It's a big mistake to assume that Medicare is
the only health insurance you need in retirement, as discussed in my previous post. You'll want to find a separate insurance
policy to complement Medicare, to cover Medicare's significant deductibles and
copayments, and to fill in coverage gaps. There are three ways you can do this:
·
Enroll in Original
Medicare and also buy a Medicare Supplement Plan and a Part D Prescription Drug
Plan
·
Enroll in a Medicare
Advantage Plan
·
Find work that offers
you medical insurance to complement Medicare
Let’s look at each of these first two
alternatives in more detail.
Original Medicare
You can enroll in Original Medicare, where
you’re free to use the services of health care providers who agree to accept
Medicare reimbursement. You can then buy a separate Medicare Supplement Plan
that will directly pay part or all of Medicare’s deductibles and copayments.
Some Medicare Supplement Plans will also
reimburse a portion of Medicare’s costs that exceed the usual Medicare
reimbursements to health care providers. This can give you a broader choice of
physicians and other outpatient professionals.
In addition, some Medicare Supplement Plans
will cover you while you’re traveling overseas. Some of these policies might
also arrange for discounts on eyeglasses, hearing aids, and other services not
covered by Medicare.
If you go this route, you’ll also need to buy
a separate policy to cover prescription drugs under Medicare Part D. There are
many types of policies, and their benefits and premiums vary significantly. If
you take several costly prescription drugs, it’s well worth your time to shop around
for the Part D plan that works best for your situation.
Note that under Original Medicare, you’ll pay
three monthly premiums: for Medicare Part B, for the Medicare Supplement Plan,
and for the Part D Prescription Drug Plan.
Medicare Advantage Plans
Medicare Advantage Plans combine coverage for
hospitals, physicians, and outpatient services; they also often cover
prescription drugs as well. In addition, they might cover some services not
covered by Medicare, such as vision or hearing. They usually have one set of
deductibles and copayments that can potentially reduce your out-of-pocket
expenditures, compared to Original Medicare, which has multiple deductibles and
copayments. Some Medicare Advantage plans don’t require an additional premium
over the usual Medicare Part B premium, while others might.
But there’s a “price” you’ll pay for the
convenience and lower premiums of Medicare Advantage Plans: Typically, you’re
restricted to use health care providers in the plan’s network, or you’ll need
to pay higher copayments if you go outside the network. And with some plans,
you could experience higher out-of-pocket expenses even when you’re in-network,
once you consider the plan’s copayment schedule.
In some cases, you might not be too concerned
about being restricted to the health care providers in the network of a
Medicare Advantage Plan. For example, you might have participated in a managed
care network under your employer's medical plan while you were working, such as
Kaiser. In that case, you might feel comfortable with a Medicare Advantage Plan
offered by the same network.
The critical differences
Many people think that the Affordable Care Act
prohibited insurance companies from denying you insurance for preexisting
conditions. That's not the case with Medicare Supplement Plans! When you're
first eligible for Medicare, you have the right to buy any Medicare Supplement
Plan without needing to satisfy medical underwriting. Thereafter, however, if
you want to buy a different Medicare Supplement Plan or switch from a Medicare
Advantage Plan to a Medicare Supplement Plan, you might need to satisfy medical
underwriting. If your new insurance company finds that you have preexisting
conditions, the company could deny you insurance or charge higher premiums.
This isn't the case with Medicare Advantage
Plans. You can enroll in such a plan or switch to another Medicare Advantage
Plan without needing to worry about being excluded for preexisting conditions.
As a result of these issues, when you
transition to Medicare, you'll want to consider which type of plan would be the
best choice for you over your lifetime, not just at the time when you
transition to Medicare. Don't assume that you could choose a Medicare Advantage
Plan when you're first eligible for Medicare, and at a later time, switch to a
Medicare Supplement Plan. That could be a costly mistake!
Medicare Advantage Plans offer simplicity and
lower premium costs, but you typically have fewer choices when it comes to
health care providers. Original Medicare, together with a Medicare Supplement
Plan and a Part D Prescription Drug Plan, offers more choice regarding health
care providers, but with more complexity. One type of Medicare plan isn’t
automatically better than the other–it depends on your preferences and your health.
The bottom line: You'll want to spend the time
it takes to learn about your options as you transition into Medicare, and
consider your needs throughout the rest of your life. It can save you thousands
of dollars over your lifetime. And remember -- the right medical insurance can
help you stay alive!
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