A lot of people with Medicare wrongly believe that having only Parts A and B will be sufficient. With open enrollment period in full swing, now is the time to make adjustments to get complete coverage.
In this episode, Marc Bautis welcomes returning guest Victoria Finlay to uncover why Parts A and B don’t cut it on their own. Brimming with pointers on Medicare, Medigap, and Medicare Advantage, this is a must-listen for expert guidance on which options to choose based on the cost and the coverage you’re looking for.
In this episode, you will learn:
- The different parts of Medicare and the coverages you can receive
- What to keep in mind about late enrollment penalties
- How to pick out the best coverage plan for you
- Questions to ask potential policy providers to ensure you will be properly covered
- And more!
Tune in to learn which Medicare coverage options are available to you. Remember, open enrollment period ends on December 7!
Resources:
Bautis Financial: (862) 205-5000 | Marc’s Medicare resources | Medicare.gov
Every year, Medicare has an open enrollment period from October 15th to December 7th. That’s everyone’s opportunity to look at their current Medicare plan to determine if they want to keep it or purchase a different one for the following year.
On today’s show we are going to focus on what the options are during the Medicare Open Enrollment period. When someone turns 65 they are turned on to Medicare for their health insurance. Everyone is familiar with parts A and B, which are the basic parts of Medicare. We are going to discuss why parts A and B usually are not enough. And you know, there’s the other Medicare options that someone has. And well, you know what they should go into considering them. Victoria, let’s start off with going through why aren’t Part’s A and B enough to cover all of our retirees health care expenses?
A lot of people think that parts A and B are just enough, as you said. And one of the main reasons that it’s not enough coverage is the fact that there is no limit on out-of-pocket spending.
When you include all the deductibles, copayments, coinsurance, and any other expenses that might be related, such as serious illnesses, chronic conditions or lengthy hospitalization periods, all that can really add up. You want to make sure you’re covered for that so that these expenses don’t keep building on each other. And then you’re wondering when is this ever going to stop?
Even though you might not experience a serious illness or even if you just end up in the hospital for a bit of time, that can be very expense by itself. You want to make sure you’re covered for something like that.
On top of that, another reason why Medicare Parts and B aren’t sufficient is because there is no prescription drug coverage. Even if you’re not currently taking any prescription drugs, it doesn’t really matter, because right now what we’re concerned about is the future. You may end up needing something like that in the future. It’s important that you make sure you are properly coverage for any future prescription drugs too.
People think that once someone goes on Medicare, every single medical expense that they have is covered. Today, we are going to talk about some of the private insurance options that people have to supplement that coverage. Let’s start talking about some of those options.
There are three major options. The first one has to do with if you’re still working and you are 65 or older. If that applies to you and you’re still working and you’re covered by your employer’s health insurance plan, then you probably are adequately covered. But again, you want to check and make sure that that is the case and you do have all the coverage that you may need. And on top of that, too, sometimes your employer’s health insurance plan isn’t that great. If you are 65 or older, it is usually recommended that you do stay on your employer plan and defer Medicare. But if you’re employers plan covers 20 or more employees, that’s when it’s best for you. If the employer covers less than 20 employees, it actually is usually better to look at your Medicare plan. And then the second option to close this gap between what parts A and B do not cover. To go ahead and look into a Medigap policy and get that Part D prescription drug plan. And then the third option is to look into a Medicare Advantage plan with drug coverage.
We are looking at three options: If you have the ability to stay on your employer plan, a Medigap policy, Medicare Advantage policy. 71% of retirees have Medigap coverage. 29% are on Medicare Advantage. However, those numbers are a little misleading because the percentage of people on Medicare Advantage has been increasing.
Once someone goes on Medicare when they’re 65, they usually don’t change coverage. In some cases that may be the right decision. But these coverages are always changing as well as your health care needs are changing. We wanted to really emphasize that it makes sense every year to look at your current plan, look at your health care needs, and decide if it makes sense to change plans.
Prescription Drug Care Coverage – Medicare Part D
But let’s start talking about Part D, which is the prescription drug drug coverage.
There is one main difference between a standalone plan and a Medicare Advantage plan. If you were to choose a standalone plan, the beneficiary of this plan must have part A or part B, whereas if you chose the Medicare Advantage plan, the beneficiary must have both parts A and B. So that’s a difference right there where it’s it’s a An and situation rather than an or situation. So that’s important to know. Regardless of what you end up choosing, whether it be the standalone plan or the Medicare Advantage plan, the average beneficiary is looking at a choice of about 29 plans. It’s important to go ahead and analyze all of your different options and see what looks like the best plan is for you and your situation. Of course, one of the main questions people are wondering is how much is this going to cost? So there is a little bit of a range, depending on what plan or what coverage you end up getting. The monthly premiums range from $15 – $132 a month. That averages out to about $40 per month. It’s important to note that even if the retiree isn’t currently taking any prescriptions, they should still sign up for prescription drug plan or else they will face a late enrollment penalty when they do need to sign up, which can be very expensive.
One of the common themes with Medicare is that it is when to sign up.
