Your Financial Future: Carefully explore Medicare plans to reduce out-of-pocket expenses
The open enrollment period for Medicare began on Oct. 15.
Along with political ads, every other ad on television is about choosing a health plan, and your mailbox is probably full of sales information. Every company claims to be your best choice. Many people get suggestions about their choices from friends and neighbors.
Making the right choice can have big financial consequences for a family. A Fidelity study found that a 65-year-old couple will spend roughly $315,000 on out-of-pocket health care costs during the rest of their lives. This figure includes premiums and deductibles.
To find your best choice, you have to consider your own health situation. Probably the two most important considerations are who your doctors are and what medications you take. Every Medicare plan must offer doctors that practice every specialty. This means that there will be options for choices down the road. However, if you are already working with a doctor you trust and who understands your health conditions, you’ll need to make sure your choice covers them. Some plans offer the choice to include every doctor who accepts Medicare, though some physicians limit the new patients they accept who are on Medicare. In the case of those doctors, you may want to become a patient before going on Medicare. While having the ability to go to any doctor who accepts Medicare is an advantage, a plan that allows that may come with a higher cost.
Some policies come with a drug plan included and others require you to purchase a separate policy. Every plan allows patients to make changes from the year before. These changes can include which prescriptions are covered and at what cost. This is known as the formulary. They contain different tiers of drugs at different prices. Generic drugs are sometimes free. Often there is a second tier of preferred generics. Name brand drugs have much higher prices. Sometimes the same drugs move to a different tier than the year before. Once you start the new plan year on Jan. 1, the cost will be locked in for the rest of the year.
It is important to understand that most plans will have some out-of-pocket costs. There is also a donut hole for people with high prescription drug expenses. During this time, there are some reduced benefits. This was put into Medicare plans to try and help most people get some drug cost benefits and people with more serious health conditions get more aid.
Some plans offer additional benefits such as eye care, dental and gym memberships. These Advantage plans often include drug coverage. Sometimes these policies are available at no cost. People often wonder how this can even be possible. In Part C or Advantage plans, the government pays the insurance company to take over providing your insurance coverage. Current television ads highlight some benefits that most people do not receive such as increased Social Security benefits. Some of these extras might require that you be dual eligible and because of your low income you might be covered by both Medicare and Medicaid.
To be on Medicare, you must pay a Part B premium that most people have taken out of the Social Security. The amount for next year will be $174.70 and take effect Jan. 1. Open enrollment ends on Dec. 7. Review your options and make the best choice to try a minimize your out-of-pocket health care expenses.
Gary Boatman is a Monessen-based certified financial planner and the author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”