Health care costs will continue to rise — how to figure out
what’s best for you
Medicare has many options
available to older and sick Americans — are you sure you’ve got the right plan?
Open enrollment for
Medicare, which is the period when people can switch their health coverage
without special exclusions, began Oct. 15 and runs until Dec. 7. But those who
qualify for Medicare shouldn’t run to switch their health care plan until
they’ve parsed through all of the necessary factors — and there are many.
Health care is expensive,
and it will only get more costly. An American couple retiring this year at 65
can expect to spend $285,000 in retirement for health care
alone, according to Fidelity. That figure does not include
long-term care insurance, which covers support for daily living tasks, like
eating and bathing, and is pricey and
unpredictable. A 65-year-old American has a 70% chance of
needing some type of long-term care insurance, and the national average for
that care in 2016 was $225 a day in a nursing home, or almost $7,000 a month,
according to the U.S. Department of Health and Human Services.
The original Medicare has
three parts: Part A, for inpatient hospital care and skilled nursing
facilities; Part B, for general medical coverage; and Part D, for prescription
drug coverage. There is also Medicare Part C, which is known as Medicare
Advantage and separate from Original Medicare (they only share a name).
Medicare Advantage is administered by private insurance companies and the plans
available vary by state. There are various types of plans available to choose
from, just as an employee may pick an insurance program from an employer: there
are Health Maintenance Organizations (HMOs), Preferred Provider Organization
(PPO); Special Needs Plans (SNPs), Private Fee-for-Service plans (PFSS) and
Medical Savings Accounts (MSAs).
There’s also Medigap,
which is extra coverage provided by a private insurance company to supplement
Original Medicare. A patient cannot be covered by Medicare Advantage and
Medigap at the same time.
Having so many options
for Medicare, Medicare Advantage and Medigap can be overwhelming, but it makes
sense, said Eric Peterson, a partner at PA Consulting Group in San Francisco.
“The downside to a one-size-fits-all model is it is designed for the average
patient,” he said. “There are superior choices.”
Coverage for Americans
who switch to a Medicare Advantage plan during open enrollment will start Jan.
1 in most states, and there is a “Medicare Advantage disenrollment period”
between Jan. 1 and Feb. 14 for people who made the switch and decided it’s not
the right fit.
Here’s what to consider
before making the switch:
Your actual health
Whatever plan you choose
— whether it be original Medicare or a Medicare Advantage plan — should be
focused on the services you need now, as well as your health history, said Chris
Alberta, president and chief executive officer of Principium Tactical Wealth
Management in Brighton, Mich. “There is a tremendous amount of variance,” he
said.
One question to ask
yourself is “What holes do I have with original Medicare that I need filled?”,
said Mike McGrath, senior vice president and partner at EP Wealth Advisors in
Valencia, Calif. Some patients may need more physical therapy or extra doctor
visits, or perhaps they’re very healthy and don’t need much more than basic
annual visits. After figuring out what needs are unmet, ask yourself “what
coverage would I reasonably need in the next 12 months” and then compare,
McGrath said. “You don’t want to pay a higher premium, but conversely, you
don’t want to miss something you’ll pay out of the nose for.”
Patients who are loyal to
specific doctors should also ask what plans they accept, as Medicare Advantage
plans may be more restrictive to a specific network. “With some options, you go
back to the world of referrals and preapprovals,” he said.
Cost
Medicare Part A comes at
no cost, but Medicare Part B does. The Medicare Part B premium in 2019 is $135
a month, but is expected to rise $9 more a month in 2020. Part D premiums
depend on income. For example, in 2020, an individual who filed a
tax return as a single person and earned between $87,000 and $109,000 in 2018
would pay for her Part B premium plus $12.20.
Medicare Advantage plan
participants may have no or a low premium, but they are also still paying for
their Medicare Part B premiums. The average monthly premiums for Medicare
Advantage plans are expected to drop to about $23 in 2020, according to the Centers for Medicare and
Medicare Services. Some states may have higher or lower premiums.
The cost of Medigap
plans, of which there are many, vary drastically. Some plans can be in the low
$100s while others can be more than $500 a month, according to Medicare.gov. “The difference is Medigap covers more but
costs more, while Medicare Advantage costs less but covers less,” McGrath said.
Location
Every state varies in the
number of Medicare Advantage plans offered. There are 71 Medicare Advantage
plans available in Alabama, for example, compared with 261 in New York and
25 in Hawaii.
Because of the more
restrictive nature of networks with Medicare Advantage, individuals looking to
switch plans should consider what health providers they want or need and where
they are located. McGrath said he had one client who was moving to northern California
from southern California, where there were no facilities he needed in
geographic reach — it would have taken hours for him to get to that doctor if
necessary. “Double check where you’re going and make sure what you have and
want is available,” McGrath said.
https://www.marketwatch.com/story/what-to-know-before-switching-to-medicare-advantage-2019-10-18
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