If you don’t sign up for parts A and B once you become eligible or even part D or Medigap policies and you try and sign up at a later time, there are late enrollment penalties. It’s important to know when you have to sign up for different aspects of Medicare and make sure that you don’t miss those deadlines. Even if you don’t particularly need that coverage at that at that time it’s still important to check if you need to sign up to avoid the late enrollment penalties.
What are what are some of the firms that offer Part D?
There are three major firms that people tend to offer prescription drug coverage. Those three firms are UnitedHealth, Humana and CVS Health and the three of them actually cover about half of the Medicare Part D enrollees. Even though those are the major firms, there are other options that offer coverage. The smaller plans might be better for you.
How do how do they go about picking the best plan for them?
Medicare actually offers a great resource, which is just their website medicare.gov. They have a great plan finder. When you log onto their website you first enter in your zip code and then select the Find Plan option from here.
You will be asked for some basic info about yourself and the current insurance coverage you have. So make sure you have that on hand. That way, you can properly fill this out as accurately as you can. The more accurate the results will be to help figure out what prescription drug plan is best for you. Once you’ve entered in all your basic info, the next step is going to be entering in any prescriptions that you are currently taking. If that doesn’t pertain to you, you can go ahead and skip this section. Once you enter in what your prescriptions are, you want to know if this drug is covered. You’ll see what the copayments or coinsurance amounts are for each of these drugs. Once you’ve entered all that info in, it’s going to give you the out-of-pocket costs based on the particular drug and the coverage options. And then the third step that’s going to pop up for you is to pick out your pharmacy. The result will be a list of plans from both the standalone or Medicare Advantage options. Since it gives you a list of everything, you can go ahead and do a side by side comparison of all the coverage options and decide which option might be best for you based off of the cost and the coverage that you’re looking for. And from there, you can also go ahead and refine your search for any other particular situations that pertain to you and what you’re looking for with your coverage.
One of the really cool things about it is you can actually enroll in a plan right from that website or you can enroll through the actual provider. You usually want to enroll with the provider if you have specific questions about the policy that you want to ask them.
Some of the things you want to consider are,
- Which plans, gives you the overall best price on your prescriptions.
- What’s the monthly premium, yearly deductible coinsurance, or a co-payment?
- Are you allowed to use your pharmacy or still receive your prescriptions through the mail if that is what you are used to.
- Or if you have family in a different state or travel a lot, you might want to consider or make sure that you will. You’ll be able to use the pharmacies wherever you travel to.
- You want to look at the plan’s quality ratings.
- Does your plans coverage start when you want to?
- How will the plan you are considering react to unexpected drug costs in the future or do you have any protection if you know a drug, particular drug raises its price in the future
So there are lots of things to consider. You know, like Victoria said, Medicare.gov has a great analysis tool. We’ve walked people through that through that tool to really help them narrow down on which plans they should be considering and how to make that final choice. We are happy to do that
Medigap
Medigap supplements the original Medicare (parts A and B) and it pays certain costs that Medicare doesn’t cover.
One good thing about medic Medigap is that the policies are standardized in that they must offer the same basic benefits. However, costs can vary widely. So shopping around makes sense and it all goes back to the theme that everyone should do a check up on their policy every year. Premiums can change. And if anyone’s familiar with Medigap, it’s an alphabet list of all these different policies that cover different things. The two most popular ones are Plan F and Plan G.
Plan F and G are very popular because they provide the most comprehensive coverage and you almost get to those fully insured state once you know if you go with the plan F or Plan G policy. Even with these comprehensive plans it still doesn’t cover everything. Victoria, what are some of the things that it does that Medigap policies do not cover?
First and foremost is long term care. This is really important because a lot of people are under the impression that this is covered with a Medicare plan. If you were to experience any long term care costs in the future, those can be very expensive. Another thing that’s not covered under this policy is vision and dental care and hearing aids. So those are four major things that aren’t covered.
I think a lot of people confuse long term care under Medicare with Medicaid. LTC is covered under Medicaid, however, if your assets or income are above a certain level, it is difficult to qualify for Medicaid. So under Medicare, though, which is the retirement system or health care in retirement system that we’re all on, long term care is not coverage.
Like Victoria said, it’s either you are looking for a separate policy to cover it or we have to figure out a way to self self insure.
The other characteristic I want to talk about Medigap is this concept of guaranteed issue. We all think of health insurance and what if we have preexisting conditions. Can we still get insurance. And the rules around this guaranteed issue, meaning the insurance company is required to give you a plan whether or not you have a preexisting condition are
If you enroll in Medicare when you are eligible at 65, you have six months after that to enroll in a Medigap policy. If you do that you will have guaranteed issue: meaning that you will be able to get a Medigap policy no matter what or if you have any preexisting conditions. If you do not enroll in a Medigap plan at that time and sometime down the road, when you’re 66 or 67, you’re 70 and you decide that you do want some supplemental coverage. The Medigap insurer is not required to give you a plan. They can look at your preexisting conditions and decide if they want to offer you a plan or not. So, again, this is one of the things we talk about all these deadlines and these enrollments.
