Do you need a Medicare plan?

Do you need a Medicare plan? It’s standardized social insurance, isn’t it?

Oh, Mona, you have a lot to learn! (Unless you’re quite far away from retirement age, of course. Although, you might gain some good insight here if you’re purchasing insurance on the ACA exchanges as well!)

For many folks, healthcare insurance has been a limited-choice environment, where our employers have given us at most a couple of options to choose from, and very little in the way of variability in the plan options. But when it comes to Medicare, (and not surprisingly, ACA-exchange insurance), the playing field is vast and variable. It makes a lot of sense to do your research as you enroll for Medicare. And this applies whether you’re signing up for the first time or you’re a veteran of many Medicare battles over the years.

Outline of a Medicare plan

On Medicare’s official website, which has been criticized for being confusing and difficult to navigate, there is a page detailing your choices regarding Medicare coverage. Incidentally, Medicare also takes it on the chin for offering little guidance in choosing your best option, but the referenced article is actually a pretty good place to start.

I won’t copy the article verbatim here, but I’ll walk through the major points briefly to underscore the importance of a Medicare plan for yourself and your family.

The first item in the list is costs. And costs for healthcare are potentially enormous. If you make a mistake about your Medicare filing and don’t pay attention to the costs, it could be financially disastrous for you and your family.

One of the niggling details about Medicare is that, if you’ve chosen the traditional path of Medicare Part A coupled with Medicare Part B, you are setting yourself up for a potential calamity. This is because Part B has no out-of-pocket maximum – no cap on how much you can be required to pay in copayments and coinsurance during a year or over you lifetime. Imagine the seemingly unlimited cost for some of these new, cutting-edge targeted medical treatments. You could be required to pay a percentage of millions of dollars of treatment.

It is for this reason that many folks (but not a majority, by any stretch) choose a Medigap (or supplement) policy to augment Parts A & B. Medigap policies are designed to fill the “gaps” in coverage, keeping you from the pain of having to pay unlimited coinsurance.

Medicare Advantage plans (aka Part C) can also resolve this issue, as these plans each have annual out-of-pocket maximums.

Of course, Medicare Advantage plans and Medigap insurance all add to the premium costs, so again, you should research and plan what your costs might be with various coverage options.

Speaking of coverage, that’s the second item in Medicare’s list. Of course, you want to tailor your Medicare plan to meet your healthcare needs, so understanding what your plan covers is important. And this is true not only the first time you sign up, but annually when you have the option to change coverage.

It would be nice if you could just choose your plan once and only make changes when your circumstances change. The problem is that many facets of the choices you made last year can be changed, often significantly, when the new enrollment period comes around. Part D (prescription drug) plans are notorious for adjusting the “formulary” quite often. (Formulary is the glossary term for the list of drugs covered by the plan.) Plus, your own health may change, requiring a new prescription that wasn’t covered under your old plan’s formulary.

The next item in the list is your other coverage. Primarily this deals with Medigap coverage and any coverage that you have from other sources, such as an employer’s coverage. The point is that it’s important to know how this extra coverage coordinates with your Medicare plan, so that you don’t have any surprises.

Prescription drug coverage is next in the list. As mentioned before, Part D plans (and not shockingly, any other drug plan) often change their formulary on a regular basis, so you need to make sure your meds are covered.

Much the same as with drug plan formularies, Medicare Advantage plans often make changes to their network of doctors and hospitals (which is the next item in the list). Similar to the HMOs many of us have grown accustomed to, you need to make sure that your Medicare Advantage plan provides you with access to your chosen doctors and hospitals, or viable alternatives. This is a factor to check out annually during the enrollment period.

Focusing on the consumer experience aspect, Medicare’s list includes a consideration for quality of care. If you’re not currently satisified with the care you’re getting from your chosen plan, you should do your research and choose a Medicare plan to improve this aspect going forward.

Lastly, if you travel much (primarily internationally, but state-to-state can cause problems depending on the availability of in-network providers if you’re on a Medicare Advantage plan), you need to review the limitations on coverage for you with the plan you’re using. Most plans don’t provide much coverage internationally, although some Medigap Plans (specifically Plan C, D, F and G) will cover a portion of your medical expenses internationally. Original Medicare (Parts A & B) does not provide international coverage, although you may be able to supplement with additional private coverage to meet this need.

So, as you can see, there are quite a few items to consider in your Medicare plan. It’s not as simple and straightforward as you thought. And as mentioned above, the rules can change regularly, not to mention your own circumstances changing as you age. It doesn’t have to become a full-time job, but it does pay off in the long run to develop and maintain a Medicare plan.