If you’re younger than 65, you probably don’t understand all the commotion. Why are there all these advertisements for Medicare Advantage and prescription drug plans all over the TV, radio and print media?
Medicare is the federal government program that provides health care coverage (health insurance) if you are 65 or older, under 65 and receiving Social Security Disability Insurance (SSDI) for a certain amount of time, or under 65 and with End-Stage Renal Disease (ESRD).
The Centers for Medicare & Medicaid Services (“CMS”) is the federal agency that runs Medicare. The program is funded in part by Social Security and Medicare taxes you pay on your income, in part through premiums that people with Medicare pay, and in part by the federal budget.
Medicare comes in two formats: “original” Medicare and Medicare Advantage. Original Medicare, used by most seniors, includes Part A hospital coverage and Part B coverage for outpatient services anywhere in the United States that accepts Medicare. Part A is free for most beneficiaries, while a premium is paid for Part B. The Part B standard premium of $134 per month is expected to remain the same in 2019, although an official announcement about 2019 premiums won’t occur until later this year. Note that individuals with income of more than $85,000 and married couples with joint income of more than $170,000, pay more for Part B.
Those enrolled in original Medicare usually add a Part D prescription drug plan, which involves a monthly premium as well as a surcharge for high-income beneficiaries. The average prescription drug plan premium is projected to be about $32.50 per month in 2019, down slightly from this year. However, premiums for specific plans vary from year to year.
Medicare Advantage plans, sold by private insurers, include Medicare Part A and Part B, and most also include prescription drug coverage. Many Medicare Advantage plans offer additional benefits, such as vision and dental care, that are not covered by original Medicare. Medicare Advantage members pay the standard Part B premium and, in some cases, an additional monthly amount, but they do not need a separate Medigap or prescription drug policy.
Medigap is extra health insurance that you buy from a private company to pay health care costs not covered by original Medicare, such as co-payments, deductibles, and health care if you travel outside the US. Medigap policies don’t cover long-term care, dental care, vision care, hearing aids, eyeglasses, and private-duty nursing. Most plans do not cover prescription drugs. You pay a monthly premium for a Medigap policy.
In exchange for generally lower monthly costs, all-inclusive Advantage plans usually restrict access to a network of doctors and medical facilities in a specific geographic area, and they may require prior approval to consult a specialist.
Each year, insurance companies can make changes to Medicare plans that can affect out-of-pocket costs for monthly premiums, deductibles and drug costs, and alter the list of healthcare providers or pharmacy networks. Changes in your health condition or prescriptions can mean your current Medicare or drug plan is no longer the best choice.
During Medicare open enrollment, which runs from October 15th through December 7th, individuals can move from original Medicare to an all-inclusive Medicare Advantage plan. In addition, they can switch from one Medicare Advantage plan to another or choose a different prescription drug plan.
This year’s open enrollment period may be particularly hectic due to changes in prescription drug plan costs for 2019, and the ability of Medicare Advantage plans to offer some new benefits, such as adult day care, home support, and caregiver support services.
Decisions about prescription drug plans for 2019 can have an enormous impact on a retiree’s budget. A new study by The Senior Citizens League of the most frequently prescribed brand-name drugs found that there could be a price difference of $1,000 or more between Medicare D prescription drug plans for the same drug.
Medicare’s online Drug Plan Finder shows the combined cost of drugs and your premium, with the lowest-cost plan displayed first. In addition, consumers should compare prices between in-network traditional pharmacies and mail-order options, as they can vary significantly.
Content courtesy of Mary Beth Franklin
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