Here’s what you need to know about Medicare plans
Choosing the right Medicare plan is a big decision, particularly if you won’t have retiree coverage under an employer-sponsored plan. Medicare is complex and can be quite confusing. So making the right choice for your budget and health needs is as important as your decision when to retire. This article will help make it easier to arrive at a decision.
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The steps to planning for Medicare
U.S. citizens and legal residents who have been in the U.S. for at least 5 consecutive years become eligible for Medicare at age 65, unless they’re disabled. In cases of disability, a citizen or legal resident under 65 qualifies automatically for Medicare Part A and Part B after receiving Social Security or certain Railroad Retirement Board disability benefits for 2 years.*
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What you need to know before you retire
Congratulations, you’re about to turn 65 and become eligible for Medicare! Now what?
Perhaps you will continue working, or maybe you’re thinking about retiring. Whatever the situation, you’ll need to continue your prescription drug coverage. If you remain working, you can keep your employer coverage, but you may need to sign up for Medicare Part A. Calling Medicare or speaking with your benefits department can help you make this decision. However, if you’re considering retirement and your company offers an Employer Group Waiver Plan (EGWP) for your Medicare Part D coverage, you might want to look closely at this option.
What’s an EGWP?
An EGWP, or “egg-whip,” is Medicare prescription drug coverage that is partially funded by an employer and often provides better coverage than an individual Medicare Part D plan. Your employer typically uses a private insurance company that is approved by Medicare to administer the plan for its employees. This type of plan also provides an option for your employer to “group enroll” its employees upon retirement, which means you may not have to fill out an application. It also means you won’t experience an interruption in your prescription drug coverage.
If your employer offers retirees both health benefits and a plan for prescription drug coverage, you should receive a notice before you turn 65 informing you of your Medicare Part D options. To enroll in a Part D plan, you must be entitled to Medicare Part A and/or enrolled in Medicare Part B and live within the plan’s service area. If your employer does not offer retiree health coverage, you’ll need to enroll in Original Medicare (Parts A and B) or a Medicare Advantage Plan (Part C). For more information on this topic, please read Planning for Medicare Part D.
Why an Employer-Sponsored Plan Might Be Better for You
Employer-sponsored plans offer more generous coverage than you’d get in an individual Medicare Part D plan, which may mean a lower out-of-pocket cost for you. Certain benefits, not available in a standard Medicare Part D plan, may include:
- A lower Initial Coverage limit (what you need to spend and what your plan spends before you enter the next stage)
- Additional coverage in the Gap (if a Gap applies to your plan)
- Coverage for non–Part D drugs
Generally, a standard Medicare prescription drug plan is required to have four stages of coverage, with the third stage being the Coverage Gap. This stage is reached when the total cost you and your plan pay in the Initial Coverage stage exceeds a certain amount set by Medicare each year. When you enter the Gap in a standard Part D plan, you may pay more for your medications. An employer-sponsored plan, however, is only required to have a minimum of two stages (Initial Coverage and Catastrophic Coverage), so your employer may agree to eliminate the Coverage Gap stage completely. This could allow you to continue the same copayments you used in the Initial Coverage stage until you reach the Catastrophic Coverage stage. This added benefit may save you money in the long run.
Have a Question?
Here are Some Helpful Phone Numbers:
Social Security Administration:
Express Scripts Medicare:
Know Your Options
When considering an employer-sponsored plan vs. an individual Medicare Part D plan, be sure to look at the overall annual cost of your premiums, deductible (if any) and all medications. Try to plan ahead to get the most affordable prescription drug coverage to meet your needs. Research the plans that are available and compare them against what your employer’s plan is able to offer you.
Remember, you always have the option of switching plans during Medicare’s Annual Enrollment Period if you’re not happy with your current plan.
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What to do when your employer drops your Medicare coverage
If you’re 65, retired or retiring and you have employer coverage, your employer pays a portion of your healthcare costs for medical expenses, prescription drugs and other items. You may pay a monthly premium for this coverage. You may also pay a deductible and/or copayment in addition to that premium. Your employer pays the balance of the cost for those services. Your employer also determines the types of plans they make available to you (such as a PPO, HMO, high-deductible HRA, prescription, dental), and they choose the insurers and benefit companies who manage those programs.
However, if your employer is no longer providing retiree health or prescription drug benefits because you’re now Medicare-eligible, consider the many options Medicare offers to help you stay healthy without draining your retirement fund.
Your Medicare Options?
|Medicare Plan||Who Offers It||What’s Covered|
|Part A||Part A is “Original Medicare” and is operated by the government||Hospital care, nursing facilities, nursing home care (not custodial or long-term care), hospice and home health services and inpatient care in a religious nonmedical healthcare institution|
|Part B||Part B is “Original Medicare” and is operated by the government||Medically necessary doctor visits, services and supplies to diagnose and treat a medical or mental health condition, preventative services, ambulance services, and medical equipment (such as canes and blood sugar test strips)|
|Part C||Also known as Medicare Advantage, Part C includes plans offered by private companies that combine Medicare Parts A and B into one plan for greater convenience||Many of these plans also provide prescription drug coverage, and some may also provide coverage for additional services, like hearing, dental and vision|
|Part D Prescription Drug Plan||Offered by insurance companies and private companies approved by Medicare||Prescription medications for beneficiaries eligible for Part A and/or enrolled in Part B|
|Medigap (Medicare Supplement Insurance)||Offered by private companies that help cover some costs not paid by Original Medicare (such as deductibles, coinsurance and copayments)||There are 10 supplemental plans that offer a variety of supplemental options and are labeled A, B, C, D, F, G, K, L, M, and N|
As a Medicare beneficiary, a portion of the cost of your healthcare is paid by Medicare. You will pay monthly premiums, deductibles or copayments/coinsurance, but the amount you pay, and when you pay it, depends on which Medicare plan YOU choose.
Tips for Choosing the Right Route
- Read up on plans: Familiarize yourself with the various parts of Medicare and the options available under them. Your employer or insurance agent/broker may provide an educational kit or refer you to a website that offers videos and other information to help you understand your options. www.medicare.gov is another good resource.
- Make a list: Write down all of the health expenses you’ve had in the past 2 years. This can help determine how much coverage you’ll need next year:
- Prescription medications
- Number of doctor visits (primary care and specialist)
- Number of hospital and emergency room visits
- Lab work
- Medical supplies
- Talk with an agent or broker: Many employers will work with an organization that provides brokers and counselors that help you select the coverage that suits your needs. Talking with a broker will not cost you anything, and it can help you make a decision about which coverage options are best for you. Before you meet with an agent or broker, be sure to read these tips to make the conversation more productive.
- Know your dates: For most people, Medicare Part D (Part D) enrollment takes place during Annual Open Enrollment from October 15 through December 7. You must enroll during this time to have coverage for the following year, and there is no grace period. Mark these dates on your calendar and be sure to start your research early to avoid over-paying or being under-covered. There is a Special Enrollment Period for Medicare members with special circumstances, such as those who move to a different state or lose employer coverage.
You may find that enrolling in Original Medicare combined with a Medicare supplement plan and/or a stand-alone Part D prescription drug plan might be best for you. Enrolling separately allows you to choose a Part D plan with a broader formulary (list of covered medications), a cost-saving pharmacy network with preferred pricing, and/or convenient home delivery.
Or, if you want the convenience of having all your health and possibly your prescription coverage (Medicare Parts A, B and D) bundled into one plan, you can enroll in a Medicare Advantage Plan (Medicare C).
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