B covers
doctor’s visits, lab services, diagnostic tests such as X-rays, outpatient care
and medical equipment you use at home. But your Part B premium might not be the
only one you’re responsible for paying each month.
If you
choose a Medicare Advantage plan, Part D prescription drug plan and/or Medicare
supplement plan, you’ll usually have separate premiums for each plan, though
many Medicare Advantage plans are available for a $0 monthly premium, and most
include prescription drug coverage. You can pay your premiums by writing a
check every month or arranging for automatic withdrawals from your bank
account. With Medicare Advantage or a stand-alone Part D plan, you also have
the option of paying your premium by Social Security deduction.
Monthly
premiums aren’t the only part of the cost-sharing equation that’s a bit
different between employer-sponsored insurance and Medicare. You’ll find that
your other cost-sharing responsibilities, including deductibles, co-pays and
co-insurance, also operate a little differently, and a lot will depend on
whether you stick with traditional Medicare or opt for a private Medicare
Advantage plan.
If you
choose Original Medicare, you’ll have not one but two deductibles to meet
before your Medicare coverage will kick in: one for Medicare Part A, and one
for Part B. The deductible that applies will depend on the type of care you
receive. If you’re hospitalized, you’ll need to meet your Part A deductible
before your care is covered; if you visit a doctor or have an outpatient
procedure, your Part B deductible will apply.
Perhaps
the biggest cost-sharing difference between employer-sponsored insurance and
traditional Medicare is the total cost of your care in a given year.
Most
employer-sponsored plans have a cap on how much you’ll pay out of pocket each
year toward your medical costs. Medicare Advantage plans have that same
feature, but traditional Medicare does not, so you’ll have to pay 20 percent of
the cost of most medical services received under Part B, with no limit. That 20
percent is your coinsurance—the percentage of the covered
costs of a medical service that you’re responsible for paying.
“With
traditional Medicare, you’ve got quite a bit of financial exposure,” Burke
said. “That’s why the vast majority of people pick either a Medicare Advantage
plan or a Medicare supplemental plan and a Part D pharmacy plan. You’ve got
certainty about what your cost exposure is.”
The
Bottom Line
Clearly
you’ve got a lot to consider as you prepare to make the jump from
employer-sponsored insurance to Medicare. The decisions you make during this
transition are important and can have a long-term impact on your plan options
and costs, so don’t hesitate to seek guidance. Your employer’s human resources
department is a great place to start.
You’ll
also find a host of online resources that can help you learn more about
Medicare and how it works. Two solid options: Medicare.gov and
MedicareMadeClear.com.
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Plans are insured through UnitedHealthcare Insurance Company or
one of its affiliated companies. For Medicare Advantage and Prescription Drug
Plans: A Medicare Advantage organization with a Medicare contract and a
Medicare-approved Part D sponsor. Enrollment in these plans depends on the
plan’s contract renewal with Medicare.
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