As Fall is here and AEP (Annual Enrollment Period) is upon us from October 15 to December 7, it gives all Medicare clients the chance to review their plan and potentially change it for the following year. If you are on a Medicare Advantage Plan (MA or MAPD) or a Part D Prescription Drug Plan, this period is the one chance you have to make changes for the following plan year. Because of this timing, we are eager to bring you this final blog of a 5-part Medicare series. We will first summarize the first 4 blogs before telling you what our recommendations are as far as picking a Medicare Supplement or Medicare Advantage plan.
Original Medicare
Original Medicare has two parts: Part A and Part B. Part A covers inpatient hospital and if you have worked and paid social security taxes for roughly 10 years (or 40 quarters), you will not be charged a premium. Part B covers doctor visits and outpatient care. There is a premium when receiving Part B although when receiving social security benefits, it can be withdrawn from there. In 2020 the premium was $144.60 for most people (the Federal Government has not released what that premium will be in 2021). You can sign up for Medicare when you are turning 65 or if you have had Social Security Disability Insurance for 24 months. There are three ways to sign up for Part A and B as most people don’t get automatically enrolled: at the Social Security Administration (SSA) office, online at www.ssa.gov, or over the phone at 1-800-772-1213. Although coverage is received through Part A and Part B, most people do not deem Original Medicare sufficient enough as there is no Maximum out-of-pocket which means you could be stuck paying lots of money with no end in sight if something serious happened. But, you must have both Part A and Part B to receive any additional coverage.
Medicare Advantage
Medicare Advantage plans, also known as Part C, combines Part A and Part B into one plan administered by private insurance companies. Most plans include Prescription Drug coverage as well and are called Medicare Advantage and Prescription Drug plan (MAPD). These are very known and asked about plans because of all of the commercials that air around AEP advertising health insurance for $0. Some Medicare Advantage plans do have a $0 monthly premium as well as have some vision and dental coverage. Most plans also offer free gym memberships, referred to as Silver Sneakers, and an Over-The-Counter (OTC) allowance that offers a certain amount of money either monthly or quarterly to be spent on over-the-counter products like band-aids, cough syrup, vitamins, pain relievers, and more. Although there are many perks with choosing an MAPD, there is a couple of things to keep in mind. The first thing to consider is the deductible/ maximum out-of-pocket. Although these plans can be relatively inexpensive, there are deductibles that can be around $5000, as well as copays and coinsurance. The other thing to keep in mind is the networks. Depending upon whether it is a Health Maintenance Organization (HMO) plan or a Preferred Provider Organization (PPO) plan, you could either get stuck paying 2 times more than your original deductible, or you may have to pay the whole bill if you go out-of-network. You must always make sure you are staying in your plan's network before going to a provider to make sure you aren’t stuck paying more than you have to.
Medicare Supplement
Unlike Medicare Advantage, with Medicare Supplement your Part A and Part B will still be your primary insurance than your Medicare Supplement plan will help fill the gap and pay some or all of the remaining balance. Medicare Supplement is also referred to as Medigap. There are many different Medigap plans that can tend to confuse people. Medigap policies are plans, for example, Plan F or Plan G, not to be confused with Parts like Part A and Part B. These policies are Federally regulated which means a Plan G being sold from one company has the exact same coverage as a Plan G being sold by a different company. The only difference is the monthly premium. Although these premiums are higher than Medicare Advantage Plans, the deductible/ maximum out-of-pocket is much lower and you don’t have to worry about coinsurance or copays. Another benefit of this plan is there are no networks. You can go see whoever you would like as long as they accept Medicare (all major providers do). Although Medigap policies have great health coverage, they do miss out on some of the benefits that Medicare Advantage plans have as most Medigap policies don’t offer dental, vision, silver sneakers, or an OTC allowance. One thing to keep in mind with a Supplement is unless you sign up when you are first eligible, you have to go through medical questions and unless you can answer no to a long list of questions making sure you are in great health, you may not be able to join a Supplement plan.
Prescription Drug Plan
Prescription Drug coverage is also known as Part D is included in most Medicare Advantage plans (MAPD) but would need to be purchased separately if you have a Medicare Supplement. There are four coverage stages within Part D:
Annual Deductible which is a separate deductible from your health insurance (some Part D deductibles are $0).
Initial Coverage where you will be a set copay or coinsurance until both you and the plan pay up to $4,130 in 2021.
Coverage Gap is also known as the Donut Hole where you will pay 25% of the cost of your drugs.
Catastrophic Coverage which you will pay a small copay or coinsurance amount during the rest of the plan year.
There are multiple ways to save money on your prescriptions whether you try using generic drugs, go to your plans preferred pharmacy, or even use the mail-order pharmacy. We do recommend you have Part D though even if you are on little to no drugs. For every month you go without Prescription Drug coverage, the Federal Government will fine you if you end up needing Part D later on.
Our Recommendation
So, what do we recommend for people and what would we recommend for you? Unfortunately, it’s not that simple. Not only can we not tell you because it depends on your personal situation, but we aren’t allowed to tell you which route, as Agents are only supposed to lay out the options, and you decide what is best for yourself. But here is what we tell people to help in the decision process. What is your family’s health history? Did your parents have any major medical issues like cancer or heart issues? If yes, you may be more inclined to choose a Medicare Supplement. Have you and or your parents been very healthy? If so, maybe you choose to save money upfront on the chance that you will stay relatively healthy and go with an Advantage plan. It would make our job, and your decision a whole lot easier if we had a crystal ball so we could see whether you are going to be sick or have any surgeries, or whether you are going to be very healthy over the next decade. Maybe you are more budget-minded and just like to know exactly how much you are going to pay without surprises. If so, a Supplement would be a good plan because you know your premium every month, but won't be shocked by a high bill if you visit the hospital. Maybe you are in a wheelchair, or a diabetic that requires insulin, the only chance you have to get a Medicare Supplement plan is if you sign up for it when you are first eligible because some questions you have to answer when switching from an Advantage plan to a Supplement is, are you currently confined by a wheelchair... and are you a diabetic that requires insulin? Remember, you can always switch from a Supplement to an Advantage plan, but you must answer a page or two of health questions when trying to switch from an Advantage plan to a Supplement.
Hopefully, this blog has helped you understand some of the basics of Medicare, as well as help you decide what plan could work best for you. If you want more information on a specific topic, go take a look at one of our previous blogs as we went into depth on all of the previous topics listed. As we approach this AEP, we at Yoder Insurance Solutions are excited for another opportunity to serve our clients and make sure that they are in the best plan possible for their specific needs. This can be confusing and even a concerning time for some. Contact us to let us help you choose what plan is best for your needs as well as saving you as much money as possible.