2012-07-26 / General Stories

About To Turn 65? Which Way Do You Want Your Medicare Coverage?

Every day, another 10,000 baby boomers turn 65. Most know they’ll be qualifying for Medicare, but many don’t realize they’ll have two ways to get their new health care coverage. So here’s a brief primer for all those busy boomers who are fast approaching Medicare age but haven’t had time yet to focus on the decisions they’ll soon be making about their health care.

One decision will be whether to join the traditional fee-for-service program run by the federal government or sign up for a Medicare Advantage health plan sold by a private insurer.

About three in four beneficiaries opt for Original Medicare, which has existed since the 1960s. With this kind of coverage, you can go to any doctor, hospital or other provider that accepts Medicare patients.

Medicare pays the doctor or hospital a fee for the service you receive. That fee generally covers 80 percent of the Medicareapproved amount for the care, after you meet your annual deductible.

You have a few choices for covering the other 20 percent:

* You may use your retiree health plan from your former employer.

* You may qualify for Medicaid, if you have limited income and savings.

* If neither of those two options applies, you may buy a “Medigap” policy from a private insurer to cover deductibles and co-insurance costs. There are 10 kinds of Medigap plans, with different benefits, so you’ll have to decide which best fits your needs.

Though Original Medicare’s Parts A and B cover most of your hospital and doctor bills, you’ll also want to think about adding the Medicare drug benefit by enrolling in a Part D plan from a private insurer. Even if you don’t take a lot of prescriptions, it’s still smart to consider the coverage when you first become eligible for Medicare. Otherwise, you may have to pay a late enrollment penalty later.

Original Medicare remains the favorite among people who want the broadest possible access to medical providers. When coupled with a supplemental plan, it makes health care costs relatively predictable.

Still, one in four beneficiaries now prefers to receive care through a private health plan. Instead of choosing Medicare’s traditional fee-for-service program, you can buy a Medicare Advantage plan.

With Medicare Advantage, insurance companies contract with the government to provide care. The private insurers set their own premiums, deductibles and co-payments for their clients. The health plans may offer cost advantages over Original Medicare and some added benefits, but, depending on the particular plan, they may also restrict your choice of hospitals and doctors.

Many Medicare Advantage plans charge a premium on top of your Part B monthly premium, but, unlike with Original Medicare, there’s no need for you to buy supplemental “Medigap” insurance.

As for drug coverage, you’ll generally need to get it through your Advantage plan. Most plans, in fact, include prescription drugs with their other benefits and charge a single premium.

Medicare Advantage enrollment has grown by 10 percent in 2012 and exceeds 13 million nationwide, or 27 percent of Medicare beneficiaries. In Texas, it has increased 20 percent and totals 710,244, or 22 percent of beneficiaries.

So what’s the better choice: Original Medicare or Medicare Advantage? There’s no single correct answer. It depends on your individual circumstances and preferences. A good way to familiarize yourself with your options is to visit www.medicare.gov and browse through the “Medicare and You” handbook. It provides an excellent overview of the Medicare program.

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