Now that I have been retired for a year and a half, I can say that I am very pleased with the decisions that my husband and I made regarding our insurance. However, it was a long and painful process made even more difficult by the confusing rules regarding Medicare.
If you are about to retire, or re-thinking your current selections, I commiserate. There is a lot of information out there. Unfortunately, most of it is just plain confusing. I am not an expert, but I did work in Healthcare most of my life and I knew some of the ins and outs already. I am going to walk you through the process that I took. This is lengthy so it may take more than one session.
Learn the different types of insurance available and what the rules are. These are the Medicare options:
Medicare A: Covers inpatient hospital charges only. Most people pay no monthly premium. There is a deductible for hospital stays and other charges are based on days in hospital.
Medicare B: Covers outpatient and doctor charges only. Has a monthly premium which changes every year. In 2020, it is $144.60. There is a yearly deductible, which also changes and in 2020 is $198. Medicare B pays 80% of the charges and the other 20% is paid by you.
Medicare A and B will here-after be called “straight Medicare”
Medicare Advantage: These are plans subsidized by private companies who contract with Medicare. Premiums may be from $0 to over $100. Each state has its own list of companies and plans available because each contract is by state. These plans can vary widely but most offer to cover many of the Medicare charges and may also offer additional services such as hearing or eye, etc. Most of these plans also offer drug coverage. If you choose a Medicare Advantage plan, you will do all your business through the private plan and NOT though the Medicare website. You will present your MA plan card and NOT your Medicare card when you go for services. Essentially, this is a substitute for Medicare A and B.
Medicare Part C: This is also known as Medigap or Medicare Supplemental. This is also by a private plan. However, if you have a Medigap plan, you still use straight Medicare. The Medigap plan kicks in AFTER Medicare pays. When you go to the doctor you present your Medicare card and your Medigap card.
Medicare Part D: This is the drug portion of Medicare. This is also administered by private insurance plans. You typically will use this only if you have straight Medicare, or a Medigap plan.
Private Insurance: You may be lucky enough to have private insurance through your spouse’s employment or your own previous employment may cover you after retirement. If so, you probably want to keep this. You will have to participate in Coordination of Benefits. Your private insurance will pay first and Medicare will pay what is leftover if covered.
So what else do you need to know?
- There are penalties if you do not take Medicare Part B at age 65. Usually an additional charge on your monthly premium.
- There are penalties if you do not participate in some type of drug coverage at age 65. This can be Medicare Advantage or Part D.
- If you opt not to use Medigap (Part C) at age 65, the company does not have to cover you at a later time and they may charge a higher premium.
- Medigap (Part C) plans are set by federal law so it does not matter which company you select. The benefits and premiums are the same no matter which company you go with.
- There is no penalty for choosing a Medicare Advantage plan at a later time.
Okay, so now you have the basic game plan. What to do? Which makes sense for you? Before you decide, here some questions that you should have the answer to:
- What is your general health like? Do you have any chronic illnesses that may land you in the hospital reasonably regularly?
- What drugs do you take? Are there any expensive brand name drugs in your cabinet or are they all generic?
- What about your doctors? Do they all take Medicare? Do they accept Medicare assignment? That means that they will not charge you for the balance of your bill.
- How much can you afford? Sometimes it doesn’t matter what you need, you just have to take what you can afford.
- Are you eligible for Medicaid?
- Are you alone or do you have a spouse?
- How comfortable are you with checking on bills and navigating the healthcare maze?
Think on these questions. More later.
*These are points are what I understand of the Medicare system. Please verify on your own.