In retirement, the wild card is health care. Nothing can wreck the best of plans like an expensive illness. While those 65 and over can take advantage of Medicare, there are a myriad of myths and misunderstandings about Medicare that can prove costly.
Here’s a look at the myths and the truth.
Don’t expect a freebie. In a survey last year by PlanPrescriber.com, 20 percent of Baby Boomers who responded thought Medicare is free and 14 percent didn’t know. Medicare is not free. There are costs. Most people pay a premium for Part B; prescription drug coverage costs extra, and if you want dental or vision coverage, you’ll need a Medicare Advantage plan that offers enhanced coverage for these needs, says Ross Blair, president of PlanPrescriber.com. Original Medicare does not cover all out of pocket costs for services and medical expenses. For example, once the $162 Part B deductible for 2012 is met, beneficiaries must pay coinsurance ranging from 20-45 percent for certain medical services. To cover additional out of pocket costs not covered by original Medicare, seniors should look at Medicare Advantage plan or a Medicare Supplement plan.
There are rules. Don’t assume you can enroll in a Medicare Supplement plan at any time. Rules vary by state, but as a general matter, someone is guaranteed access to Medicare Supplement (Medi-gap) insurance when they are first eligible for Medicare Part B and for six months after that. Following that time horizon, carriers are usually allowed to ask health questions and to turn down someone’s request for Medigap coverage. So don’t assume that because you are applying for a Medicare Supplement plan that you are guaranteed to receive it. Make sure you apply for coverage during the Medicare Supplement eligibility period.
Know the rules. You can’t get an endless supply of drugs. There are “cost utilization measures,” which means there are drug limitations. In some cases, a health plan that offers prescription drug coverage may place limits on the cases in which certain medications are covered. Therefore, while you may assume your drug is covered, it may only be covered after prior authorization, step therapy (where your doctor must first try other, alternative medications to see if they work), or in certain doses and quantities (for example, only 10 milligrams per month of Lipitor, but not 100). Look for comparison tools that allow you to view drug limitations for Medicare Part D plans by specific region, such as that found on PlanPrescriber.com.
Things change. Check your Medicare Part D Prescription Drug Plan and Medicare Advantage plan each year, because insurers may change drug formularies each year, warns Blair. “Not only do you want to make sure you enroll in a Part D plan that covers your medications, but you may find that new Part D plans are available with lower cost sharing, premiums and or deductions,” he says. Stay abreast of changes. Go to the source, www.medicare.gov for the best information.
Switch to generics. When available, generic equivalents can save money. Through the end of 2011 into 2012, a number of brand name drugs, such as Lipitor and Plavix are expected to come off patent. Check for each brand name drug you use to see if there is a generic equivalent. If so, speak to your doctor about switching to the generic and see if you can save money in the process.
Pick the right plan. One size does not fit all. Selecting the Medicare Advantage plan that best matches your prescription drug utilization is huge. However, there are other factors that you should count too. For example, pay attention to deductibles, co-pays, co-insurance out-of-pocket limits and physician networks, when comparing networks side-by-side. Most Medicare prescription drug plans have sizeable pharmacy networks available, but there are others that leave much to be desired. Before you select a plan, make sure the plan has a participating pharmacy that meets your needs, whether that is: convenience of location, preference of pharmacist or the best prices.
Medicare is not a magic pill, but if you know how to play the game, it can be a lifesaver for controlling costs in your retirement years.