For most Americans, Medicare coverage is an essential part of life in retirement. Arguably, one of the most confusing parts of planning for retirement is trying to understand how Medicare coverage works and what it will cost.
In fact, in a nationwide study of pre-retirees, 64% of those surveyed said that they were “terrified” at the thought of health care costs hurling their retirement plans off track.
The best way to calm your Medicare fears is to collect the information on how your coverage will work and what it will cost. You may find that being on Medicare is a lot less scary than the confusing jargon makes it out to be.
I’ve put together seven tips that you can put into action to make the most of your Medicare coverage.
1. Understand Medicare Coverage Options
Getting familiar with your Medicare benefits is the first step in feeling prepared. Initially, you will get bombarded from every which way with conflicting information. Doing your homework on how Medicare works will save you time and money in the long run.
With Original Medicare, your benefits will come directly from the federal government. With Original Medicare, you need to know its two parts, Part A and Part B.
- Part A – your hospital benefits on Medicare will come directly from this part of Medicare. Most people who have worked in the U.S. qualify for premium-free Part A.
- Part B – your outpatient medical services will be covered under Part B. Most Americans will pay a monthly premium of $144.60 (as of 2020) while those in higher income brackets will pay more.
Though there is no retail prescription drug coverage directly from Original Medicare, Part D plans are offered through private insurance companies and federally regulated by Medicare.
Too often people are led to believe that Medicare is free. Despite the misconception, you will have premiums, deductibles, and uncapped out-of-pocket expenses. Medicare is not free. Many people opt for a Medicare Supplement plan to help cover these out-of-pocket costs.
Medigap (aka Medicare Supplement)
Hence the name, Medigap plans help bridge the gap between what Original Medicare covers and what you are left to pay out-of-pocket. These plans work in unison with your Original Medicare benefits.
These plans are provided by private insurance companies but standardized by Medicare. No matter which company you choose, your Medicare Supplement will have the same benefits as another company. Our team likes to say, “A Plan G is a Plan G, no matter who you choose.”
I’ve mentioned Medicare Parts A, B, and D – now I’ll fill you in on Part C. Part C is better known as Medicare Advantage.
Medicare Advantage plans are completely separate from Original Medicare and Medigap. These are private insurance plans offered by insurance companies rather than through the government.
This is one part of Medicare that I always encourage my clients to really do their homework on before choosing to go this route.
Here’s what you need to do before going with a Medicare Advantage plan:
- Determine what benefits are important to you
- Know your budget
- Find out if your doctors accept this coverage
- Research and compare the various plans
2. Know What Your Policy Covers
Once you’ve decided on the best Medicare option for you, you need to know the ins and outs of how this coverage will work for you specifically.
Knowing what your policy covers and where you can use your Medicare benefits are key.
With Original Medicare and Medigap plans, you can rest easy knowing that 93% of primary care doctors in the U.S. accept Medicare.
With Medicare Advantage plans you will want to determine exactly which doctors are in the plan’s network and what additional benefits are included in your plan.
If you have chosen to work with one of our Medicare Experts, they will cover the benefits information of your plan through and through. Additionally, you never have to worry about the details because our Client Service Team will be helping you resolve claims for the life of the policy.
3. Know Important Dates
You wouldn’t believe the number of calls and emails my team gets with concerned beneficiaries thinking they’ve missed an important date. Sometimes they have (and it is very unfortunate) but many times they are just misinformed.
Here are 4 major Medicare dates I want you to highlight on your calendar:
1. Initial Enrollment Period (IEP)
This is when you should be signing up for Medicare. If you miss this window, expect penalties for life. Your IEP is a 7-month window around your 65th birthday. It will begin 3 months before your 65th birth month and will end 3 months after your birth month.
2. Medicare Supplement Open Enrollment
This is a one-time, 6-month window where you can choose any Medicare Supplement plan with zero health questions asked. This 6-month window begins on your Part B effective date. After this enrollment period ends, if you try to enroll in a Medicare Supplement plan you will have to go through medical underwriting.
3. General Enrollment Period
This period is specifically for people who missed their initial enrollment into Medicare Parts A and/or B. It occurs annually beginning January 1st and running through March 31st. If you miss your IEP, you would enroll in Medicare during this enrollment period and your benefits would take effect on the following July 1st.
