How do I Choose? Traditional Medicare v. a Medicare Advantage Plan
The first step in evaluating if you should enroll in Traditional Medicare or a Medicare Advantage plan is knowing there is a DIFFERENCE!
Recently, my father-in-law, Bob, was faced with the decision of choosing a Medicare plan. He was quick to choose: 1) Traditional Medicare 2) a Medicare Supplemental Plan, and 3) a Medicare Part D Prescription Drug plan. This seemed to make the most sense to him, but before he enrolled, we sat down to discuss the different options.
His alternative to this three step process was to enroll in one Medicare Advantage plan, which would replace all three of these plans. Sounds easier, right? That was the opinion of two representatives that Bob called regarding the subject. I received this text from him: “I’m healthy, don’t need Medicare or Supplemental Insurance, just Advantage, it is cheaper.”
Whoa, Bob. Slow down… let’s look at the differences between Traditional Medicare and Medicare Advantage.
The good stuff:
- You have one policy that covers Traditional Medicare, costs that Medicare doesn’t cover, and prescription drugs.
- Premiums can be less expensive.
- You will have co-pays and out of pocket expenses throughout the year, which means bills sent to your home.
The not so good stuff:
- Your doctors and other providers will be limited to just those in the plan’s network. If you decide to go to a provider out of network there may be only partial or NO coverage.
- Networks are tied to your geographic area. If you are on vacation or spend part of the year in a different state, your coverage may be very limited or nothing.
- The plan can change its network each year, which means you may have to change providers in order to have coverage.
- The plan can change the annual limit on out of pocket costs (limited to the federal maximum), which makes it more difficult to predict your health care expenses each year.
- If you have been on a Medicare Advantage plan for more than 12 months, it ISN’T easy to switch back to Traditional Medicare. If you apply for a supplemental policy outside of your Initial or Special Enrollment period (remember that is either the 7 month period surrounding your 65th birthday or within 8 months of losing other group coverage) you are subject to medical underwriting.
The not so good stuff:
- You may need 3 policies (Medicare B, Supplement, and Prescription Drug Plan).
- Your premiums may be higher than an Advantage Plan.
The good stuff:
- Your out of pocket expenses may be lower during the year with little to no co-pays or out-of-pocket expenses.
- You can more easily predict your health care expenses each year.
- You can see any doctor, hospital, or provider that accepts Medicare patients anywhere in the country.
- You are guaranteed coverage as long as you enroll during your initial enrollment or special enrollment period.
As with any type of insurance, if you can tell me exactly when you’ll need care and for how long, I can tell you which type of coverage to have. Unfortunately, I don’t have a crystal ball.
If you plan to be healthy, not see many doctors, and don’t plan to travel, you may want to consider an Advantage plan. Oh, and make sure you remain organized and interested in this stuff throughout retirement so that you can:
- Budget for your maximum out of pocket expenses each year.
- Make sure your network hasn’t changed so that you can continue to see your doctor and have coverage.
- Pay your medical bills.
If you are less sure how much medical care you may need in retirement, but want to be more sure about your health care costs each year, not worry about your providers being in network or having coverage when you travel, and have less medical bills to remember to pay, you may want to consider Traditional Medicare plus a supplement plan.
My father in-law opted for Traditional Medicare and a Supplement. He decided that he’d rather NOT spend his retirement worrying about medical bills and networks and spend more time traveling and enjoying his family. As his family, I appreciate that.
The choice is yours. Now let’s take a look at some long term planning concerns…
Does Medicare Pay for Assisted Living or Memory Care?
A question that we frequently hear at Vesta Senior Network is “Does Medicare pay for assisted living or memory care?” The answer to that question is simply “No, it does not.” It’s important to think about Medicare as our healthcare insurance, similar to the commercial healthcare insurance that may be part of an employee benefits package that we have prior to being Medicare eligible.
Commercial healthcare insurance has a lot of similarities to Medicare in that:
- You will find that there are providers both in and out of network.
- Your deductible may vary from plan to plan.
- Your healthcare insurance covers hospitalizations, procedures, outpatient visits, physical therapy, and perhaps medications.
- Your healthcare insurance doesn’t cover “personal care,” or assistance with your activities of daily living such as bathing, grooming, dressing, or your housing expenses. And that is exactly the services that are provided by an assisted living or memory community. Therefore, Medicare does not cover the cost of assisted living.
What Will Medicare Cover in Assisted Living and Memory Care?
An important thing to understand is that Medicare will continue to cover your hospitalizations, procedures, outpatient visits, physical therapy, and medications, while you live in and are cared for in an assisted living or memory facility. That doesn’t change. Medicare simply will not cover your day to day care needs.
Frequently, assisted living and memory care communities will have primary care physicians and nurse practitioners visit the facility on a regular basis to provide for the residents’ primary care needs. Many places have the service of a podiatrist, dentist, and at times, even an audiologist. In addition, the communities are frequently partnered with therapy companies that will come in to provide physical, occupational, and speech therapy. Also, assisted living and memory care communities will frequently partner with laboratories and mobile x-ray companies so that the residents don’t have to leave for these services, particularly when they are not feeling well or when it’s difficult to get in and out of a car. These services are most often covered under your Medicare benefit, just as they would be if you were still living in your own home, receiving the services there or in a hospital or rehab setting. Assisted living and memory care communities are your home, and Medicare continues to provide coverage as it would have previously.
Article written by Pam Foti, Elder Care Advocate and Co-owner, Vesta Senior Network, and Andrea Bulen, a Certified Financial Planner with Shakespeare Wealth Management, a fee-only financial planning firm in Pewaukee, WI.