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Weighing Your Medicare Options

Are you 65 or older and exiting a group medical plan? If so, you probably have questions about your Medicare options. Most people are used to signing up under employer-provided health plans, so navigating Medicare on your own can be overwhelming.

There are dozens of Medicare options you’ll need to consider, including whether you are going to enroll in a Medicare Supplement or Medicare Advantage plan. Both come with their own set of pros and cons. In order to make the best decision, you need to know the differences between these plans and how they might impact your healthcare.

medicare options

Medicare Supplement
Medicare Supplement (also known as Medigap) plans are sold through private insurance companies and serve as supplemental coverage to help pay out-of-pocket costs not covered by original Medicare (Parts A and B). This includes deductibles, copays and coinsurance. Networks aren’t involved, so participants can choose any doctor or hospital that participates in Medicare.

Currently there are 10 standardized Medicare Supplement plans approved by Medicare; however, some changes are coming in 2020. Different plans pay different costs, and this coverage does require a monthly premium. Medicare Supplement plans don’t include prescription drug coverage, but separate Part D plans can be purchased through private insurance companies to fill this gap.

Medicare Supplement plans are typically purchased on an attained-age basis (so as an insured ages, the rates go up). These plans are also subject to annual rate increases if claims are high. A few carriers also offer issued-age rates, which means premium costs are based on an insured’s age at the time they buy a Medicare Supplement policy. If warranted, policies can be subject to annual rate increases, but premiums won’t go up with age.

A number of carriers also offer a 10% to 15% household discount on Medicare Supplement premiums. Most people qualify because they either:

  • Reside with a spouse or civil union / domestic partner; or
  • Have resided with someone age 60 or older for the last 12 months.

Some carriers even issue a household discount for those living with someone age 18 or older who is a legal spouse or has resided with the applicant for the last 12 months. These deals can make premiums very competitive.

Medicare Advantage
Medicare Advantage (Part C) is an alternative to Original Medicare Parts A and B. Though offered by private insurance companies, these plans are approved by Medicare and may offer prescription drug coverage. Medicare Advantage can also offer additional benefits like routine dental, vision and hearing services, as well as gym memberships. Two of the most popular Medicare Advantage plans are:

  1. Health Maintenance Organizations (HMOs) – these plans require insureds to use healthcare providers in designated plan networks and may require referrals from primary care physicians to see specialists.
  2. Preferred Provider Organizations (PPOs) – these plans recommend the use of “preferred” healthcare providers in established networks. They typically cover more costs if insureds stay in-network. A referral isn’t needed to see specialists.

The Medicare Advantage market continues to grow. This is partly due to the low monthly premiums (some plans have a $0 premium, but insureds still have to pay a Part B premium). The tradeoff for the lower premium is a higher exposure to out-of-pocket expenses (such as copays, deductibles and coinsurance) up to an annual maximum of $6,000 to $7,000.

Comparing Your Medicare Options
It can be helpful to review these Medicare options in a more concise format. The chart below compares key coverage differences for your reference.

medicare coverageMaking Medicare Manageable
The average couple retiring at age 65 can expect to pay $280,000 in healthcare costs during retirement.1 That’s a lot of money! It’s imperative to fully understand your Medicare options to make the best decisions based on your needs. Choosing the right Medicare Supplement or Medicare Advantage plan could make or break your overall insurance strategy. SilverStone Group has insurance professionals who have a special focus on Medicare. If you are beginning to weigh your Medicare options, now is the time to seek out guidance.

This article originally appeared in the 2019 | ISSUE ONE of the SilverLink magazine, under the title “Decisions…Decisions… Weighing Your Medicare Options.” To receive a complimentary subscription to the SilverLink magazine, sign up here.

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