PUBLISHED FRI, OCT 23 20208:00 AM
EDTUPDATED THU, NOV 12 202010:36 AM EST
KEY POINTS
·
Whether you’re reviewing your coverage during open enrollment
through Dec. 7 or are signing up for the first time, there are some key
considerations to factor into your decision-making, advisors say.
·
Although Advantage Plans often come with low or no premiums, the
out-of-pocket maximums for in-network coverage can be as much as $7,550 in
2021.
·
So-called Medigap plans, whose monthly premiums can be pricey,
provide more flexibility.
For the nation’s older residents, the stakes
can’t be higher when it comes to choosing health-care coverage.
That’s partly because under Medicare — you’re
eligible at age 65 — changing plans can be challenging in some circumstances
and costly if you get your choices wrong. So whether you’re giving your
coverage an annual checkup during open enrollment (Oct.
15 through Dec. 7) or signing up for the first time, financial advisors say
there are some key considerations to factor into your decision-making.
“I encourage people to get the best plan they
can, because you don’t know what will happen with your health,” said certified
financial planner Carolyn McClanahan, a physician and founder of Life Planning
Partners in Jacksonville, Florida.
“The most important thing when it comes to
health-care costs is to be adequately insured,” McClanahan said.
Roughly 62.8 million individuals are enrolled in
Medicare, the majority of whom are age 65 or older (the remainder are younger
with disabilities or individuals with end-stage renal disease).
About a third choose to get their benefits
delivered through Advantage Plans, which are offered by private insurers and
typically include Part D prescription drug coverage. The remainder stick with
original Medicare: Part A (hospital coverage) and Part B (outpatient care).
Those beneficiaries often pair that with a stand-alone Part D plan and a
Medicare supplemental plan (aka Medigap), both of which also are offered by
private insurance companies.
The most
important thing when it comes to health-care costs is to be adequately insured.
Dr. Carolyn McClanahan FOUNDER OF LIFE PLANNING PARTNERS
The current open enrollment period is for making
changes related to those stand-alone drug plans and Advantage Plans: You can
switch, drop or add them.
This window is different from your initial
sign-up for Medicare, when you get a seven-month period that starts three
months before the month in which you turn 65 and ends three months after it.
During that time, unless you meet an exception — i.e., you have acceptable
coverage elsewhere — you generally must sign up for Parts A and B.
When deciding on your coverage, it’s important
to consider all associated costs. In addition to things like premiums, copays
or coinsurance through Medicare, be sure to consider aspects of your care that
may not be covered. For example, dental, vision and hearing generally are not
covered under original Medicare, which also comes with no out-of-pocket
maximums.
Additionally, higher-income beneficiaries pay
extra each month for their Part B and Part D premiums through so-called
income-related monthly adjustment amounts, or IRMAAs. Your tax return from two
years prior to the coverage year is generally relied on to determine whether
you’re subject to the extra charges. However, if your financial situation has
changed, you can appeal the decision. The charts
farther below show the 2020 amounts to give you a sense of how the IRMAAs are
applied (income thresholds and monthly charges for 2021 have not been released
yet).
Here are some tips from financial advisors when
it comes to determining which type of coverage is most suitable for you.
Advantage
Plan considerations
Enrollment in Advantage Plans has more than
doubled over the last decade, to 24.1 million beneficiaries in 2020 from 11.1
million in 2010, according to the Kaiser Family Foundation.
These plans often come with low or no monthly
premiums (although you usually still pay your Part B premium). As mentioned,
they also typically include prescription drug coverage, as well as extras such
as dental or vision.
However, “just know that it might look good on
the surface at first, but it can be very limiting,” McClanahan said.
For example, you may have to see a doctor or
other provider in the plan’s network. This means if you have a health crisis,
you might be unable to see the specialist you want. And while Advantage Plans
also come with out-of-pocket maximums, they can be as high as $7,550 (in 2021)
for in-network coverage before the plan pays 100% of covered services.
Nevertheless, one of these plans may be
suitable, depending on how much you use the health-care system. Keep in mind
that generally speaking, the lower the premium, the more you’ll pay in copays
or other cost-sharing.
If you’re already enrolled in an Advantage Plan,
you can switch to another during this open enrollment if you find one that’s
more suitable. If you take no action, your current coverage will continue next
year.
