Medicare is the government health care insurance program for most citizens 65 or older. You must go on Medicare unless you or a spouse works for a company with 20 or more employees.
Without this program, many people would not be able to afford to retire because of health care costs. Medicare is not free, but it is less expensive than the open market.
You have been paying into Medicare all of your working life. When you start receiving the benefit, you still pay a monthly premium which is currently $135.50 per month. Even after paying this monthly fee, Medicare is an 80/20 program with lots of deductibles. Because of this, most people have some kind of supplemental coverage.
When you are choosing a supplement the most important considerations are doctor choices, covered medicines and cost.
A plan is useless if it does not provide the coverage you need. When you first go on Medicare, you probably picked a supplement. The government knows that some years your medical needs change. You may need a specialist, your doctor may have retired or you may have been prescribed a new medication.
To deal with these situations, every year between Oct. 15 and Dec. 7 is open enrollment period. This is when you make decisions about your coverage for next year. This is why you will be receiving a lot of sales booklets and seeing many commercials on television. Once you make your final choice of supplement, it will be in effect from Jan. 1 until Dec. 31.
If you move out of the area or the plan was discontinued by the insurer, you get to decide again.
There are two types of supplements, Medigap and Advantage Plans. Medigap plans pay for some of the deductible and co-pay in Medicare. Thus they fill in some of the gaps. Medigap policies have the biggest provider network since you can see any doctor who accepts Medicare and new patients.
Different Medigap plans offer various levels of coverage. This means if you are choosing this type of plan, pick the approximate level for your needs. Plans are standardized, meaning all Medigap Plan C cover the exact same this as any other company’s Plan C. Cost can vary greatly.
Advantage plans have a network of providers. Sometimes these networks are very large. They are often lower cost sometimes even zero. They often offer additional benefits such as gym memberships, eye care and other enhancements. Most Advantage plans include prescription coverage while Medigap plans require you to buy an additional Part D plan.
Seniors have much better options for coverage because of the new agreement between Highmark and UPMC. You must be careful still if you have doctors in both networks that you will have the needed access. Not all policy offers this complete coverage. There are no health questions when you first become eligible for Medicare from any type of coverage. Medigap plans sometimes do look at health status after six months if you are changing plans. Advantage plans accept most applicants.
Make sure you review both types of plans and select the proper one for your health care needs. Spouses do not need to be on the same plan.
Gary Boatman is a Monessen-based certified financial planner and the author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”