What is Medicare?
/Medicare is the United States’ health insurance program for disabled and retired individuals. It is divided into different parts, each offering different coverage options and costs. When you become eligible at 65, deciding the path you take for Medicare can be permanent with a lasting financial impact.
The most important Medicare decision is choosing between Original Medicare provided by the government coupled with a supplement plan or a Medicare Advantage plan (Part C) provided by a private health insurance company. Both options will have two mandatory parts. Part A has no premiums and provides hospital coverage. Part B covers doctors and carries a monthly premium based on your household income. Parts A and B have low expected out-of-pocket expenses but do not fully cover the needs of most people. Therefore, if you keep Original Medicare, a supplement plan (or Medigap plan) and prescription drug plan (Part D) are usually necessary to help cover all areas of medical care. This option can allow you to see doctors in any state and can prevent you from having surprise medical expenses. However, it comes with additional monthly premiums. If you select an Advantage plan instead, you forgo some flexibility for private insurance that has no premium. A supplement/Medigap plan is not an option with an Advantage plan, but a prescription drug plan might be necessary. Advantage plans typically include additional free coverages, like dental or vision, and perks, like gym memberships, but it comes at a cost of having restrictive doctor networks, pre-authorization requirements, and the potential for higher out-of-pocket expenses.
After the first year of enrolling in Medicare, you may no longer be guaranteed eligibility for switching to a different plan, and some plans may require medical underwriting to qualify. So, not only is it important to choose wisely when selecting Original Medicare or a Medicare Advantage plan, but you must also select proper coverage for your supplement/Medigap and Part D plans. All plans, except Parts A and B, change each year during the open enrollment period based on changes in laws or adjustments made by insurance companies. Open enrollment is October 15th through December 7th each year for Original Medicare and January 1st through March 31st each year for Medicare Advantage plans.
If you are unsure about which path is right for you or need help reevaluating your coverages, seek professional advice.
Worley Erhart-Graves Financial Advisors is having a Medicare education event on October 16, 2024 from 6-7:30 p.m. This event is open to the public, and we will be hosting Medicare expert Melinda A. Caughill, CSA who will be deciphering the complexities of Medicare regulations and translating them into easy-to-understand concepts.
- Kyle McCune, CFP®, Worley Erhart-Graves Financial Advisors