Five ways to get the most from Medicare

The traditional fee-for-service program remains the gold standard–it allows you to see any healthcare provider who accepts Medicare. But coverage is chosen from an a la carte menu of insurance choices (Part B, Part D prescription drug coverage, and a Medigap supplemental plan, which caps out-of-pocket costs and supplements Medicare’s basic coverage).

Advantage is a managed care option that rolls the parts of Medicare into an all-in-one option. Enrollees often save some money with Advantage–many plans carry no additional prescription drug premium, and Medigap plans are not used by Advantage enrollees. The trade-off: you are limited to using the providers in the network assembled by the plan provider.

Medicare enrollees can shift between the options during the annual fall enrollment period. But if you’re inclined to use the traditional program, you probably will want to add a Medigap policy, which covers deductibles, coinsurance, and copayments not paid by Parts A and B, and is available only to enrollees in the traditional program.

There are major advantages to buying a Medigap plan during the initial enrollment period. During this time, the private insurance companies that sell Medigap cannot turn you down or charge higher premiums due to your health status.

“When you first enroll, that may be your only shot at buying Medigap at the best price,” says Schwarz. “If you enroll outside that protected period of time, insurance companies can create a personalized premium just for you based on your health status, or they can decline to write a policy for you at all.”

Medicare Advantage is rising in popularity, but think carefully about the network restrictions before you choose this route.

Advantage enrollees can review lists of in-network providers before opting into a plan. However, a recent study by the Kaiser Family Foundation found that provider data often is very difficult to review, can be out of date, and frequently contains inaccurate information. Kaiser’s review also found shortcomings in the quality of providers in some Medicare Advantage provider networks. One out of every five plans did not include a regional academic medical center–institutions which usually offer the highest quality care and top specialists.

“The network adequacy issue is huge,” says Moeller. “If you are considering an Advantage plan, make sure that you will be satisfied with the providers and quality of care.”

He adds that retirees who travel frequently, or who split their time between more than one location, may want to think twice about choosing Advantage.

“There usually are geographic restrictions on coverage, although some have started to include portability features,” he says.

4. Beware High Income Surcharges

High-income seniors pay stiff premium surcharges for Part B and Part D. The surcharges are paid by individuals with modified adjusted gross income of more than $85,000 in annual income and joint filers above $170,000. This year, the monthly surcharge amounts start at $53.50 and top out at $294.60.

The Social Security Administration determines if you must pay the premium surcharge, using your most recent tax return. Eligibility is determined using a definition of modified adjusted gross income that includes the total of your adjusted gross income and tax-exempt interest income. If your modified adjusted gross income is higher than the income threshold in any given year, you’ll get a letter from the SSA indicating your premium.

Exemptions are granted for “life-changing events,” and Moeller notes that retirement qualifies under that definition.

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