Medicare is a morass. To help guide you, we offer a podcast and a summary (TLDR) which is attached to this comprehensive discussion. Pick your poison!
- Medicare Advantage Plans (also called “Part C”) or
- Medicare Supplement Plans (also called “Medigap” insurance) paired with a Prescription Drug Plan (Part D)
- HMO type Part C plans generally require areferral from a primary care physician before seeing a specialist and havelower monthly premiums, but higher out-of-pocket costs than Medicare Supplement plans.
- PPO type Part C plans generally don’t require referrals for specialists and allow out of network non-emergency coverage, but with a higher copay. The devil is in the details. Although your Part C Plan may be a PPO, out-of-network doctors may require upfront payments and leave you to deal with getting even a partial reimbursement from the insurance company.
- Most people qualify for Part A, without paying a premium. If you qualify for premium free Part A, you can sign up for Part A coverage 3 months before you turn 65 or any time after you turn 65. Your participation in an employer plan may affect when you decide to enroll.
- If your own or your spouse’s employer (if you participate in your spouse’s plan) has more than 20 employees, you can postpone signing up for Part A or Part B without incurring any penalties. If you lose employer coverage in the future, you will qualify for a Medicare Special Enrollment Period and can sign up for Medicare Part A and/or Part B without penalties during that time. Cobra coverage, retiree health plans, VA coverage and individual health plans are not considered coverage based on current employment and are not eligible for a Special Enrollment Period.
- It is wise to consult your group health plan during the initial Medicare enrollment period to see if they require you to sign up for Medicare or if enrolling in Medicare will affect your coverage in some way. For example, Medicare enrollment ends your ability to contribute to a Health Savings Account (HSA).
- If you are covered by a group health plan from an employer with less than 20 employees, the rules are more complicated, and you should consult your employer.
- If you are not employed and not covered by a group health plan, it behooves you to sign up for Medicare coverage during your initial enrollment period in order to avoid penalties.
- You must have Part A & B to enroll in a Medicare Advantage Plan.
- You must pay a Part B premium + a Medicare Advantage premium.
- Plan availability differs by region, and you must reside in the Medicare Advantage plans service area to enroll.
- You must designate a primary care provider and get referrals to see specialists. If your specialists or doctors are not in the plan’s network, there will be additional costs.
- Most plans offer extra benefits such as vision, hearing and dental.
- Enrollment in, or changes in Medicare Advantage plans, can be made every year during the open enrollment period, which takes place annually between October 15th and December 7th.
- During the Medicare Advantage Open Enrollment Period (January 2nd to March 31st), some Medicare changes may be allowed as well.
- You must have Part A and Part B in place to enroll.
- You must pay Part B premium (and Part A if you don’t qualify for premium free Part A) + Medicare Advantage premium.
- You can use any provider who takes Medicare without a referral.
- To get prescription drug coverage, you need a Medicare Part D prescription plan.
- You can enroll in Medigap without a medical underwriting review during the 6-month period that begins from your Part B effective date. After this period, underwriting may be required, and you can be denied coverage.
- Any standardized Medigap policy is guaranteed renewable even if health problems arise as long as you continue to pay the premium.
- Medicare will pay its share of the Medicare-Approved Amount for covered health care costs, and then the Medigap policy pays its share.
- Most plans cover emergencies during the first 60 days of a trip abroad, but you pay a $250 deductible plus 20% of the cost of treatment up to a lifetime limit of $50,000.
- Medigap plans don’t cover routine things that Original Medicare didn’t cover, though some plans do include extras like preventative vision, and hearing coverage.
- Birthday Rule - California enacted a birthday rule for Medigap open enrollment, which begins on your birthday and lasts for 60 days after. During this time, you can elect a new Medigap policy with equal or lesser benefits without going through medical underwriting. There are other states with birthday rules including Idaho, Illinois, Louisiana, Nevada, Missouri, Oregon and Nevada, though the rules may vary Some states have an open enrollment period that is not tied to your birthday, and you can switch at any time without underwriting or providing medical information.
- The medications you take and how frequently you take them (are they on the plan’s formulary and in what tier).
- Generics that you can take as an alternative to your prescription drugs.
- Where you fill your prescriptions - there may be preferred pharmacy networks.
- Your plan’s annual deductibility. This is the amount you pay before the plan begins to pay. Not all drugs have deductibles.
- The coverage phases change as you go through the year. Dollar amounts are for 2023.
- Deductible phase – you pay 100% of the prescription drug costs. Not all plans have a deductible.
- Initial Coverage Phase – You pay a copay based on drug’s tier and where you fill the prescription. You remain in this phase until you and your plan spend $4660 combined on drugs, including your deductible.
- Coverage Gap (Donut Hole) - Once you and your plan spend $4660, you enter the donut hole and pay 25% of the cost of all drug tiers until you spend $7400. The applicable manufacturers' drug discounts count towards your out-of-pocket expenses.
- Catastrophic Coverage – Once your out-of-pocket drug costs reach $7400, you pay no more than 5% of the cost for covered drugs for the rest of the year.
- Plans can change annually and so may your medication needs. It is important to reevaluate your Part D plans each year to take advantage of Open Enrollment which runs from October 15 and December 7 and when you can make changes.
- Part A late enrollment penalty
- If you have to buy Part A, and you don't buy it when you're first eligible for Medicare, your monthly premium may go up 10%.
- You'll have to pay the penalty for twice the number of years you didn't sign up.
- Part B late enrollment penalty
- You’ll pay an extra 10% for each year you could have signed up for Part B but didn’t. This penalty lasts for as long as you have Medicare.
- You may also pay a higher premium depending on your income.
- Part D late enrollment penalty
- You’ll pay an extra 1% of the national average premium for each month you go without creditable drug coverage and should have had it (that’s 12% a year)
- You may also pay a higher premium depending on your income.
- If you have concluded that it is time to enroll in Medicare, sign up with Social Security:
- If picking your doctors is important, a Medicare Supplemental plan is perhaps the best option. Ask if your doctors take Medicare.
- Know where you want to get your prescriptions filled and have a list of all the drugs you take so you can see what is covered under the various Part D plans.
- Consider talking to an independent Medicare insurance agent. They are knowledgeable and can input your circumstances (doctors, drugs, etc.) into their models to find out the best solution for you.
- Signup for Medicare Coverage during your initial enrollment period if you want to avoid penalties - unless you have other coverage from an employer plan with more than 20 employees.
- If you or your spouse are currently employed, it is best to talk to your current healthcare plan to find out the impact of enrolling in Medicare on your existing healthcare coverage and your HSA account.
- Once you sign up for Medicare, you basically have 2 choices for layering private Medicare Insurance onto government provided Medicare to pay for costs not covered by the government:
- o Medicare Advantage (Part C) Plan
- o Medicare Supplement Plan (Medigap) + Part D Prescription Plan
- In general, there is more network flexibility with a Medicare Supplement Plan (Medigap) than with a Medicare Advantage (Part C) Plan. If choosing your doctors is important to you, consider a Medicare Supplement Plan (Medigap) + Part D Prescription Plan.
- When choosing a Part D Prescription Drug Plan, it is important to look at where you get your prescriptions filled. You should also compare the medications you take to the plan’s formulary tiers to minimize out-of-pocket costs.
- What plan is best for you is highly personal based on your current and anticipated health status, your desire for ease of access to your preferred doctors or specialists, the amount and type of drugs you take and where you fill your prescriptions.
- Medicare.gov is an excellent resource for answers to specific questions.
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