If you’re getting closer and closer to age 65 – or if you’re over 65 and about to leave your employer’s health care plan for the last time – then Medicare enrollment is about to become a reality for you. During a window of about 6 or 7 months, starting three months before your 65th birthday, you’re expected to sign up for Medicare unless you still have workplace coverage. If you wait too long to enroll, and aren’t otherwise exempt, expect to pay a penalty in the form of higher premiums.
In our practice here at AgingOptions, we frequently encounter people who approach Medicare enrollment without having done any of their homework, so they feel baffled and overwhelmed by the choices they have to make. But a little study and some advance planning – not to mention consultation with the AgingOptions team – can take much of the mystery out of the process and help you secure the coverage you need at a price you can afford. For that reason this very recent article from the popular financial website Motley Fool caught our attention. The article describes what the writer calls the four important decisions you need to make before it’s time for Medicare enrollment, and we recommend this article as a good, basic place to start planning if Medicare seems like an overwhelming mystery to you.
The first decision is a basic either/or choice: do you want to opt for original Medicare or Medicare Advantage? Here’s how the Motley Fool article describes the first option. “Original Medicare, which consists of Medicare Part A and Medicare Part B, covers hospital related expenses and some non-hospital healthcare expenses, including certain types of medical appointments, medical supplies, and outpatient care. These plans are provided by the federal government and allow you to use any healthcare provider that accepts Medicare.” The second option, which is growing in popularity (now covering about one third of eligible beneficiaries), is called Medicare Advantage, consisting of various insurance plans provided by private carriers. These plans, which function like an HMO or PPO, often provide more robust coverage but may restrict the physicians you can select under your plan. Both choices have their advocates and their advantages – and drawbacks – so this is one area where professional advice is recommended. It’s important to make the right choice the first time because your options may be restricted if you try to change plans later.
The second choice relates to the first: if you choose original Medicare, do you want to purchase what’s called a Medigap plan? These private-carrier plans, as the name suggests, fill in many of the coverage gaps in Medicare Parts A and B. There are ten different optional plans, all standardized, so wherever you live the offerings are consistent. (The government website www.Medicare.gov is a great place to begin the process of evaluating your choices.)
A third decision you’ll have to make, says Motley Fool, involves drug coverage: will you need what’s called Medicare Part D? The article explains what’s at stake with this choice. “Neither original Medicare nor Medigap offers prescription drug coverage,” writes Motley Fool, “so if you go that route, choosing a Part D plan is strongly recommended. Even if you’re in good health now, you may still end up with expensive prescription requirements as you get older, and without an insurance policy to help prescription expenses can get very high very quickly.” Remember that if you choose a Medicare Advantage plan, your plan may also include drug coverage, and if it’s sufficient for your prescription needs, you can skip Part D.
The final choice is pretty straightforward: do you want to pay more for better coverage or pay less for minimal coverage? “When comparing the different Medigap plans and/or the different Medicare Advantage plans,” says Motley Fool, “you’ll quickly see that plans that provide more coverage nearly always have much higher premiums than plans that provide less coverage. Thus, you’ll have to decide whether it makes more sense to pay high premiums for a plan that will cover a larger percentage of your medical expenses, or lower premiums for a lower-coverage plan.” This is something of a gamble, experts say, just like most insurance: if you’re in good health, choosing a less expensive plan might make sense since medical expenses will probably be low. But health conditions change, and for those in poorer health a high premium plan is generally the best (and cheapest) option in the final analysis.
Here’s one final caveat from the Motley Fool article: if original Medicare plus Medigap is your decision, beware of choosing a lower-cost, lower-coverage Medigap plan. If you later decide you want to switch to a different Medigap plan with more robust coverage, the insurance company that provides the new coverage has the right to decline coverage or boost your premiums once you’re outside your initial enrollment period. “Thus,” says Motley Fool, “it may make sense to choose a fairly high-coverage Medigap plan from the beginning, even if you’re in good health. ‘Better safe than sorry’ is another truism that can easily apply to healthcare, especially in retirement.”
If the whole idea of Medicare-related choices confuses you, you’re in good company. We urge you not to go it alone. If you’ll make plans now to attend a free AgingOptions LifePlanning Seminar, you’ll get most of your Medicare questions answered, and you’ll understand how all the various aspects of your retirement planning need to work together in a kind of strategic harmony. Making the right medical coverage decisions is essential, but you also need to plan ahead for your financial needs and legal protection. Your housing choices need to be a central part of your plan, and you also need to make certain you’ve included your family members since they need to know your plans and support them as you age. With an AgingOptions LifePlan in place, you can face the future with confidence, knowing that you’ll be able to protect your assets, avoid becoming a burden to your loved ones, and escape the trap of being forced into institutional care against your will.
There’s a simple, risk-free way to learn more about the LifePlanning process: join us soon for a free AgingOptions LifePlanning Seminar. We offer these in many locations throughout the region, so why not join us at a seminar near you? Click here for details and online registration or call us during the week, and we’ll look forward to meeting you soon.
(originally reported at www.fool.com)
