For most of us, making the move from private, employer-provided health insurance to Medicare is a daunting task. First, there’s the new lexicon: Medicare Advantage, Part B, Part D, Medigap — what do they mean? Then there’s the fear: “The Medicare decisions you’re about to make will affect your health care and out-of-pocket costs for the rest of your life,” says the Medicare information organization 65 Incorporated.
Yikes — that’s a lot of pressure! Take a deep breath, because with some research and careful consideration, you can find a Medicare plan that works for you. Here are the steps you should take to make the right choice.
1. Check your timing. “Timing is one of most important decisions a person can make,” says Diane Omdahl, co-founder and president of 65 Incorporated. Many people need to enroll during the Initial Enrollment Period, which is the seven months surrounding one’s 65th birthday — including the three months before, your birthday month and the four months after. Patients may be responsible for late penalties and lapses in coverage if they don’t qualify for a Special Enrollment Period, which allows you to enroll outside your 65th birthday window or during open enrollment, for unplanned events like losing a job and associated health insurance coverage.
But for those still working, there’s often no need to enroll. “There is a perception that you must enroll when you turn 65. That is true except with people still covered by an employer plan,” Omdahl says. Federal law says that commercial insurance can be the primary carrier over Medicare. “People working at 65 or past 65, that population makes the most of the mistakes with enrollment,” she says.
For those already enrolled, the open enrollment period, which runs from Oct. 15 until Dec. 7 each year, is the best time to consider switching plans or adding coverage.
2. Learn about your options. There are two types of Medicare plans: Original Medicare and Medicare Advantage. According to Medicare.gov, Original Medicare is a government-provided, fee-for-service plan that is made up of two parts: Part A is hospital insurance and Part B is medical insurance. After you pay a deductible, Medicare pays its share of the approved amount, and you pay your share through coinsurance and/or deductibles. Prescription drug coverage requires signing up for Medicare Part D, with an additional premium. There are also supplemental policies, known as Medigap policies, which can cover certain benefits not covered by parts A and B, such as vision and dental care.
Medicare Advantage is a plan offered by a private insurance company that contracts with Medicare. These plans include Part A and Part B coverage, and may be set up as an HMO, PPO, fee-for-service or other type of plan. They typically include prescription drug coverage and may offer vision, dental and other services.
3. Look closely at prescription drug coverage. A 2012 study of Medicare beneficiaries found that only about 5 percent of seniors chose the least expensive Medicare prescription drug plan. Seniors overspent on Part D premiums and prescription drugs by an average of $368 a year. The study found that many beneficiaries paid higher premiums for plan features that they didn’t actually need.
When researching plans, keep all your current medications handy. “I find that when people call us, they often don’t have their medication names, dosages or frequencies,” says Tatiana Fassieux, a consultant with California Health Advocates, a Medicare advocacy organization. And every year, plans change what drugs fall into which payment tiers and which pharmacies they work with to offer the best prices. Check your plan’s formulary carefully each year to see what may have changed. Medicare.gov also has excellent price comparison tools.
“Don’t be complacent,” Fassieux says. “If a person doesn’t proactively review prescription drug coverage, in the end it can cost them hundreds if not thousands of dollars.”
4. Pick your plan. “If you are new to Medicare, your first decision is a simple fork in the road,” says Andrew Shea, vice president of Medicare products at eHealth.com. “Do you want Original Medicare or an Advantage plan? They are very different plans. Each has pros and cons.”
Of course, monthly premium is one important factor when choosing a plan. But there is much more to it than that, according to 65 Incorporated:
— Other costs: What are the out-of-pocket costs, like copays and deductibles?
— Coverage: Is there coverage for all your physicians, medications and required services?
— Quality: How does Medicare rate the plan, in terms of customer service, fairness of appeals and other important factors?
The best way to wade through these differences is to work with a Medicare expert. “Our strong belief is you need to work with someone who understands senior insurance really well and can help you weigh the pros and cons,” Shea says. “You don’t want a jack of all trades who sells you home and auto insurance and, oh by the way, also has medical insurance if you want it.”
5. Enroll. If you are new to Medicare, you first need to enroll by:
— Going to www.socialsecurity.gov/medicareonly
— Calling Social Security at 1 (800) 772-1213
— Visiting a local Social Security office
Next, decide who you want to work with to choose your plan — an insurance agent or broker, or the insurance company directly. The premiums are set by Medicare and do not change regardless of who you work with.
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