As the debate over “Medicare for All” heats up, it is essential for retiring baby boomers to understand their Medicare alternatives. For good reason, most seniors are highly confused about their Medicare alternatives.
Traditional Medicare is what retirees have paid into their entire lives via FICA payroll taxes. The FICA tax is made up of Social Security tax at 6.2 percent and the Medicare tax at 1.45 percent. The Medicare tax that the baby boomer generation paid into was intended to be their final insurance plan.
As the debate over “Medicare for All” heats up, it is essential for retiring baby boomers to understand their Medicare alternatives. For good reason, most seniors are highly confused about their Medicare alternatives.
Traditional Medicare is what retirees have paid into their entire lives via FICA payroll taxes. The FICA tax is made up of Social Security tax at 6.2 percent and the Medicare tax at 1.45 percent. The Medicare tax that the baby boomer generation paid into was intended to be their final insurance plan.
These days more retirees are opting for Medicare Advantage, an alternate plan to regular Medicare.
They are under the mistaken belief that they are boosting their Medicare card. This is due in large part to a lack of understanding of the Medicare process and its options.
Medicare-eligible retirees often have just two options. Keep Medicare as their insurance and enjoy nationwide coverage with no networks and no doctor recommendations required, or join an alternate plan known as Medicare Advantage. Those who choose this alternative will no longer receive healthcare through Medicare, but rather from a private insurance firm. Medicare pays a fixed sum to the companies who offer these plans each month. This limits the government’s liability to managed care with potentially strict networks, referrals to specialists, and copays. Since 2011, all plans have been forced to reduce users’ out-of-pocket spending for services covered by Medicare Parts A and B to no more than $6,700 (in-network) or $10,000 (out-of-network).
Because of the growing number of retirees entering the Medicare-eligible there has been an uptick in Medicare Advantage marketing and sales.
These plans are sold as all-in-one bundles that include hospital, medical, and, in most cases, prescription coverage. The convenience of carrying only one card with little to no monthly cost for these policies may appear appealing to someone who is unaware that Medicare will no longer be their primary insurance. Most people believe the plan is a supplement to Medicare. Many people are therefore surprised to hear that the Medicare Advantage plan is not supplementary to Medicare. It is instead an alternative plan meant to privatize and regulate a person’s healthcare.
When first enrolling in Medicare or turning 65, retirees must be completely aware of their options. They only have a six-month window in most states to obtain a guaranteed Medicare Supplement plan with no medical inquiries. If this window closes, the individual may never qualify for a Medicare Supplement plan again owing to health issues.
Although Medicare provides excellent benefits, the major disadvantage of Medicare plans is that they only pay 80% of medical expenses.
That leaves a retiree responsible for the remaining 20%, with no out-of-pocket spending cap to protect them. Medicare Advantage plans could be a brilliant option for those who cannot afford a Medicare Supplement. Also for those who missed the guaranteed issue period and don’t qualify for one as a result of health issues.
Medicare Supplement plans, also known as Medigap Supplement plans, are standardized plans characterized by letters that are designed to overcome Medicare’s gaps. A Medigap plan supplements Medicare, which serves as the primary insurance provider. The Medigap plan is accepted wherever Medicare is accepted and is transferable if a person moves or travels. Private insurance firms offer Medigap Supplement policies, which are all standardized to provide the same coverage and benefits. Plans F, G, and N are the three most common standardized plans used to complement Medicare. Because Medicare does not cover medicines, an individual would need to purchase a separate plan known as Part D. A monthly fee is charged for a Medigap Supplement or a Part D plan. Those who want to preserve Medicare as their primary insurance may consider a Medicare Supplement and a separate Part D plan to provide financial stability for what Medicare does not cover.
With most seniors on a fixed income, Medicare should never be used as primary insurance without supplementary insurance for added safety.
The issues that retirees encounter when they become Medicare-eligible include being bombarded with marketing information via mail, phone, and other kinds of television and social media. It can turn what should be a happy time for the retiree into a stressful one. The retiree not to try to understand it on their own, but rather to consult with a professional. Before making a final decision, retirees should always ask themselves if the coverage the’re getting is sufficient no matter what their healthcare requirements look like down the road? If they have that attitude they will be more prepared for this new chapter in their lives.