“Just make sure your prescriptions and doctors
are still being covered under your current plan,” said CFP Joe Boden, senior
wealth advisor and partner at EP Wealth
Advisors in Seattle.
If you want to drop your Advantage Plan during
this enrollment period and are planning to pair original Medicare with a Part D
plan and Medigap, be aware that getting the latter may involve medical
underwriting. And if you have underlying health issues, you may be charged more
or denied coverage altogether (more on that below).
Also, if you discover after open enrollment ends
that you aren’t happy with the Advantage Plan you chose, you can switch to
another, or drop it and return to original Medicare, during a separate window
that runs from Jan. 1 to March 31.
Medigap
considerations
So-called Medigap policies either fully or
partially cover some cost-sharing aspects of Parts A and B, including copays
and coinsurance and, perhaps, deductibles.
Each is simply assigned a letter: A, B, C, D, F, G, K, L, M and N.
Some states also offer high-deductible versions of Plan F and G. While they are standardized from
state to state, coverage between each plan varies. And the premiums can vary
widely among locations and insurers.
For instance, the difference among the highest- and lowest-cost Plan G
policies in various markets can be stark, according to the
American Association for Medicare Supplement Insurance. In one Dallas ZIP code,
the lowest cost is $99 per month for a 65-year-old female and the highest was
$381 monthly for that same consumer. So yearly, that would be $1,188 vs.
$4,572.
More from FA Playbook:
Advisors need to listen more to keep clients on board
Here are tips financial advisors offer to new parents
Workplace benefits may reflect new reality of Covid-19
Nevertheless, many Medicare beneficiaries like
the lower out-of-pocket predictability that can come with a Medigap plan. For
example, if you get Plan D, you know that all of your Part B copays (usually
20% of covered services) would be picked up by Medigap. Same goes for the Part
A deductible charged per benefit period (in 2020, that amount is $1,408).
Sticking with original Medicare also comes with
flexibility in choosing where to get care. For example, if you’re vacationing
far from your home state, most providers accept original Medicare. Some Medigap
plans will even partially cover care if you’re traveling overseas.
“If you want to make sure you’re covered no
matter where you are, a Medigap plan may be more advantageous than an Advantage
Plan,” Boden said.
If you
want to make sure you’re covered no matter where you are, a Medigap plan may be
more advantageous than an Advantage Plan.
Joe
Boden SENIOR WEALTH
ADVISOR AND PARTNER AT EP WEALTH ADVISORS
It’s important to know that if you don’t get a
Medigap plan during your six-month “guaranteed issue” period — which starts
when you sign up for Part B — it could be hard to get one down the road.
After that window, unless you live in a state
with different rules, you would have to undergo medical underwriting, which
could result in a higher premium or being denied coverage altogether if you
have underlying health issues.
One exception: If you try out an Advantage Plan
for the first time and decide within the first 12 months that it’s not for you,
you generally would get a special enrollment period to purchase a Medigap
policy without any underwriting.
Additionally, be sure that if you definitely
want Medigap, pick the one that would be suitable long term, McClanahan said.
“Once you pick a Medigap plan, it can be really
difficult to change because there might be underwriting,” she said.
Prescription
drug coverage
If you’re first signing up for Medicare and
wonder why you’d need prescription drug coverage when you are healthy and take
no medications, be aware that you may face a life-lasting late-enrollment
penalty if you change your mind down the road. And, you could
find yourself shelling out full price for medicines if you have a health event
and no coverage.
“People hate paying for Part D if they don’t
have health issues, but the problem is that you don’t know when something could
happen,” McClanahan said.
If you already have a stand-alone Part D
prescription drug plan alongside original Medicare (and, perhaps, a Medigap
policy), you can change it during this open enrollment if you find one that
better suits you. If you take no action, you generally will remain with the
same plan — which could have changed its formulary and how it covers (or
doesn’t cover) certain medicines.
Be sure that any medications you take are on
your plan’s formulary and that you’re at peace with any additional requirements
for the plan, such as step therapy (trying a lower-cost drug before a more
expensive one). Also, know your deductible. While not all Part D plans have
one, it could be up to $435 (for 2020).
The bottom line is that regardless of the
Medicare coverage you choose, it’s important to consider the “what ifs” in
addition to the cost.
“Insurance is always one of those things where
you might be glad you paid an extra amount up front,” Boden said. “Sometimes
it’s about peace of mind, even if you’re paying a little more each month.”
No comments:
Post a Comment