The Big Three: A Simplified Overview of Medicare Planning

After leaping over financial hurdles throughout your adult life, you finally reach retirement. But retirement isn’t always the finish line. In fact, it can be a whole new race with its own set of obstacles.

Among the biggest challenges faced by seniors are health care expenses and understanding how to navigate Medicare enrollment and their Medicare coverage.

Medicare benefits certainly aren’t free, and they can come with a number of out-of-pocket costs. As with most challenges related to finances, a little bit of planning can go a long way.

The “big three” things to consider are:

  1. The costs
  2. How to make those costs more predictable
  3. How to reduce those costs

Let’s conduct an overview of Medicare planning using these “big three” considerations, which could potentially help you save money on your health care, create more predictable spending and put you in position to maximize the value of your Medicare coverage.

Know Your Costs

One thing every Medicare beneficiary may want to consider is learning about some of the baseline costs of Medicare.

Most people receive Medicare Part A (hospital insurance) without having to pay a premium. When you use Part A benefits, you may be subject to Medicare deductibles and coinsurance that can add up fast.

In fact, the 2018 Part A deductible for inpatient hospital care is $1,340 per benefit period. You could be subject to more than one benefit period within a calendar year. Also, if you’re forced to stay in a hospital for more than 90 days, you could have to pay coinsurance payments of up to $670 per day in 2018.

You’re required pay a premium for Medicare Part B coverage (medical insurance). The standard Medicare Part B premium in 2018 is $134 per month.

Part B also has a $183 annual deductible in 2018. After you meet this deductible, you are typically required to pay a 20 percent coinsurance of the Medicare-approved amount for most doctor services, outpatient therapy and certain medical equipment.

If you choose to enroll in a Medicare Part C plan (also called Medicare Advantage) or a Medicare Part D plan (Medicare prescription drug coverage), you typically will also be required to pay a premium for your plan. Some of these plans may also include deductibles and coinsurance or copayments.

First thing’s first: Know the costs. Don’t make the mistake of assuming that everything is cheap and affordable with Medicare, because the care you receive could come with higher out-of-pocket costs than you may anticipate.

Know How to Make Your Costs More Predictable

The unpredictable nature of potential health care costs can be daunting to many. A bill may feel more affordable when it’s clearly foreseen and you have ample time to prepare for it. A bill for a similar amount can be devastating, however, when it crops up out of nowhere and you aren’t financially prepared.

One way to help cover some of your out-of-pocket Medicare costs is to enroll in a Medicare Supplement Insurance plan, also called Medigap. A Medigap plan can help provide coverage for a number of Medicare deductibles, coinsurance and other costs, which can help make your health care spending more predictable.

For example, consider that every time you use your Part B coverage after reaching your annual Part B deductible, you will be on the hook for 20 percent of the bill for Medicare-approved services. How often will you use your Part B coverage in a given year? How much will those coinsurance bills be?

Predicting your health care costs can be incredibly tricky.

Now let’s say you have a Medigap plan that covers the Part B coinsurance. In this case, you would pay a monthly premium for your Medigap plan, but you don’t have to pay the Part B coinsurance, no matter how many times you use Part B coverage.

Having this type of coverage can help make your Part B costs more predictable and easier to budget for.

Know How to Reduce Your Costs

Once you’re familiar with the some of the out-of-pocket costs of Medicare and how to better prepare for them, you can look for additional ways to whittle away at some of your other health care costs.

A few ways you can help lower your Medicare costs include:

  • Stay in network and see providers who accept Medicare
    If you have Original Medicare (Medicare Part A and Part B), try to only see health care providers who accept Medicare assignment. This means that the provider agrees to only charge you the Medicare-approved cost for their services as payment in full.If you have a Medicare Advantage plan or a Medicare Part D plan, staying within the plan’s network for care can help save you bundles in many cases, depending on your plan.
  • Be proactive
    Medicare covers a wide range of preventive health benefits such as tests, screenings and vaccinations. Many of these services are covered in full. Being proactive about your health now can help lower your health care costs in the future, and it can help keep you healthier and happier.
  • Enroll in a Medicare Advantage plan
    Many privately-offered Medicare Advantage plans may offer a number of additional benefits not covered by Original Medicare, such as dental, vision, hearing, prescription drug coverage and memberships to gyms and wellness programs.Some Medicare Advantage plans offer $0 premiums, though you still need to pay your Medicare Part B premium. $0 premium plans aren’t available in all locations.
  • Shop around
    Original Medicare costs are standardized by the federal government. Medicare Advantage plans, Part D plans and Medigap plans are sold by private insurance companies, which means a lower rate is sometimes only a phone call away.

Conquer these big three cost considerations, and you can have a head start in making your Medicare coverage more affordable.