Mrs. Smith calls, and during the course of our conversation conveys her goals related to her new Medicare health insurance:
(1) to retain control over choosing her own doctors;
(2) to limit her out-of-pocket financial exposure annually;
(3) and to have the ability to travel with her coverage and not worry about being out-of-network.
Possible to achieve? Sure is. You just need to be cautious in how you proceed with Medicare enrollments. Let’s walk through how we can help Mrs. Smith accomplish what she’d like.
When a person chooses to or must enroll into the Medicare system, they will pay a premium to the U.S. government. This is just like paying an insurance premium to a large, national insurance company.
In exchange for your dollars each month, you will be given coverage that will cover 80% of your health insurance needs.
To keep things a tad simple, we’re not going to address prescription coverage here. We’ll address hospital and medical coverage which are referred to as Parts A and B of Medicare, respectively.
At Boomer Health Group we coach people through getting their Part A and B coverage in the proper order. Remember, that will cover 80% of a person’s health insurance needs. Not 100%!
So, if nothing else were done, you have what can be a substantial hole should you have medical claims that are significant. And, there is no out-of-pocket maximum for Medicare’s 20% – so that number can be limitless.
The next education part of the process is critical. Our firm helps people choose the product that they should pair with Medicare’s Part A and B. We help fill that “hole” of the 20% so that Mrs. Smith, for example, can limit her out-of-pocket exposure.
We find that many, many people do not understand that they have two products to choose from. So, we like to refer to the Medicare and You Handbook provided by the U.S. government.
Page 6 clearly shows that there are two options to supplement or enhance Medicare’s coverage. It’s a great starting point.
On the left side of the chart is what we refer to as Medigap policies. We like to call them Medigap policies vs the words Medicare Supplements. They are, indeed, one and the same.
However, whenever I ask an audience if they have a Medicare Supplement, all hands rise. If the follow-up question is, “Do you have Medigap or Medicare Advantage?” All hands rise.
They have no idea of what they have. If you are in the Medicare system you are likely chuckling with agreement at this point. So, option #1 is Medigap.
Medigap is simply an insurance policy that is put into place that obligates an insurance carrier to pay all that Medicare does not pay. So, Medicare is billed. They pay their 80%; the insurance carrier pays the other 20%.
Medigap requires no co-pays and no co-insurance payments from the consumer. Medigap does not require you to change physicians. As long as a doctor or facility accepts Medicare, they will accept your Medigap policy. The “network,” if you will, is the entire United States.
Depending on which Medigap letter type is selected, the maximum out of pocket charges can be minimal.
We currently recommend Plan G and Plan N. With a Plan G, for example, Mrs. Smith’s maximum out-of-pocket charge will be $185. The monthly premium in Michigan for a 65-year-old is $115.00 just for reference sake. Rates vary by zip code and age.
Back to the Medicare and You Handbook. On the right column of the page, a person’s 2nd option is outlined. This is called a Medicare Advantage plan.
Medicare Advantage plans look much like the employer insurance that you may have had or are leaving. There are co-pays, co-insurance levels, and maximum out-of-pocket annual amounts such as $4,300, etc.
You must check with your doctor and facility to confirm that they accept and will bill your plan. They have a network, and you must be careful as you receive out of network care (on a non-emergency basis).
These plans change annually on January 1. So, you must be committed to reviewing the changes each year.
The pricing for Medicare Advantage plans is commonly 0 – $100. They will typically include prescription coverage and minor dental coverage.
If you are 65 years old and leaving employer insurance and see a quite similar plan that can cost $14 per month going forward, you can see why they may be popular. Especially if you are currently healthy and active.
Ready for the shoe to drop? Here we go. You can’t game the system.
What is commonly misunderstood in the Medicare space, is that when you arrive at Medicare’s doorstep as a healthy 65-year-old that enrolls into a $14 per month Medicare Advantage plan, you may become a 71-year-old facing a medical challenge such as a stroke.
You will incur costs in addition to rules and requirements imposed by your plan provider related to care. So, that $14 per month will remain in the past, and you may not be able to change your plan.
When healthcare needs escalate, people tend to recollect learning about Medigap insurance, which seems a bit more comprehensive now that they aren’t as healthy as they had been five years ago.
But we have to break the bad news. You can’t necessarily have the coverage. Medical underwriting will take place now and people can be declined coverage. Which means that you have to know your options beforehand.
Mrs. Smith in our example selected a Medigap Plan G upon retiring. She liked the fact that she could retain her current doctors without question, could travel freely and enjoy the thought of having a low maximum out of pocket amount without any additional bills.
Be sure that any agent or company you are discussing Medicare with is showing you your TWO options. And, our last tip, choose wisely and make good choices for the future you!
What health insurance do you use? What do you look for in an insurance plan? How much did you learn from your insurance agent? Do you use Medicare coverage? Please share in the comments below.