Medicare’s annual enrollment period starts on October 15. If you are currently enrolled in Medicare, this is a good time to take a fresh look at your Medicare election. For those of you who are not yet 65, now is a good time to begin learning about how Medicare works.
Medicare is divided into four parts. The most common are Part A (hospitalization insurance), Part B (medical services insurance), and Part D (prescription drug insurance.) Part C, otherwise known as Medicare Advantage, is less well-known, but is finally starting to come of age.
Parts A and B are often referred to as original Medicare. Original Medicare pays for doctor visits and hospital stays and for a limited number of other services like physical therapy, lab tests, and some preventative health care services. In addition, people often have separate Medicare Part D coverage to help pay for prescription drugs.
Medicare Parts A and B are provided by the federal government. Part D is provided by private insurance companies.
Part A coverage is usually provided without a premium while the monthly premium for Part B is $134 (unless your income exceeds certain thresholds). Part D coverage usually costs somewhere between $20 and $45 per month, depending on the provider and your policy features.
A significant problem with original Medicare is that it has no out-of-pocket maximum to protect you against a catastrophic event. If you want to limit your exposure, you must purchase a supplemental plan from a private insurance company. This is also known as Medigap insurance.
In contrast to original Medicare, you can instead choose to be covered by a Medicare Advantage plan. These plans are offered by private companies and take the place of Medicare Parts A, B, D and supplemental insurance. For a small monthly payment above your Part B premium, your medical care will be provided by a local network operating under contract with Medicare.
What happens if you have a medical emergency while traveling to visit family? No worries. As with original Medicare, Medicare Advantage plans provide nationwide coverage for urgent or emergency care. You will be covered on the same terms as if you were receiving treatment from your home network. International travel is not covered by Medicare or Medicare Advantage, so in either case you need to protect yourself with travel insurance.
The only Medicare Advantage plan offered in Monterey County is the not-for-profit Aspire Health Plan. Its network includes all four Monterey County Hospitals (including CHOMP and Salinas Valley Memorial) and more than 600 doctors and other service providers. In addition to all the services provided by original Medicare, and depending on the plan, Aspire also provides vision, dental, hearing and chiropractic care.
Aspire Health Plan has a menu of offerings to appeal to a wide range of customers and budgets. The basic plan is available for a monthly premium of $35.50 (on top of the standard Part B premium), roughly what you would spend for a monthly Part D premium. However, for that amount you get prescription drug coverage and maximum out-of-pocket protection.
As you consider your various Medicare options, it is important that you find the plan that best fits your needs. It is worth taking time to shop the various providers. As you do, don’t overlook the Medicare Advantage plan.
Steven C. MerrellMBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey. He welcomes questions that you may have concerning investments, taxes, retirement, or estate planning. Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA93940 or email them to firstname.lastname@example.org.