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 healthcare expert 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.
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