Prescription drugs are a big part of the medical expense in this country. Perhaps that is why Medicare chose to cover them under a different program - called Part D. By transferring the drug costs risk to third party insurance companies, Medicare limited its out-of-pocket Medicare costs and passed them on to these insurance companies and to Medicare recipients. To minimize your costs, you need to understand Part D and how it affects your out-of-pocket maximums.
Many people who are just turning 65 don't take expensive drugs and don't really need a drug plan. "The essential to budget travel is to approach in advance. When it occurs to family trips, globetrotting, well-deserved trips and/or going to see new destinations we have never been before, the reality of cost and budgeting is generally in the back of our minds. Considering and spending our travel budget carefully is a consideration for most families. Curbing spending and costs, while still delighting your vacation to its fullest, is the key to assured achievements and fiscal responsibility. Your pocketbook and family will thank you! The reasoning regarding saving money while travelling is simple: Even if your personal finances is highly small, you can still take a break and enjoy life! Simply put, life is just too short to never step out of the door or departing the homestead! Also keeping in mind that while traveling, regardless of whether on a funds or not, even the smallest of things can all add op to a huge vacation or travel expenses!..". But, the Medicare program requires them to purchase (or have) one, whether they need it or not. If you don't purchase a drug plan when you turn 65, and need one at a later date, you'll have pay a higher premium for it for the rest of your life. Is it really worth taking the risk and paying more the rest of your life, if you do need a drug plan?
So, what if you could minimize your out-of-pocket medical costs and get a qualifying drug plan without paying for it? Wouldn't that be cool? Why wouldn't you do that?
There are basically three ways to supplement basic Medicare and limit your out of pocket medical costs
- Basic Medicare (Part A and B) with a supplemental drug plan. Your out-of-pocket costs is potentially unlimited. Traditional Medicare usually pays 80% of most Medicare covered expense but you are on the hook for the other 20% (for an unlimited amount). With a drug plan, you can limit your out-of-pocket costs for drugs (only) to whatever the law allows. In 2011, the out-of-pocket maximum is $4,550. You still have an unlimited out-of-pocket costs for the 20% not covered by Medicare. The cost of a minimal drug plan is about $20 a month or $240 a year.
- Basic Medicare (Part A and B) with a Medigap policy (supplement) and a Drug Plan (Part D). A new Medicare beneficiary (age 65) can get a comprehensive supplement (Plan F) for about $130 a month and a minimal drug plan for $20 a month, so we'll estimate the cost of this program at $150 a month. So, the total annual cost of this program is about $1800 a year and with this expense, you can limit your out of pocket exposure to the out of pocket exposure for drugs only (currently $4,550).
- The third choice is a Medicare Advantage plan that includes drugs (MAPD). These plans cost about $0 - $40 a month but have separate out-of-pocket maximums for Drugs and non-drug expenses. The drug out-of-pocket maximum is regulated by law and is currently $4,550. The other out of pocket maximums are currently $3400 - $5900 in my state. So, for cost of $0 - $480 a month, you can limit your out of pocket exposure to $7950 - $10,450.
When you put the numbers to it, it's easy to see why Medicare Advantage plans are so popular. In the worst case scenario, you could wind up spending several thousand dollars a year more with an Advantage plan than with a supplement and a drug plan. But, you don't have the "known" cost of the supplement and the drug plan. And, if you never get really sick, you save the cost of all these premiums.
If you have traditional Medicare or a supplement, then you can visit any doctor or facility that accepts Medicare. With an advantage plan, you have to follow the plan rules, which may limit your choices to providers/pharmacies in your area or network. There may not be Medicare Advantage plans in your area that will meet your needs if you travel outside the area for extended periods of times, or if you take very expensive drugs.
Medicare supplements can be purchased by anyone at age 65, without underwriting. It's called guaranteed issue. If you already have medical issues at age 65 or worry about having them in the future, then the ability to purchase a comprehensive Medicare plan at age 65, without underwriting, is truly a great opportunity. A plan F supplement will cover almost everything that Medicare doesn't cover (except non-Medicare covered expenses, such as drugs).
So what's more important to you - cost or choice and convenience? If you have the money for a supplement and drug plan, is it worth spending it to save a few thousand dollars in the event of a major medical expense? Or, would you just as soon keep your money and take your chances?
The choice is yours - but if you need to get a drug plan or make a change to your drug plan, you have to do it during Open Enrollment (Oct 15 - Dec 7). If you want to switch to a Medicare Advantage plan or change Medicare Advantage plans, you have to do it during this time as well. If you want to get a supplement or make a change to a supplement, you can do that at any time. Remember, supplements provide more choices, better convenience and less risk. Advantage plans provide fewer choices, less convenience and more risk.
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