This is one of the hardest decisions someone turning 65 or retiring past that age must face regarding their health insurance. If you’re much younger, you might not relate, however you may have family members, friends, patients or customers who need to get Medicare who don’t know how to answer that question. Let’s break this down:
Option 1: Original Medicare (OM) itself covers a lot of services, but it doesn’t pay for all services in full. It leaves deductibles, copayments and coinsurance behind. Worst of all, there’s no max out of pocket so you could be left with tens of thousands of dollars out of pocket. To supplement this coverage, you could purchase a Medigap policy known as a Medicare supplement. This coverage could cover most of the finances left behind by Medicare. Unfortunately, it doesn’t cover your prescription drugs. You’ll need a policy that does and that’s called Part D Medicare. Your supplement and part D plan will have a monthly premium you need to pay. There’s always a pro and con to a plan. Pro to this scenario: you know what your monthly costs are. Con: you could be overpaying and missing out on other benefits.
Option 2: Part C Medicare known as Medicare Advantage Prescription Drug (MAPD) plans. This is more like group health insurance. Instead of getting your benefits directly from Medicare, Medicare sends money to a private insurance company who administers your Medicare benefits with a different cost structure. What gets complicated is that each state and sometimes even counties within a state could offer different plans. In some areas of the country these plans are very limited. Here in PA and NJ, we’re blessed with competition which offers a large selection of plans with great benefits. These plans will often feature additional benefits that OM doesn’t offer such as vision and dental insurance to name a few. You’re responsible for the financial obligations left behind by the plan, however there is a max out of pocket, so you won’t owe more than that in a given calendar year. The pro: additional benefits, possible cost savings of thousands of dollars a year. The con: about 5% of the population would end up spending more money than option 1 and buyer beware, not all MAPD carriers are the same.
Which option will best serve you will depend on your needs, goals, finances, current health status and medication list. Bottom line, there are a lot of choices that need to be made. You could do this on your own, but there’s an easier way. Working with a state licensed independent insurance agent specializing within this market could make this process a lot smoother. They should be able to educate you on OM, options 1 and 2, which will help you make an informed decision as to which way you want to go. Best of all, you don’t have to pay for their time as they’re compensated directly by the insurance carrier you choose. Not you.
