Every day about 10,000 of us enroll in Medicare for the first time -- inevitable with the aging of the massive Baby Boomer population.
All in, more than 55 million of us are in Medicare, and every year - in the so-called open enrollment period - many change their plans, either to cut costs or access better coverage. But what you don’t understand about Medicare will likely cost you when making such decisions.
There may even be a one-stop, money-saving solution that you have ignored. How could that be? Easy. Talk with Medicare recipients and those entering the program, and confusion is rampant. That’s because signing up for Medicare in fact involves many choices; it’s not one plan, it is is many. To boot, there also are many varieties of plans. All have different price tags, co-pays and even some means testing (the more you earn, the more some features cost).
If you thought multivariable calculus was a gut course, you’ll love Medicare enrollment and changing plans in open enrollment.
“People think when they turn 65, their health will be handled by Medicare. That’s part right,” said Dr. Stephen Schimpff, author of Fixing the Primary Care Crisis. “But they don’t know that they will have to make a lot of complicated decisions when they enroll. It can be confusing.”
It starts with the Medicare building block called Part A. That covers hospitalization, and there will be co-pays. This comes free at age 65 to any who are eligible for it (generally because of payments made as an employee).
Part B covers physician and lab fees. The monthly fee is $121.80, and that scales up, based on income, to as high as $389.80. Enrollment is optional.
Part D is prescription drug coverage, also optional. Charges are all over the board - in a search of Phoenix area plans, the monthly fee ranged from $18.40 to $40.40 - and coverage is every bit as variable. Advice from experts is to see how a plan treats prescriptions you currently are on before signing up. And understand that the inclusions and exclusions often change from year to year. That’s why Dr. Joel Shalowitz, a professor of preventive medicine at Northwestern’s Feinberg School of Medicine, said it is prudent practice to annually check what a Part D plan covers and doesn’t during the open enrollment. And change plans as needed.
Most consumers will also want additional coverage called Medigap, or a Medicare Supplement, which picks up many charges not covered by other parts of Medicare. Cost for these plans vary but generally run $100 to $150 per month in Phoenix (rates vary by metro area).
Add this up and between B, D, and Medigap, monthly charges will run perhaps $250 to $300 per month, for coverage that is reasonably comprehensive. Is there an easier route? Maybe. That’s called - hold on - Medicare Part C, which is also known by its more familiar name, Medicare Advantage. This is kind of one-stop shopping - it includes the coverage provided by Part D and Medigap as well as Parts A and B. Prices vary from free to perhaps $89 per month.
Advantage plans also include coverage not offered in Medicare - often vision, perhaps hearing aids.
The hitch: Medicare Advantage plans generally are PPOs or HMOs, meaning they have defined physician networks. The networks, incidentally, are what differentiate Medicare Advantage plans. The other difference is co-pays, which may vary from a few dollars to as much as $90 or higher. In many other respects benefits look a lot alike from plan to plan.
Out of pocket in a Medicare Advantage Plan is capped at $6,700. Some plans have lower caps.
Right now, about 25% of Medicare recipients are in Advantage - but some experts believe that number should be higher. Said Shalowitz, “I think many [Medicare recipients] would be better off doing Medicare Advantage. Advantage plans can be under the best buy category. They cover pretty much everything.”
Schimpff, who said he is 74, said he personally is in a traditional Medicare plan but is now thinking of switching to an Advantage plan - “I think we’d found a good one that will work for us.” He added that in enrolling in any Advantage plan, it’s imperative to do your due-diligence to ensure what you want is included - the doctors and hospitals and labs you want to use. “It requires careful shopping," Schimpff said. "But if you are getting what you want you probably will also be saving money.”
A reason not to go into Advantage? “Some people want freedom of choice in picking a physician,” said Shalowitz - and, as with any network, that’s not happening with Advantage plans.
Nonetheless, Shalowitz added that for many Advantage is the Medicare answer: “It’s the closest thing to a free lunch.”