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Live Life On Your Own Terms

medicare checkupThis month marks the start of Medicare's annual open enrollment period. Instead of automatically renewing your current plan, it makes good sense to give it a thorough examination, to make sure it's still fulfilling your needs and that you're not paying for coverage you don't need.

More than your health could be at stake here. 

The average Medicare beneficiary runs up $16,000 in medical costs each year and pays about half of them – $8,000 or  more – out of pocket. And according to consulting firm, at least 90 percent of Medicare beneficiaries are shelling out for more out-of-pocket medical costs than they need to.

While Medicare Parts A and B cover 80 percent of doctor visit and hospital charges, what they don't cover can be expensive. 


One thing they don't cover is prescription drugs. Over the past five years, prices for each of the 20 most prescribed brand-name meds have risen an average of 12 percent each year. That's about ten times higher than inflation. Even though you may not have needed prescription meds in the past, and though you may still not need them right now, chances are you will in the future.

They don't cover dental and routine vision care, even as an extra-cost option.

Another thing they don't cover is co-insurance – the 20 percent copays for doctor and hospital services. If you just see your primary care doctor once or twice a year, that's no big deal. But what if you need a hip replaced or bypass surgery? Those procedures can run to six figures. so it doesn't take a math genius to figure out that 20 percent copays will run to tens of thousands of dollars, at the very least.

Buying a Medicare Part D policy can help you offset the cost of prescription drugs. These are sold by private insurers, not the government, so coverages, costs and benefits aren't standardized. The key thing to check thoroughly is the formulary of each Part D plan you're considering. The formulary is a list of which generic and brand-name meds they cover, and the deductibles and copays for each. These may vary widely for the same medicine you're taking.

One way to fill the holes left by Parts A, B and D is with Medicare Supplement (or Medigap) insurance. The government has standardized coverages for ten Medigap plan levels, but the policies themselves are sold by private insurers.

Plan F, for example, has the widest coverage but, as you might expect, the highest premiums. (This plan will be eliminated starting 2020, but if you've signed up before then, you'll be grandfathered in.) Plan G is almost identical; the only difference is that it doesn't cover the $183 annual Part B deductible.

As for the other eight levels, the more you pay for, the more you get, and vice versa. That being said, it's very important to shop around. Private insurers offering the same coverages  compete on premiums and service, so you may find a plan with more services covered at the same cost. More likely, you'll find that costs vary widely for the same levels of coverage. Some surveys have found that premiums for plans with identical coverages can vary by as much as 100 percent.

More than 33 percent of current Medicare beneficiaries (and an estimated 40 percent of future ones) have found that Medicare Advantage Plans (Part C) combine the advantages of traditional Medicare, Medigap, and Part D coverage.

Most Advantage Plans charge no copayment for seeing your primary care physician and a nominal copay for seeing specialists your PCP refers you to. They also put a cap – usually in the low four figures – on the out-of-pocket expenses you have to pay each year. Like Part D plans, they cover prescription drugs, ranging from zero copayments for common generics to percentages of the cost of many brand-name drugs. 

Because most Advantage Plans are structured as HMOs, you'll pay more for nonemergency medical care that's out of network or specialist care without a referral. But referrals are generally easy to get, and you can check whether your doctor's in the network before you sign up. The downside is, you'll give up some flexibility. But a big upside is that you'll get broader, more coordinated and more proactive health care at a lower cost.

Another upside is that private insurers compete for your premium by throwing in all kinds of extra services – from annual eye exams and prescription glasses, dental cleanings, transportation to and from doctors' offices and hospitals, and Silver Sneakers membership to health clubs, YMCAs and other fitness facilities. Some even have concierge teams that connect you to local services from bill-paying to pet-sitting.

Another downside is that geographical coverage is often limited to one or a few counties per plan. So if you're a snowbird or travel a lot, you might want to look into an Advantage Plan from a national health insurer.

The important principle here is to determine your specific needs and how to fulfill them as cost-effectively as possible. This applies not only to Medicare but to senior care in general. That's why we offer a three-part assessment  to analyze and define your specific needs and develop care plans tailored to meet them. To see what that can do for you, click here to arrange a free 30-minute consultation.