Medicare provides insurance for most seniors 65 and older, but getting covered isn’t as simple as it may seem. In fact, you have a choice of Medicare plans, and the decision you make can affect the size of your premiums as well as the coverage available to you.
You can switch Medicare plans only during a specific time of the year, called open enrollment season, and that key time is coming up. In fact, it’s starting Oct. 15, 2020, and will run through Dec. 7. If you don’t act during this time, you’ll generally have to wait a full year before you can switch your coverage again.
Whether this is your first open enrollment period or you simply haven’t shopped around for a Medicare plan in a while, here are a few key things you need to know about the decisions you’ll need to make to find the best and most affordable coverage to meet your needs.
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Do you understand original Medicare vs. Medicare Advantage?
Before you move on to the specific decisions you’ll need to make about your coverage, you’ll first need to understand the difference between original Medicare and Medicare Advantage.
Original Medicare refers to Medicare Parts A and B. It’s administered by the federal government, with Part A providing coverage for hospitals and skilled nursing facilities and Part B providing coverage for your routine outpatient care. If you opt for original Medicare, your premiums, deductibles, coinsurance costs, copays and all other terms of your insurance policy are set by the government. Plus, you don’t have to shop around for a policy because there’s only one original Medicare plan.
Medicare Advantage, on the other hand, is offered by private insurers. Also called Medicare Part C, Medicare Advantage plans are an alternative to traditional Medicare, but they still entitle you to all the coverage that original Medicare provides.
The big difference is that Medicare Advantage plans can also provide extra coverage, such as for dental care, which original Medicare doesn’t cover. Many Advantage plans also offer prescription drug coverage, which you’d otherwise need to get by shopping around for yet another optional part of Medicare called Medicare Part D.
Medicare Advantage plans can have different out-of-pocket costs and can impose different rules for when you can get medical services. For example, an Advantage plan might require you to get referrals to see a specialist. There are also multiple different Medicare Advantage plans provided by different private insurers. This means you have a lot of options, but it can also complicate your shopping. You’ll want to thoroughly compare providers if you go the route of a Medicare Advantage plan.
There’s no one right answer when it comes to deciding between original Medicare versus Medicare Advantage because a lot depends on your specific situation. So now let’s look at some of the key factors that could affect your choice.
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1. How much can you spend?
When you buy original Medicare, your premiums are set by the government and are the same no matter where you live. In 2019, for example, everyone with Medicare paid $144.60 per month for Medicare Part B unless they earned above $87,000 as a single tax filer or $174,000 as a joint filer, in which case premiums increase based on income.
Medicare Advantage Plans, on the other hand, can vary in cost from one plan to another. Where you live, as well as which plan you choose, can affect the amount of your premiums. Many Medicare Advantage plans will come at a higher monthly cost than Medicare Part B, but you cannot necessarily assume that makes them less affordable as you need to look at both premium price and the out-of-pocket spending you’d potentially facing.
If you can pay a slightly higher premium but get more coverage, you may be better off with an Advantage Plan. This is especially the case if you tend to use a lot of services that Part B doesn’t cover, such as dental care.
Alternatively, if you stick with original Medicare, you may need to buy a Part D plan to cover prescription drugs as well as a Medigap plan to limit your out-of-pocket costs. Once you add everything up, it may turn out that Part B isn’t as inexpensive as it seems.
The key takeaway: It’s important to take a careful look not just at premiums, but also at all the plan details to choose the best option for you.
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2. What providers do you want access to?
If you opt for original Medicare, you’ll be able to see any doctor who accepts Medicare, anywhere in the U.S.
If you opt for a Medicare Advantage plan, you may be restricted to only seeing doctors who participate in that plan’s network. You may also be required to fulfill certain additional requirements such as getting a referral before you can see a specialist.
The key takeaway: If you have specific providers you’re interested in seeing, make sure any Medicare Advantage plan you’re considering participates with those practitioners.
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3. Do you plan to travel in the future?
As mentioned above, original Medicare provides you with coverage to see any doctor throughout the entire U.S. as long as the provider accepts Medicare.
Medicare Advantage plans may have more narrow networks and you may be limited to seeing providers within a specific geographic area. In other words, if you travel to a different state, your Advantage plan may not cover you once you get there.
Not all Medicare Advantage plans restrict your ability to get coverage when traveling, though. In fact, there are some plans that offer coverage for care even if you are traveling overseas. Traditional Medicare, on the other hand, generally pays only for medical care received in this country. So if you travel abroad with only original Medicare coverage, you’d be out of luck.
The key takeaway: You’ll need to think about the type of traveling you intend to do, as well as whether it’s more cost-effective to buy a Medicare Advantage Plan that offers overseas coverage or to stick with original Medicare but buy a supplementary travel insurance plan from another insurance provider for when you leave the country.
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4. Is your current Medicare plan the right plan for you?
If you’re happy with your current Medicare plan, you don’t have to make a change. But it’s possible your provider might make some changes during open enrollment, including altering your premium costs or coverage.
The key takeaway: Even if you like your current plan, it’s important to review any plan paperwork carefully in case your coverage has changed.
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How to choose the right Medicare plan for you
This upcoming open enrollment runs only from Oct. 15, 2020, through Dec. 7, 2020. If you miss the window to shop around for coverage, you have to wait a full year to get another chance.
To choose the best Medicare plan for you, there are a few key steps you’ll need to take including:
- Evaluate your care needs. Those who require more medical services may find it’s more cost-effective to pay higher premiums for a comprehensive Medicare Advantage plan.
- Review your current coverage. If you’re happy with your plan, you may want to keep it — but make sure you understand any changes to coverage or your premiums that may have occurred.
- Shop for Medicare Advantage plans. You should look carefully at premiums and what each plan covers to determine if it is a good fit. Pay attention to the plan’s network, out-of-pocket expenses and coverage during domestic and foreign travel.
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With Medicare open enrollment season quickly approaching, now is the time to make sure you get the insurance coverage you need so you don’t end up with unpaid medical bills you can’t afford. Missing out on open enrollment could be one of your most costly retirement mistakes if it means you end up stuck with the wrong plan for an entire year, so don’t consign yourself to this fate.
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