Picking a Medicare plan, a complex process
Selecting a Medicare plan is complex. For a summary of the basics, you should obtain a free copy of “Medicare & You (2023),” a government handbook that is updated each year.
Contact the Center for Medicare and Medicaid Services (CMS) at 800-633-4227 to obtain a copy; or visit https://www.medicare.gov/ medicare-and-you.
Traditional Medicare refers to Part A (hospital insurance), Part B (medical insurance) and Part D (drug coverage). The major advantage of traditional Medicare is that you can visit any hospital or doctor affiliated with Medicare without a referral or prior authorization.
If you claim a Social Security benefit prior to age 65, you are automatically enrolled in traditional Medicare. Although traditional Medicare is flexible, it may not be your most cost-effective choice.
Part B premiums are based on your income. In 2023, for most participants, the standard monthly premium is approximately $165 per month. However, if your family’s adjusted gross income (AGI) exceeds $370,000 or your individual income exceeds $180,000, your monthly cost will be higher.
Medigap is supplementary insurance to original Medicare. Part B covers 80% of your physician services. If you require hospitalization, there is a $1,600 deductible cost that could be covered by Medigap. If you require skilled nursing care after your hospital stay longer than 20 days, the cost would be $200 per day without Medigap coverage.
The bottom line is that without Medigap coverage, you could be facing substantial out-of-pocket expenses. There are 10 types of plans, which vary by state. Medicare.gov covers the differences in the plans and the associated premiums.
Part D premiums are tied to income, with an average cost of $43 per month. You have only 63 days after your initial enrollment in Medicare to enroll in Part D. Enrollment after that date will result in higher premiums.
Medicare Advantage Plans, known as Part C, are an alternative to traditional Medicare. If you are healthy, and remain so, a Medicare Advantage plan may be cost-effective, but there are disadvantages. These plans, which vary significantly, can include insurance coverage for routine dental, vision and hearing. You have to do your homework before you select a Medicare Advantage plan. “Medicare and You” provides valuable information.
In order to be eligible, you must first sign up for Parts A and B. Some of these plans offer prescription drug coverage. Some offer lower monthly costs than traditional Medicare. In most cases, you will need to use health care providers who participate in the plan’s network.
These plans set a limit on what you have to pay out-of-pocket each year for covered services.
An excellent resource is your State Health Insurance Plan (SHIP). SHIP is available in all states. You will be assigned an unbiased individual with expertise in Medicare to work with you. There is no cost. I volunteered for SHIP for several years.
Another source is “Get What’s Yours for Health Care: How to Get the Best Care at the Right Price” by Philip Moeller (Simon & Schuster). The book is comprehensive, unbiased and covers the pros and cons of traditional Medicare vs. Medicare Advantage. Moeller also provides good advice on minimizing drug costs.
Medicare options are plentiful and complex. Some cost-effective options are available only at the time you apply. Don’t hesitate to ask your primary health-care advisers for their advice.