Scott Budd, CFP®
Senior Wealth Planner
Choosing the right Medicare plan is one of the most important decisions seniors are faced with. It’s also one of the most difficult. The health care system isn’t user-friendly to begin with. Stack all the Medicare options on top of that and you’ve got yourself a challenge.
That’s why it’s a good idea to consult a qualified professional about which plan works best for you. It’s tricky terrain and it’s something that may be difficult to navigate on your own. I recommend raising the issue with your planner 12 to 18 months in advance of enrolling in Medicare.
Wondering when you need to sign up for Medicare? For most people, the enrollment age is 65. But take note: There’s a seven-month enrollment window three months before and four months after your 65th birthday, after which you may be tagged with a late enrollment fee. You can use this handy flowchart to find out exactly when you should enroll.
What Medicare Plans Cover (and What They Don’t)
Medicare, as you will see, is quintessential alphabet soup. Here’s what you need to know about the plans – what they cover, what they don’t, and how much they cost.
Part A - Pretty much everyone gets Part A. Why? Because the coverage is free for people who paid taxes during their working careers. This covers in-patient hospitalization as well as, in some cases, skilled nursing facility care and hospice and home health care.
Part B. This pays for your outpatient care by a doctor, medical tests, any drugs that are administered in a doctor’s office and preventative measures like flu shots. Also included are ambulance services, durable medical equipment and mental health services. The average monthly premium in 2022 is $170.10.1
What’s not covered in Part A or Part B: medical services outside the U.S., long term care, dental and optical care, dentures, cosmetic and other elective surgeries, acupuncture, hearing aids and routine foot care. While Medicare pays for care in a skilled nursing facility or rehab center that’s preceded by a hospital stay, it does not cover so-called residential nursing home care.
Part C. Commonly known as Medicare Advantage, Part C is an alternative to Part A and Part B. For the record, Part A and Part B are often referred to as “Original Medicare.” Medicare Advantage can be a good fit for seniors who are healthy and who don’t mind being restricted to a specific network of doctors, health care providers, and hospitals. In the Medicare world, it’s the closest equivalent to private insurance.
Depending on the state where you reside, a Medicare Advantage plan can cover traditional costs associated with original Medicare and often throws in extras like dental, vision, hearing, prescription drugs and gym memberships.
The plans, administered by a Medicare-approved private insurer, tend to have lower out-of-pocket costs. The premium itself is paid by Medicare. One hitch: Many regions in the country — rural areas, in particular — have limited or no Medicare Advantage providers. Availability could literally depend on the zip code you live in.
Part D. This helps cover outpatient prescription costs. Part D can also stand for difficult. Sometimes, it’s not going to be the cheapest option when it comes to purchasing medications. Discount programs offered through companies like GoodRx and Costco are worth exploring. It’s also a good practice to ask for a generic instead of a brand name drug if there’s a safe alternative.
The good news? Part D providers issue a “formulary,” or list of drugs, each year so you will always know what your plan covers and what it doesn’t. The drug list has several cost-sharing tiers. The tier your medication is on will affect how much it costs. The lowest tier, Tier 1, involves generics and has the lowest co-payment. The current average cost of a basic Part D plan premium is $32.08 per month.2
Medicare Supplement Insurance. This insurance, known as Medigap, does precisely what the name implies – it helps to fill in any gaps not covered by original Medicare. Some policies, administered by private companies, even include medical care outside the U.S.
Medigap offers several different plans, with Plan G being the most comprehensive and far-reaching. The only things Medigap Plan G doesn’t cover are the Part B deductible and anything related to drugs. The monthly premium for a Plan G policy ranges from $100 to $300.
Have Medicare Questions? We Can Help
Medicare can be confusing. Talk to a qualified professional today to get professional advice on which Medicare plan is best for your needs. Need help finding a financial advisor in your area? Give us a call today so we can match you with an advisor who will put your needs first.
1 U.S. Centers for Medicare and Medicaid Services, “Medicare Costs,” https://www.medicare.gov/basics/costs/medicare-costs
2 U.S. Centers for Medicare and Medicaid Services, “CMS Releases Projected 2023 Medicare Basic Part B Average Premium.” July 29, 2022, https://www.cms.gov/newsroom/news-alert/cms-releases-2023-projected-medicare-basic-part-d-average-premium
Scott Budd is a non-registered affiliate of Cetera Advisor Networks.