Rob Leonard, The Insurance Coach. Rob is the co-owner of The Insurance Coach Agency in Greensboro, NC. Rob has been in the Insurance Industry since 2000 and specializes in Medicare planning.
Fall means cooler weather, colorful leaves, migrating geese and Medicare Mail. If you are over 65 you know what I am talking about. Medicare is confusing and the barrage of information you receive is of little help. Today I am going to explain what you need to know about Medicare planning.
There are four ways to get your Medicare. You can choose original Medicare, a Medicare Savings plan, a Medicare Supplement, or a Medicare Advantage plan.
Original Medicare has two parts, A and B. Part A covers hospitals stays and inpatient care. Part B covers Physicians and outpatient care. Medicare is an 80/20 plan with deductibles. Medicare pays 80 percent of the costs and you are responsible for the deductibles and the remaining 20 percent. Medicare does not cover drugs so you will need to purchase a prescription drug plan. The most important thing to remember is that Medicare has no out-of-pocket maximum! There are better options than original Medicare.
Medicare Savings Account (MSA) Plans
MSA plans are high deductible Medicare plans combined with a savings account. For example, a MSA plan with a deductible of $5000, would require you to pay 100% of the costs for everything up to the deductible amount after which Medicare would pick 100% of your medical costs. For those with this plan, Medicare would also deposit $2000 into your Medicare Savings Account on January 1 each year. If you do not use this money it rolls over to the next year. Unfortunately, these plans do not include a drug plan. You must purchase that separately. These plans are accepted anywhere Medicare is accepted. These plans are great for people who may have an existing HSA savings account or want the freedom to see any doctor who accepts Medicare.
Medicare supplements were designed to pay for what Medicare does not such as Medicare deductibles and your 20% share. Medicare supplements have a monthly premium. As with original Medicare you will have to purchase a Drug plan as well. One advantage of a Medicare supplement is that you can go to any doctor or hospital who accepts Medicare. It is great for world-travelers, snowbirds or for people who have a second home in a remote area such as the mountains or the coast. The downside is you pay premiums each month whether you use it or not.
Medicare Advantage Plans
The Low-cost alternative to Medicare supplements, MSAs and original Medicare. Medicare Advantage plans are available through private health Insurers. Many of the plans have $0 monthly premiums! Instead, you pay copays for each service received. Each plan has a maximum cap on your medical expenses after which the plan will pay 100% of the costs for your care. These plans must cover everything regular Medicare would cover, most include prescription drugs and most offer additional benefits such as Vision, Dental, Low cost Hearing aids, and Gym Memberships to their members at no charge. I would recommend giving advantage plans a serious look. Make sure your doctors are in the plans network and your prescriptions are in the plan’s formulary.
No matter which option you choose, everyone will pay a premium for the part B of Medicare. This premium in 2020 is $144.60 per month and is usually deducted from your Social Security check. High wage earners will pay more because of the IRMAA tax.