When you turn 65, you really want to consider whether you’re going to get that Medigap coverage or not. And the other thing that’s important about Medigap is that the prices vary widely. The different carriers price them differently. There’s really three different options or on how they price the policies.
- The first one is called community rated, which is the same premium is charged to everyone based on age.
- There’s also something called issue age rated where the premium is based on what age you are at the time you buy the policy.
- And then the third is attained age. The premiums based on your current age that that you are now and these all can change. So whatever’s cheapest when you’re first looking may not be cheapest down the down the road.
Can someone shop for a Medigap policy similar to how you covered on the Part D prescription drugs?
That same resource, again, Medicare.gov has this option to look at the supplements and insurance section. So what you’re going to want to do is go to that website, click on that section, and then from here you can start with a plan and see which companies provide options. You can get a list and see what coverage options are out there for you.
Are there certain questions that they should be asking the insurance company if they’re comparing a plan and have questions about it.
There are definitely questions you should be asking when you do this. This is going to help you determine what plan is best for you
- The first question that you’re going to want to ask is if they use medical underwriting for this Medigap policy.
- Another question that’s important to ask is if they have a waiting period for the pre-existing conditions.
- It’s important to note this next question that you should be asking is I am X years old. What will my premium be under this policy? Obviously, the cost of this plan plays a big role in determining if it’s the best option for you.
- Another question you should definitely be asking is has the premium for the Medigap policy increased in the last three years due to inflation or for other reasons? And if they answer yes to this, you’re obviously going to want to ask how much it has increased by to give you an idea of what your future costs may be inflated by.
- And then the last question you definitely want to ask is if they offer any discounts or other benefits, because this can play a role in your coverage and how much you’re going to be paying.
The last type of plan that we wanted to talk about are the Medicare Advantage plans. You can kind of think of these as your combo plans. It provides all care of parts. A and B and most of these plans include the Part D prescription drug coverage. And, you know, some of those things that we talked about that Medigap doesn’t cover may be covered under the Medicare Advantage plan. Things like vision, hearing, dental, or wellness programs. So they do simplify a lot of it. However, there are a couple of nuances that you have to consider. And the biggest one we see is that you have to use the plan’s network of providers.
One question, whenever I talk to someone about Medicare and their options they have is can I keep my existing doctors? And under Medigap, you can as long as the doctor accepts Medicare. However, Medicare Advantage, if their doctor has to be part of the network. So that’s one big thing that people have to consider about these types of plans. Like I mentioned earlier, that they are becoming more popular. The other big thing about it is they cannot be denied enrollment based on your your health status. And you can use the similar plan finder at Medicare.gov. And you can even enroll in the plan from that from that website. So that’s the other big option in addition to Medigap are these Medicare Advantage plans. And let’s talk a little bit about comparing the Medigap versus Medicare Advantage and how someone would make that decision on which plan is best for them.
Everyone is going to be different. For some people, they might have a very clear choice as to the option is best for them. And then in some cases, you’re going to have to see what option is better by weighing the pros and cons of each option. With Medigap you can see anyone who accepts Medicare where, but with Medicare Advantage, the doctor has to be within your network. That’s really important to know because you might be covered right now under one certain doctor. And then once you were to take on a Medicare Advantage plan, you might not be covered by that doctor anymore. Medigap policies tend to be more stable because they don’t have annual changes whereas an advantage plan, those providers that have those plans are going to have to renew their contract with Medicare every year.
That’s something else to consider when you’re looking at these plans.
Medigap tends to be better for people who go to the doctor a lot while Medicare Advantage tends to be a little better for people who tend to be healthy and the premiums are reflected in that. However, you do have to be careful because if you are and are under a Medicare Advantage plan and you do use health care a lot it could be a more costly option. But to close this out and we want to circle back to open enrollment, which starts the second week in October. Anyone that has a Medicare plan or one of these supplemental plans, you should get a packet in the mail that will outline how your plan will change for the upcoming year and really should take advantage of that open enrollment period to do the analysis.
Let’s say you’re on Medigap:
- You can change from plan F to G or H or to a different plan.
- You can change insurance companies within a plan so you can stay in Plan G, but change from UnitedHealth to Aetna
- or you have the option of changing from Medigap to Medicare Advantage.
So you do have decisions to make. There can also be changes in your prescription plan. They may one year stop covering a particular drug and you have to find a different plan that provides coverage for it. There are a lot of decisions or a lot of analysis that you have to do. We’re happy to walk someone through that analysis. You can reach us on our website bautisfinancial.com or by calling us at 862-205-5800.
Thank you, this was educational. I’ve got a ton of questions which we don’t have time for. Which is OK. But I because I can always call you and ask those questions and so can somebody else. But I do have one question. Victoria. You did a great job of listing a lot of questions that people should be asking, and I appreciate that. Do you have that list available anywhere so that somebody can see that?
We will list all of these. We have checklists and other resources, including flow charts that will help you decide between all these different options. And you can find them at the the episode website page for this show, which is agentofwealth.com/28.