You face important Medicare choices!
iStock contributor vaeenma
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.
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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