The Boy Scouts motto is dead on: “Be Prepared!” However, for many of us, procrastination is much easier because it takes less time (in fact, it takes no time). With the Medicare Annual Enrollment Period (AEP) rapidly approaching (Oct 15 - Dec 7) it is going to be vitally important for you to be prepared. And since procrastinating is the path of least resistance, I am going to make this easy on you by giving you a single step that will go a long way in helping you be prepared for the upcoming AEP. I know that insurance is at the top of everyone’s “Most Interesting Topics” list, so do your best to stick with me.
The one step is, Know What You Have. If you don’t know what type of Medicare Health Plan you have you are an easy target for being taken advantage of. There are two major types of Medicare Health Plans:
1. Medicare Supplement plans
2. Medicare Advantage plans
These two types of plans are very different when it comes to how they work and the benefits they provide, but they are extremely misunderstood by policyholders. I often hear from policyholders, “I have a Medicare Supplement,” when in fact they have a Medicare Advantage plan. So what is the big difference between these plans?
Medicare Supplement Plans:
1. Work in unison with Traditional Medicare Parts A & B: A supplement policy will pay most, if not all, of what Medicare does not pay. It acts as a secondary insurance.
2. Do not have networks: They are not HMO or PPO plans so you are free to use any doctor or hospital that you want as long as they accept Medicare.
3. Are funded entirely by policyholder premiums: This is important as it allows companies to keep benefits the same from year to year.
4. Travel with you in all 50 states: Your plan works the same out of state as it does in your home state.
Medicare Advantage Plans:
1. Work in replacement of Traditional Medicare Parts A & B: An advantage plan works in place of Medicare as your primary insurance and you do not have a secondary insurance. You are responsible for all deductibles, copays and coinsurance. And you don’t get out of paying your Medicare Part B premium.
2. Are network plans: They are HMO and PPO plans so you may be restricted in the doctors and hospitals you are allowed to use.
3. Are funded by Government subsidies and policyholder premiums: This is critical because as government subsidies are reduced, plan premiums will go up and benefits will go down, as has been the case for the past 7 years and I expect to be the case in the years ahead.
4. May not cover you in other states (except in emergency cases): Many advantage plans only cover you in the case of an emergency if you are outside of your home state.
The biggest advantage in advantage plans has been the lower premiums. But as government subsidies have been reduced in years past, this benefit has been greatly diminished. For example, in 2007 you could get a Medicare Advantage PPO plan for a $0/month premium and your maximum annual out of pocket expense was $2,000. For 2014 that same plan has a $50/month premium and maximum annual out of pocket of $5,100 (for Shelby county plans).
As you can see, there is a big difference between these two types of plans. Know What You Have … because you may not be able to get your old plan back.
Seniormark will be sponsoring a workshop on September 11 at 5:30 p.m. at their office in Troy. “Solving the Medicare Puzzle” lays out the different parts of Medicare, and then will show you how the pieces fit together. This event is only for educational purposes and no plan-specific benefits or details will be shared.
Dan Hoelscher is the founder of Seniormark, LLC, a company that has specialized in helping retirees make a successful transition from the workplace into retirement for the past 18 years. Seniormark has offices in Sidney and Troy. You can reach Dan by email at firstname.lastname@example.org or you can visit their website at www.seniormark.com. Seniormark, LLC has no connection or affiliation with, and is not in any way sponsored by, the federal or state government, the social security administration, the centers for Medicare and Medicaid services or the department of health and human services.