By Steve Jacobs
The Annual Enrollment Period for Medicare Advantage and Prescription Drug Plans is quickly approaching, and that means many first-time users – and, let’s face it, returning users as well – have questions about what’s being offered, how to pick their coverage and what all those different “parts” are.
In general, if you’re new to Medicare, you’re turning 65 and this is the first opportunity you’ve had to enroll. Entering this program is likely something you’ve anticipated and it’s a very big decision. After all, for many folks this is their first time looking to the U.S. government instead of their employer for health care benefits. It’s important to understand what you can and can’t do.
Hopefully, this article has caught you with a little time to spare before enrollment. Spend your time identifying what you choose to elect in Medicare. This will depend on a few major factors — your budget, your retirement assets and what you want from your health care.
According to Sean Scaturro, CERTIFIED FINANCIAL PLANNERTM practitioner and USAA advice director, this last part needs to be reasonable, knowing you can’t get it all.
“It gets into the behaviors of how you want to manage your health care,” Scaturro says. “Do you want it to cover the vast majority and to know you’ll have higher monthly premiums, or do you want to spend less on monthly premiums and manage out-of-pocket costs as they come?”
Medicare is broken down into different parts, all of which provide a different level of coverage. Basic Medicare, the one that’s available to all Americans, 65 or older, contains two parts: Part A and Part B.
Part A is for hospital visits, while Part B is for medical coverage such as going to see your doctor. (Note that prescription drugs and long-term care aren’t included.) Additionally, there’s a Part B deductible that must be met on those types of visits. Scaturro recommends a plan to shore up your defenses against these gaps in the plan.
“Where Medicare falls short, you need to protect against expenses that wouldn’t be covered,” he says.
What does that protection look like? As mentioned earlier, there are many different parts. You’ll almost certainly want Part D, a Medicare Prescription Drug Plan, to make your costs more predictable.
Another way to cover some of these gaps is through Part C, a Medicare Advantage plan. This is similar to an HMO; your network of doctors may be more limited, but your premiums and costs in general might be substantially less – some plans have no monthly premium.
“What you’re doing with a Medicare Advantage plan is shifting some of the cost burdens and out-of-pocket costs onto your shoulders and potentially limiting the network of doctors you can use,” Scaturro says.
Many find this to be an acceptable trade-off. Medicare Advantage plans are very competitive and have a growing audience. According to the Kaiser Family Foundation, 34% of all Medicare beneficiaries — more than 20 million people — are enrolled in one, and that number is expected to reach 42% by 2028.
These people are choosing to have lower monthly premiums – the average plan costs $29/month in 2019 – figuring the strain on their monthly expenses causes more stress than out-of-pocket costs.
“You have to look at what’s important to you,” Scaturro says. “Does your monthly budget allow you to have a better cost control on out-of-pocket expenses? Or is it more important to have lower monthly costs and have more management responsibility over your health care?”
This is a lot to consider. A USAA advisor is a good resource if you’re looking for help on how to supplement your Medicare coverage. You can also visit medicare.gov to find out more on any of the plans mentioned above. Their annual guidebook is an invaluable resource as you make your decision.
Find out more about USAA’s range of solutions that can help bridge your Medicare coverage gap
USAA Life Insurance Company (NAIC #69663) is a wholly owned subsidiary of USAA and was established in 1963 to meet the needs of USAA members and associates. It is domiciled in Texas with its principal place of business in San Antonio, Texas, and is licensed in all states and the District of Columbia, except New York. USAA Life Insurance Company of New York (NAIC #60228), based in Highland Falls, NY, a subsidiary of USAA Life Insurance Company, offers life insurance and annuities to residents of New York. In Florida, the licensed agent of record for Medicare Supplement is Todd Lisle #E050166 and the licensed agent of record for Life Insurance and Annuities is Cary Wayne Smith #1025867.
USAA does not offer all of the plans in your service area. For a complete list of available plans please contact 1-800 MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.
Enrollees must use network providers for specific OSBs when stated in the Evidence of Coverage (EOC); otherwise, covered services may be received from non-network providers at a higher cost.
Optional supplemental benefits (OSB) are only available to members of certain Medicare Advantage (MA) plans. Members of MA plans that offer OSBs may enroll in OSBs throughout the year depending on plan details. Benefits may change on Jan. 1 each year.
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