You Have Medicare, Now What?

That giant sigh of relief you hear the first of every month, is from the folks turning 65 and people who have had permanent disability for two years. Medicare is significantly less expensive than Covered California for two reasons: payroll deductions while working pre-pay for Medicare Part A and Part B is paid for by a subsidy from the Federal government as well as a monthly Part B premium paid by the beneficiary.

Generally, Medicare pays for 80% of medical costs with a few stop gaps for hospitalization costs, but there is no maximum out of pocket. This can lead to a financial risk of tens of thousands of dollars. People choose a Medicare health plan to protect themselves against this financial loss. There are two primary types of Medicare health plans: Medicare Supplements (also known as MediGap plans) and Medicare Advantage plans.

Which Medicare health plan is best?

There is no one best Medicare health plan, each plan has unique pros and cons. After considering your needs as well as the benefits of the various plans, Medicare beneficiaries can make an educated decision on which plan is best for them. No matter which plan you chose, you must continue to pay your Part B premium.

Medicare Supplements: Freedom isn’t Free

Medicare Supplement or Medigap plans give you the freedom to choose any physician that accepts Medicare. This is beneficial if you live in different parts of the country for extended periods of time. If you live in Arizona six months out of the year, and Morgan Hill the other six months it is an ideal choice. A Medicare Supplement allows you to see physicians in multiple physician networks; for example, if you have a primary care doctor in the Bass Network, and specialists at Stanford you won’t need a referral or approval from an insurance company.

The downside of a Medicare Supplement is the cost, you are prepaying for your medical care whether you use it or not. There are multiple types of MediGap plans and they are designated by a letter, all Medigap plans are the same based on that letter the costs vary from company to company.  The most common plan sold today is the G plan, costs vary depending on your age, sex, location and if you smoke. Your monthly cost increases as you age.

The G plan has an annual deductible based on Part B; for 2021 the deductible is $203. Medicare has not released the 2022 Part B deductible as of this writing. With the G plan, all Medicare covered costs, provided by a physician who accepts Medicare are paid for by the insurance company after the deductible.

In addition, you should purchase a Part D (prescription drug) plan. Part D plan costs vary by the medications covered and whether it covers a deductible. If you do not purchase a Part D plan, you will be fined by Medicare when you choose to get a Part D plan.  This fine can be significant, last week I spoke with a 79-year-old man who was told by Medicare that his fine was over fifty dollars a month, for as long as he had a Part D plan.

Medicare Advantage: Play by the Rules

There are 40 Medicare Advantage plans offered in Santa Clara County, thirty-eight are HMO’s (Health Maintenance Organizations), two are PPO’s (Preferred Provider Organizations) and 38 include Medicare Part D drug coverage.  This article will refer to Medicare Advantage HMOs with drug coverage.

The downside to these plans is you must stay within their network of physicians. You choose a primary care physician, and they refer you as needed to specialists within their network. You may only see a physician outside of the network if your primary care physician obtains an exception for you. Obtaining an exception is not unusual, but you should not make a health plan decision based on exceptions.

If you travel within the United States, you are covered for urgent and emergency care at the same copay if you are at home. The plans cover international urgent and emergency care, and the amount varies greatly by plan.

The positive to these plans is low or no monthly fee and low or no copays to see physicians, specialist, and obtain lab work. Drug coverage is included in the majority of these plans. Each plan has a maximum out of pocket amount for A and B covered items. This limits your annual liability. The plans often include dental, vision and occasionally hearing coverage.

Every Medicare Advantage plan is unique, Medicare provides guidelines that the insurance companies must work within but gives them the freedom to create a plan that will meet the needs of each unique Medicare eligible person.

Medicare can be overwhelming and making the wrong decision can cost you thousands of dollars. After signing up for Medicare meet with our local HICAP office (Sourcewise in Santa Clara), or a professional insurance agent specializing in Medicare who will assess your needs and help you make an informed decision.

Cheri Brown is a longtime Morgan Hill resident and a licensed insurance agent specializing in Medicare health plans. You can reach her at medicarecheri@gmail.com or visit her website www.cheri-brown.com for more information. Not affiliated with the U. S. government or federal Medicare program. A licensed agent may contact you regarding this insurance-related information. This is a solicitation for insurance.