Many retirees spend more money out of pocket than they should for medical care. One source concluded that about 90% of Medicare beneficiaries pay more out of pocket than they need to.
It’s not surprising. Medicare is a complicated program. Since Medicare Open Enrollment is here (October 15-December 7), here’s my review of the key steps people should consider and mistakes they need to avoid.
Open a “my Medicare” account. You can open the account on medicare.gov.
The account gives you access to Medicare’s Plan Finder tool and allows you to customize it and save results to your account. This is particularly helpful when you take a number of medications and are searching for the best Part D prescription drug plan.
You also can view claims under original Medicare as they’re processed. This not only updates you on their progress but also is a fast, easy way to check to see if someone’s making unauthorized use of your Medicare number.
You’ll also be able to review a list of the preventive services you’re eligible for and print a copy of your Medicare card, among other useful features.
Get help from SHIP. Each state offers trained volunteers to help you with Medicare. The program isn’t connected to insurance companies or health plans. It’s officially the State Health Insurance Assistance Program (SHIP), though a few states give it different names. The Medicare web site has contact information for the different state programs.
There’s no income or wealth restriction on users of the program, and it’s a free service. SHIP can help you compare plans, join plans, learn details about Medicare, and help with various Medicare and billing problems.
Decide which Medicare you want. You can choose between original Medicare and Medicare Advantage.
Medicare Advantage is comprehensive coverage under which you receive original Medicare, coverage of most of the gaps in original Medicare, prescription drug coverage, and usually more.
A downside to Medicare Advantage is you can’t pick your medical providers and usually need approval for treatments and medications. Also, if you move, the same plan or even a comparable plan might not be available in your new area. You’ll have to start over.
Original Medicare lets you choose your own doctors, and you don’t need approval to see a doctor or receive treatment.
But original Medicare has a lot of gaps in coverage. It’s highly advisable to purchase both a Medicare supplement (Medigap) policy and a Part D prescription drug policy.
You’re guaranteed to be able to purchase the supplement policy when you’re first eligible for Medicare. After that if you want to switch policies or buy one for the first time, the insurer can do a medical underwriting and either deny coverage or charge a higher premium.
There are 10 Medicare supplement plans, or policy types. They’re regulated so every insurer has the same coverage for each plan. Plan G has the broadest coverage. You should buy a Plan G policy unless you need to pay a lower premium and receive less coverage in return. The next-broadest plan is Plan N.
Shop, shop, and compare. People don’t like to shop for insurance. As a consequence many pay more than they need to. Studies have found that premiums on identical Medicare supplement and Part D policies differ by as much as 100%.
Don’t pay much attention to television commercials or mail promoting different Medicare coverage. You’ll be paying for those marketing costs.
In most areas, you can find insurance brokers who specialize in the Medicare market and work with multiple insurers. Work with one or more of these insurance brokers. And don’t hesitate to talk with a SHIP volunteer.
But don’t automatically go with the lowest-priced policy. You want an insurer who’s been offering the policies for years, has few consumer complaints, and a history of modest rate increases. Some insurers underprice policies to increase market share, and then increase premiums or exit the market when the policies are unprofitable. With Medicare supplement insurance, you don’t want to switch insurers and be subject to medical underwriting.
Be skeptical of extra Advantage plan benefits. Medicare pays each Medicare Advantage provider or insurer a fixed amount per enrolled beneficiary. Medicare also allows each provider to develop a package of benefits within constraints.
Some Advantage plan providers advertise free extra services that aren’t available in original Medicare, such as meals, transportation, private home aides, bathroom safety devices, and others.
When you read the details of the plan, you’ll find most of these benefits are limited. For example, a member usually can pick only one of the extra benefits. You won’t receive all of them. Plus, other benefits of the plan often are reduced in order to pay for the extra free benefits.
Don’t be tempted by Medicare plans pitched by celebrities or in hard-sell television ads.