29 May I need to sign up for Medicare. What plans should I choose?

Q. I just turned 64 and will need to sign up for Medicare in October. I’m still working, but I’m extremely confused as to what plan makes the most sense when it comes to Medicare supplement and Advantage plans — what’s the difference? And what happens with all the different parts, from A to B to F to G? It’s very confusing.
— Looking for clarity

A. Happy birthday!

You’re right that it’s confusing.

It does seem like something of an alphabet soup.

Let’s start with a review of the three main components that are provided under basic Medicare:

Part A is hospital insurance.

This covers inpatient care in the hospital, a skilled nursing facility, hospice or home health care, said Claudia Mott, a certified financial planner with Epona Financial Solutions in Basking Ridge.

“There is no premium paid for Part A but there are deductibles of $1,600 for a hospital stay up to 60 days,” she said. “Thereafter there is a coinsurance payment for the next 30 days.”

Part B is medical insurance.

Coverage under Part B includes services from your health care provider, outpatient care, medical equipment such as wheelchairs and walkers and preventive services like shots and annual check-ups, Mott said.

“Each participant contributes to Part B by paying a premium either directly debited from their Social Security or through Medicare,” she said. “For 2023, the base cost per month is $164.90 as long as modified adjusted gross income for an individual is under $97,000.”

The premium is subject to income-related adjustments, also known as IRMAA, when an individual’s income exceeds the threshold, Mott said.

In addition to the monthly premium, there is a deductible of $226 that must be met before Part B expenses will be covered, she said.

Part D is your drug coverage. Prescriptions and many vaccines and shots will be covered under this section of Medicare, Mott said.

“For those with incomes under $97,000, there is no cost for Part D coverage,” she said. “However, there are income-related adjustments which can result in a monthly premium cost.”

While Medicare Parts A, B and D cover many of the expenses for an individual’s health care, most will opt to obtain supplemental insurance policies to fill in the gaps and deductibles that exist, she said.

That’s where it starts to get more complicated.

Let’s start with Part C, also called Medicare Advantage plans.

These plans are considered an alternative to basic Medicare and are appealing because of their low monthly premiums, Mott said.

Additionally, she said, these plans may offer vision, hearing and dental benefits which are not included under regular Medicare.

“However, there are typically restrictions in terms of the providers that can be used and approvals may be needed for certain drugs and services,” she said. “Think of this plan as an HMO where there is a network of doctors and facilities that an individual is required to use in order for a claim to be covered.”

According to the Kaiser Family Foundation, 48% of those on Medicare used a Medicare Advantage Plan in 2022.

Then there are Medigap plans.

“For those who wish wider choices in their health care services, a supplemental insurance plan for both medical insurance and prescriptions will need to be selected,” she said. “Medigap plans are standardized nationwide, although premiums can vary by location.”

Each lettered plan — A, D, C, D, F, G, K, L, M, N — provides different coverages for items like the Part B deductible, coinsurance/copayments, foreign travel, skilled nursing coverage and more, she said.

Plans F, G and N are the most frequently used plans according to Forbes as they cover the broadest number of expenses at 100% and foreign travel emergencies up to 80%, Mott said. https://www.forbes.com/health/medicare/best-medicare-supplement-providers/

“There are a myriad of providers of prescription drug plans for Medicare enrollees,” she said. “In many cases, plans can be priced and evaluated based on the prescriptions that an individual uses regularly to determine which provides the best value.”

Medicare.gov has many resources that can help assist with the decision-making process including the ability to speak with a representative. The SHIP program (State Health Insurance Assistance Program) is another resource. The number is (800) 792-8820.

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This story was originally published on May 29, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.