Last week I received from my Medicare adviser a simple overview of what the next round of Medicare will look like. I thought I'd share it with those of you who are at or near Medicare age. This info is for supplements, insurance that covers what Medicare doesn't.
NOTE: These are NOT Medicare Advantage programs. In those, Medicare just gives an approved company a lump sum and then bows out. For better or worse you're then their problem. Many of the Advantage plans seem to cover more, but there is always small print. They are basically HMO's/PPO's, meaning you have to use THEIR doctors and hospitals. They may also say they include prescription drugs, but not ALL drugs are on their included list (their "formulary"). Be careful!
Medicare has deductibles and co-pays ... lots of them. These deductibles and co-pays change every year, but this is what they look like in 2017:
PART A DEDUCTIBLES AND CO-PAYS (the hospitals)
Day one deductible: $1,316
Days 2-59 co-pays: $0 per day
Days 60-89 co-pays: $329 per day
Days 90-150 co-pays: $658 per day
Skilled Nursing Facility co-pays: $164.50 per day (Maximum 100 days)
PART B DEDUCTIBLES AND CO-PAYS (the doctors)
Annual deductible: $183
Co-pays after the deductible is met: 20% co-pay of everything WITHOUT LIMIT.
You don't have to be a Mensa member to see that an unexpected illness could cost you a ton of money if you had original Medicare and nothing else.
THIS IS WHERE SUPPLEMENTS COME IN
Medicare supplements (Medigap plans) are private insurance plans, regulated by Medicare, that pay all or part of the aforementioned deductibles and co-pays.
There are eleven different kinds of supplements, identified by letters A to N, each one covering different pieces of those deductibles and co-pays. The most popular plans are Plan F and Plan G since they cover the most.
A Plan F covers ALL of Medicare's deductibles and co-pays. Plan G covers all of them except the Part B annual deductible of $183. Since Plan G has a premium that's $400 per year less than Plan F (on average) it's always the better value.
Here's a little known fact: Because supplements are federally regulated, those with the same letter are identical except for price! They have to cover the exact same things.
WHAT DO THEY COST?
Premiums are based on your age and your zip code. In Frisco, TX, there are at least 26 different companies offering Plan F supplements. The premiums for a 65 year old female range from $120 per month to $369 per month - for the exact same thing!
The least expensive plan is not usually the best value because those are the plans that have the largest renewal increases. If your plan costs $120 per month in year one but jumps to $180 per month in year two, it's no longer a good deal. And if your health is bad, or your medications give the insurance companies a scare, you'll be stuck with that plan and its ever-increasing premiums.
There are some supplement companies that have proven to be reasonably priced and have relatively low annual premium increases.
They are, in alphabetical order: AARP, Aetna and Blue Cross. As those of you who have been to my office know, Aetna has always been the plan that starts out the least expensive of the three and stays that way over the years, so that's usually what I recommend. In addition, if a husband and wife both go on the plan they get a 12% discount.
Once you have a quality supplement, there should be no need to change. They will all have some rate increases each year on your anniversary date, but those increases should be manageable.
CAN YOU CHANGE SUPPLEMENTS?
If you have a supplement that is NOT priced right, can you do anything about it? Maybe. You can apply for a different supplement any time during the year, but the plan you're applying for will ask you three pages of health questions, review your medications and talk to your doctors. If they don't like what they see, they will decline you and you'll have to stay where you are.
Hope this helps.