What Medicare decisions to make now

From Retirement Now Newsletter October 21st, 2021

The Medicare annual enrollment period is in full swing right now. Which means if you are over 65 your mailbox is getting filled up with ads to sign-up for a new drug plan or advantage plan. And your tv is filled with ads about zero premium plans that cover dental and vision, etc.

Not sure if Joe Namath is still spokesman for one of the tv ads.

But I did see one with Jimmie “JJ” Walker… you know the guy that said “Dyn-O-Mite” in Good Times.

So let’s talk a little about what’s going on with Medicare this time of year.

Medicare has an Annual Enrollment Period that lasts from October 15th through December 7th.

During this time you can make changes regarding your Part D prescription drug plan or a Medicare Advantage Plan.

It’s very similar to how group employer health plans have a period toward the end of the year where you pick what your new health option will be starting January 1st.

So Medicare does about the same thing.

During this window each year you can make changes to your Part D drug plan. Or if you have (or want to get) a Medicare Advantage Plan, you can do so at this time of year.

This time window restriction does not apply to Medicare Supplements. They can be purchased at any time during the year. A lot of people don’t know that because it is very common to get Medicare Advantage Plans and Medicare Supplement plans confused.

There are 2 ways to receive your Medicare coverage:

You can get coverage from Original Medicare (which is Part A and Part B).

Or you can get coverage from a Medicare Advantage Plan (which is Part C).

If you go with Part C, the value of your Part A and Part B benefits is diverted over to whatever Part C Medicare Advantage Plan you sign up for.

That’s another thing that is not obvious on the surface. Most people don’t pay a premium for Part A, but if they had to in 2021 if could be up to $471 each month. And the premium most people pay for Part B is $148.50. And under current Medicare law, that premium represents about one fourth the average costs of Part B services. Which means you’re getting the other three-fourths covered by the government. So the real benefit of Part B is not the $148.50 you pay each month, it’s 4 times that at $594 each month.

So if you had to put a dollar value on your Medicare Part A & B benefit it would be $1,065 per month ($471 + $594).

If you sign for Part C, Medicare then has about that much money to forward over to whichever Advantage Plan you sign up for.

That’s why you can see ads on tv for zero premium Advantage Plans. They are getting compensated through your Medicare benefits. Then they must put together a plan that will pay at least as good as Original Medicare (Part A & B).

And often they can include other benefits that Original Medicare doesn’t include, like dental and vision.

The downside is there are often provider networks you must be aware of. And there are typically co-pays and co-insurance amounts you are responsible for.

But in a lot of ways the coverage can be better than Original Medicare due to those additional benefits, as long as your providers accept the plan. And Advantage Plans have become so popular today that they are widely accepted.

To change gears a little, let’s talk about Medicare Supplements.

They are different from Advantage Plans. Medicare Supplements fill in some of the gaps that Original Medicare (Parts A & B) don’t cover. And if you have a Medicare Advantage Plan (Part C) you are not currently receiving your benefits through Original Medicare… which means you can’t have a Supplement at the same time you have an Advantage Plan. And even if you did, the Supplement wouldn’t work anyway.

If you want to get a Supplement you can do so at anytime of the year. But there will likely be health underwriting questions.

And if you are currently in a Medicare Advantage Plan and you want to switch to a Medicare Supplement, you typically have to wait until this time of year to say you want to disenroll. And on January 1st you will be disenrolled and your Medicare Supplement can go into effect (assuming you were able to pass the health underwriting questions).

Anyway, what should you do during this time of year? Here’s a list:

-Determine if you are happy with your current plan, whether it’s a Supplement or an Advantage Plan or a stand alone Part D Drug Plan.

-If you want to enroll (or disenroll) from an Advantage Plan, this is the time of year to do it.

-If you have a stand alone Part D Drug Plan be sure to double check how it will pay starting on January 1st. Most Drug Plans change slightly each year, so although you may be happy with how it’s covering your drugs so far this year, that may change in the New Year. Be sure to double check this, because you be locked into that plan for 12 months even if you’re unhappy with any changes they’ve made.

-A good resource to see which drug plan will be best for you in the New Year is Medicare’s website (medicare.gov) where you can input your prescriptions and the pharmacy you like to use and the site will calculate which plan will save you the most money in premiums, co-pays, and co-insurance.

-An even easier resource is to ask your pharmacist to look this up for you. We’ve had plenty of times when a pharmacist calls our firm to say “We have Mr. _____ here. We looked up his prescriptions and he needs a drug plan with _____ insurance company. Can I send him over to you guys to take care of it?”

And all those ads on tv?

If you call the 800 number you’ll probably talk to someone that will try to sell you on signing up for a plan.

So you’re still talking to a licensed insurance agent, you just may not have as personal of relationship with them if you need help in the future.

Anywho, Medicare is a vital piece of most American’s retirement puzzle. And it’s worth understanding it so you can make the best decisions on coverage.

If you need additional help with your retirement plan to make sure you have not just your health insurance covered, but also investment, tax planning, and income withdrawal planning, then feel free to reach out to me.

Here’s my calendar link. Pick anytime that works for you.