Navigating Medicare

The Medicare alphabet soup of options reminds me of that old Abbott & Costello routine, “Who’s on first?” where Abbott’s list of the baseball team’s players – Who, What, etc. – is also a non-responsive answer to Costello’s questions. Don’t remember that? Good for you, Medicare is probably years away. Chuckle, like me, when you think of that bit? Probably need to pay attention to this.

Health insurance is complicated, can be expensive and all the choices and options can cause much anxiety. So, it never hurts to get some help when navigating the myriad of options available through Medicare, whether approaching 65 or considering options during open enrollment. Here are the basics:

Eligibility: If you’re approaching 65, you have three months prior to your birthday until three months after to enroll in Medicare Part B. This is an important deadline as there are permanent penalties – both financial and guaranteed issue rights for pre-existing conditions - if you miss it.

Medicare Part A: This is free and covers inpatient services, such as hospital stays. You’re automatically enrolled in Part A when you sign up for Medicare. The annual deductible this year is $1,364.

Medicare Part B: This covers outpatient doctor visits, lab tests, etc. What many may not realize is the premium is income-tested. So, if you are married and earn more than $170,000, for instance, you will pay an additional $54.10 per month above the $135.50 monthly premium. As your income rises, so does that monthly adjustment.

Medicare Part D: Yes, D for Drugs. This is purchased through private insurers.

That’s the easy part. Here is where it can get more complicated:

Medicare Advantage: Sometimes referred to as Part C, this is essentially an all-in-one, inclusive option from a private insurer that covers everything in traditional Medicare plus drug prescriptions and potentially others, such as vision and dental, depending on the plan. Hospitalization is still covered under Part A, you still pay the Part B premium for inpatient care and then Advantage in addition to that. Retirees from the University of Kentucky have a Medicare Advantage option that allows you to continue using providers within their UK HMO network.

Medigap: This is the alternative to Advantage, it’s illegal for a company to sell you both. Medigap, formally known as Medicare Supplement Insurance, protects people who buy traditional Medicare against some of the additional costs a patient might pay. Sold by private insurers, Medigap charges a premium in addition to that required for Parts B and D and covers costs such as co-pays, co-insurance, deductibles, etc. Medigap usually costs more than Advantage and will also allow you to see doctors out of network. If you spend part of the year in more than one state or if you travel out of the country a lot, traditional Medicare plus Medigap might be the better choice for you than Advantage.

While Medicare alone is fairly straightforward, you may want additional coverage or protection that either Advantage or Medigap provide. That gets tricky and probably warrants some help. https://www.medicare.gov/ is a very good resource and, as always, call us for guidance.

Steve Byars, CFP®