4. Annual Enrollment Period
You’ve probably noticed that every fall, you start seeing some of your favorite pastime actors showing up in dozens of commercials talking about Medicare Advantage plans. This is the AEP (also referred to as the Fall Open Enrollment) and runs from October 15th through December 7th each year. This is the time in which you can change your Part D drug plan and/or your Medicare Advantage Plan.
4. Take Advantage of Preventative Care Benefits
There is no question that good health is going to save you money and keep you around longer. With Medicare, you can accomplish both!
Initially, in your first 12 months on Medicare, you will be eligible for a free “Welcome to Medicare” doctor’s appointment. Along with this initial appointment, you will also have access to many other annual preventive services and vaccinations covered by Medicare.
Here are just a few of the preventative services and screenings you can expect Medicare to cover:
- Abdominal aortic aneurysm screening
- Bone mass measurement (bone density)
- Breast cancer screening (mammograms)
- Cardiovascular disease screenings
- Cervical cancer screenings
- Colorectal cancer screenings
- Influenza (flu)
- Pneumococcal (pneumonia)
- Hepatitis B
As long as you have great preventative benefits available to you, why not take advantage of your coverage and stay happy and healthy while you’re at it?
5. Plan for Health Care Costs
If you’ve been following Boomer Benefits on social media, you know we’ve really been highlighting the often overwhelming costs of health care in retirement. The unexpected out-of-pocket costs can feel detrimental if you choose the wrong plan or aren’t prepared to pay for them.
My best advice on this, no matter what stage of life you’re in, is to choose the right plan for your budget and set aside what you can in anticipation of your health care costs throughout retirement.
Though Medicare is an extensive health coverage plan for seniors, there are still a variety of costs associated that cannot be overlooked. Remember, with Original Medicare, there is no annual limit on your out-of-pocket responsibility.
At the end of the day, choosing a supplemental plan that will provide you (and your bank account) with peace of mind is the most important step in planning for healthcare costs. Our agents can help you decide whether you would prefer to have lower monthly premiums but use a network of providers, or have higher monthly premiums but zero unknowns/out-of-pocket costs be better for you?
Knowing which route is best for you will also help you determine if you need to build up a rainy-day fund or budget for a higher monthly premium.
Once you’ve squared away your supplemental coverage, you should also turn your eye toward potential long-term care costs. Medicare does not cover long-term care, so purchasing a long-term care insurance policy or setting aside some retirement savings for this is important.
6. Don’t Overpay for Prescription Drugs
All too often, Medicare beneficiaries are paying far more than necessary for their prescription drugs. Just one small mistake in your initial Part D enrollment could cost you a considerable amount.
This is one of the main reasons our team continues to help our policyholders with the Part D enrollment process. Our Part D specialists have helped our clients save thousands of dollars each year.
If you think you may be overpaying for prescription drugs, here are some actionable steps you can take today to save:
- Go Generic – talk to your doctor about generic alternatives to the drugs you are on. The generic versions are often much cheaper and work in the same way as the brand-name version.
- Review your Formulary – your formulary is a list of prescription drugs covered by your Part D plan. Discuss options with your doctor to see if there are any opportunities for you to switch to a similar but covered drug.
- Shop Pharmacies – the price of a drug at Walgreens could vary dramatically from another local pharmacy down the street. Know which pharmacies are preferred on your Part D plan. There are great apps like GoodRx that will let you instantly compare prices in your area.
- Remember AEP – ultimately there is no compensation for having the wrong drug plan. Fortunately, the AEP rolls around every year for this exact reason. You can shop around and get the best plan for your prescription needs.
Your drug plan is just as important as every other part of Medicare. Make sure you review your plan each year and work with your doctor to make sure you aren’t unnecessarily overpaying for your prescriptions.
7. Don’t Stress
I saved my best bit of advice for last – don’t stress! Easier said than done right? In this case, I promise Medicare is not nearly as frightening as it initially looks.
I get emails regularly from clients who tell me they wish they had known our help was available sooner so they wouldn’t have spent so much time and effort worrying about which coverage they should have gone with or how Medicare was going to work for them.
Whether you are just beginning to do your research or you’re in the thick of it, I encourage you to get one of our Medicare experts on your side to help you through the process. Services like ours are completely free to you and provide you with 360-degree help from your initial enrollment through the life of the policy.
If you made it this far, you’re on the right track! Doing your Medicare homework will provide you a great foundation to make the best decisions for your health care coverage in this stage of life.