Turning 65 is a major milestone for a lot of people. In the U.S., it’s considered the typical “retirement age,” opening the door to a variety of benefits, including the ability for retirees to sign up for a Medicare health insurance plan. While Medicare can help ensure seniors get the healthcare and services they need, considering the various Medicare options and supplemental plans and determining which one is the right fit for you and your unique situation can be a challenge. How do you know which plan will be best for you in the year to come?

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The basics of Medicare

Medicare is a government-sponsored health insurance plan for seniors. You become eligible to sign up for Medicare three months before your 65th birthday (or possibly earlier if you have a disability, End-Stage Renal Disease [ESRD], or ALS [also called Lou Gehrig’s disease]).

There are four “parts” of Medicare, each of which offers different types of coverage.

Part A (Hospital Insurance): Helps cover the cost of inpatient care in a hospital, skilled nursing facility, and/or hospice center, as well as certain home health care services.

Part B (Medical Insurance): Helps cover the cost of:

  •         Services from doctors and other health care providers
  •         Outpatient care
  •         Home health care
  •         Durable medical equipment (wheelchairs, walkers, hospital beds, etc.)
  •         Many preventive services (like screenings, shots or vaccines, and annual “wellness” visits)

Part C (also known as Medicare Advantage): See details below.

Part D (Drug Coverage): Helps cover the cost of prescription drugs (including many recommended shots or vaccines). You join a Medicare drug plan in addition to Original Medicare, or you get it by joining a Medicare Advantage Plan with drug coverage. Plans that offer Medicare drug coverage are run by private insurance companies that follow rules set by Medicare.

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A tale of two Medicares

The two main types of Medicare coverage are Original Medicare and Medicare Advantage, also known as Part C. Here’s a brief summary of the differences between the two.

Original Medicare Medicare Advantage (also known as Part C)
·  Original Medicare, provided through the U.S. federal government, includes Part A and Part B (see above).

·  You can join a separate Medicare drug plan to get Medicare drug coverage (Part D, above).

·  You can use any doctor or hospital in the U.S. that takes Medicare.

·  To help pay your out-of-pocket costs in Original Medicare (like your 20% coinsurance), you also can buy supplemental coverage, like Medicare Supplement Insurance (Medigap), have coverage from a former employer or union, or Medicaid (a health insurance plan for low-income and disabled people).

·  Medicare Advantage is a Medicare-approved plan from a private company that offers an alternative to Original Medicare for your health and drug coverage. These “bundled” plans include Part A, Part B, and usually Part D.

·  Typically, you’ll need to use doctors who are in the plan’s network.

·  Plans may have lower out-of-pocket costs than Original Medicare.

·  Plans may offer some extra benefits that Original Medicare doesn’t cover — like vision, hearing, and dental services.

Medicare vs. traditional private insurance

Medicare has some similarities to traditional private/employer-provided insurance plan, as well as some distinctions.

When you first sign up for Medicare and during certain times of the year (open enrollment periods), you can choose which way to get your Medicare coverage, and also add or switch drug coverage, just like a private insurance plan. Open enrollment is going on now for Medicare — Oct. 15 through Dec. 7 — during which time current Medicare enrollees can switch plans if so desired. Medicare Advantage open enrollment is Jan. 1 through March 31.

Unlike a private plan, however, you typically only need to sign up for Medicare Part A and Part B once. Another important difference is that Medicare doesn’t offer plans for couples or families. Because of this, since each senior signs up individually, you don’t have to make the same selections as your spouse.

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Choosing the right plan for your budget and needs

As you can see, there are a lot of options to consider, and your selections will impact your premiums and out-of-pocket costs. For example, a Medicare Advantage beneficiary can choose from among a whopping 39 private health plans, each with various premiums, deductibles, copays, coinsurance, out-of-pocket maximums, benefit limits, and more.

It’s understandable if all the choices feel a bit overwhelming to you! And the stakes can be high. Seniors may overpay a few thousand dollars if they don’t select the right plan. So, how can you choose the best option that meets your needs while also fitting into your budget?

The Medicare.gov website has a plethora of helpful information, including pricing information and premium cost estimators. It is a great place to start if you want to learn more about how Medicare works, plans, and coverage. The Medicare Plan Finder website displays plans, but it does not allow the user to estimate their cost of care.

Medicare brokers are another potential resource to help people select a health plan. Just like private insurance brokers, these are folks who shop the market for you for free, but they may not be entirely unbiased. They make money when insurance companies reimburse them for every member they enroll.

But there also are some new third-party companies entering the scene that can help you determine which plan might be right for you in a more unbiased manner. One such company called Carepick offers seniors a user-friendly, unbiased way to find the health plan with the best value.

Carepick’s digital platform collects data about all the Medicare and Medicare Advantage plans offered in the U.S. Platform users submit their home ZIP code and information related to their current pharmacy drugs and usage of healthcare services, but they enter no personally identifying information, and no information is retained by the site to ensure users’ privacy.

Carepick then uses those location, drug, and service usage details to estimate the user’s total healthcare cost under each Medicare plan offered in their county of residence, ranked from cheapest to most expensive, potentially saving users several hundred to several thousand dollars.

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It’s worth your time to get educated!

With record high inflation and interest rates going up, just about everyone is looking for ways to save money. While none of the information in this post is intended to be financial advice, it is worth noting that choosing the right Medicare plan for your needs is a place where annual expenses can potentially be reduced. Educating yourself on how Medicare works, and the various options available, can result in real cost savings!

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