Compare Medicare premiums to what you actually pay for group health insurance, keeping in mind that doctors often prefer working with patients covered by group policies and have started to deny patients with Medicare or individual coverage. Group plans have higher reimbursements than Medicare and individual coverage pays even less. Cancelling your group insurance to enroll in Medicare could cause serious problems, especially if you have dependent children or your spouse does not qualify for Medicare.

Medicare offer many popular benefits with rules not as commonly understood. It covers 80% of medical expenses leaving you with the burden of paying for the remaining 20%. Once you make the decision to enroll in Medicare, you must decide how you want to receive your Part A (Hospital) and Part B (Medical / Doctor) benefits and whether you need additional coverage. You can get your Medicare benefits through Original Medicare or a Medicare Advantage Plan (like an HMO or PPO). The Federal Government manages Original Medicare providing eligible individuals coverage for hospitals, doctors and other health care expenses. Private insurance companies offer Medicare Advantage Plans (Part C) and have also designed supplement plans to complement Original Medicare benefits. Medicare Advantage plans often provide prescription drug coverage and Medicare Part D is also available for this coverage.

Medicare Advantage and supplement plans as well as Medicare Part D (drug plan) provide different benefits at different costs with different rules that help lower your out-of-pocket medical expenses not covered by Part A and Part B.  Stiff penalties apply every month you are eligible but not enrolled in a drug plan and you will only have guaranteed issue of optional supplement plans providing additional coverage ONCE during the Initial Enrollment Period, which occurs at age 65 or after the loss of your employer healthcare coverage. After you have established Medicare, you will have to go through an insurance company’s underwriting process if you decide to apply for a better supplement plan later. The US Department of Health and Human Services has compounded the importance of making the best initial decision possible since it will eliminate one of the most comprehensive and popular supplement plans (PLAN F) on January 1, 2020. If you don’t already have this plan in place by then, you have lost the opportunity to apply for it.

Once you have implemented Medicare, do not “set it and forget it”. You should review your Medicare Advantage and any supplement plan and/or drug coverage in place annually. You will have the option to switch between Medicare Advantage plans and from Medicare Advantage to Original Medicare (and vice versa) each year during the Medicare Open Enrollment period (October 15-December 7). You will also have the option to compare your drug plan with what other insurance companies offer during this period allowing you to identify lower-cost options if available that could save you thousands of dollars depending on your prescription drug list. Your drug plan’s covered drugs (formulary) will change over time, which may increase premiums, co-pays and deductibles substantially.  In addition, always call your drug plan immediately if your doctor prescribes a new drug. Contact your drug plan before leaving your doctor’s office to find out if they cover it and what it costs. If it’s not on your plan’s formulary, ask for an alternative prescription. By law, each drug plan must offer at least 2 drugs in every class to treat specific symptoms.

The Medicare Open Enrollment period DOES NOT apply to Medicare Supplement plans. California and Oregon, however, have implemented a Medicare Supplement law called the “Birthday Rule” that allows those who live in these states to change their Medicare supplement from one insurance company to another with no medical underwriting during their birthday month. All supplement plans must cover basic benefits as defined by Medicare but each insurance company prices them differently and offers varying levels of service.

Premium prices will vary and change over time.  Companies charging lower premiums at age 65 usually increase them in subsequent year and they eventually grow expensive when compared to those that charged a higher premium initially. By periodically comparing supplement plans around your birthday, especially at milestone ages (70 and 80), you have the option of making changes if it would save money or enhance service without compromising your coverage.

Medicare was designed and has been altered over the years with the intention of benefitting those eligible for enrollment.  Multiple coverage options exist not to confuse us but to satisfy unique circumstances and needs. Take time to learn what’s available and take advantage of the options available to establish and maintain the very best coverage possible.