Explaining Medicare

Once we reach age 65, most of us are eligible for subsidized health insurance through a government program called Medicare. Part A, which covers hospital care, is free. Part B, which is available for purchase for an extra fee (depending on your income), covers doctor visits, outpatient therapy, medical equipment and preventative services. Many people acquire Medicare Advantage or Part C, which includes prescription drugs as well. These plans are guaranteed issue. Open enrollment is between Oct. 15 and Dec. 7 each year.

Medicare Advantage plans are typically relatively inexpensive, but they come with high co-pays and other out-of-pocket expenses. Moreover, majority of care must be obtained in network like an HMO. Therefore, these plans are not ideal for those who like to travel and choose their own care providers regardless of the network.

For more flexibility, many people acquire Medicare supplements called Medigap. Medigap policies are sold by private insurance companies and help pay some of the health care costs basic Medicare doesn’t cover, such as co-payments, co-insurance and deductibles. In order to acquire a Medigap policy, you pay an extra premium in addition to the standard Medicare premiums. This is in contrast to the Medicare Advantage Plan premiums, which include the total cost of Medicare benefits. Medigap policies are guaranteed renewable even if you have health problems. This means the insurance company can’t cancel your Medigap policy as long as you pay the premium. Medigap policies generally do not cover prescription drugs and you will need to get a drug plan (Part D) to cover those expenses. Neither Medicare nor Medigap covers long-term care expenses.

It’s wise to review your plan each year with an expert to make sure it’s consistent with your needs. Based on the drugs you are taking, the doctors you are seeing and where you will be spending most of your time, you may be able to modify your plan selection to reduce your costs and maximize your benefits.