Ask any Federal worker in their 60s what they think of regarding their retiree health insurance and they all have the same question: Should I pick up Medicare Part B or not? By retirement they would have talked with work and social friends, trying to pin down the best advice for picking up the part of Medicare that requires a premium. Of course, health insurance is of paramount importance to them and they want to neither, not have enough coverage, nor over insure and pay too much. I have sold Medicare Plans for 16 years and will offer my opinion, but first a quick review.
The 4 Parts of Medicare
Most people approaching retirement age know they will probably have to incorporate Medicare into their healthcare, but what is it? Medicare is meant to be your foundation of health insurance upon retirement. It has 4 parts, but not all of which will apply to each beneficiary. Part A is for hospitalization. This is premium free as it was earned through lifelong payroll takes similar to social security by way of quarterly accrument. Part B is for doctor visits and outpatient procedures and it has a monthly premium. Most people pay $170.10 a month but there is a surcharge for those of higher incomes. Here’s when it gets dicey. Medicare Part C are Medicare Advantage Plans. These are plans sold through private insurance companies that combine medical and prescription drug coverage. These plans are essentially the government outsourcing your Medicare benefits for administration through private companies like BlueCross BlueShield or Aetna. Finally, Part D are prescription drug plans which go hand in hand with a different kind of coverage called Medicare Supplemental, a topic for another day.
That being said, how does the Federal Retiree program work with all this? A Federal retiree has the option of picking up Part B or not, in addition to their standard health plan. If they do pick up Part B their coverage will improve but not by much. Why would they even consider it then? Here’s the thing, if they don’t buy Part B within 8 months of their last day of being an active employee or spouse then they will pay a penalty if they want to pick it up in the future. To add insult to injury, they can only do so between January 1st and March 31st of each year. So, if they have a revelation in June for example, and want to pick it up, they will have to wait until the new year. Still, why the debate? Let’s take a closer look.
Maryland has the third-lowest enrollment of Medicare Advantage plans in the nation. Advantage plans are network-based so beneficiaries should make sure their doctors are covered by the plans. In Maryland the networks are limited and this can be a major deterrent. So far, it seems like the retiree would be better off just staying with Part A and having it coordinated with their Federal plan. Hmm…you may ask. Are there other states that have better plans and networks? The answer is an unequivocal yes!
I, the author, represent a company in New York state during open enrollment. In a word, their plans are phenomenal. They have plans that start at $0 monthly premium which can be upgraded from there. Their networks are HUGE. In 4 seasons of working with this company, I have only had to tell a client a few times that their doctor didn’t participate. But, herein lies the dilemma; to get one of our advantage plans, a client has to be on A and B. Federal retirees who never elected to pick up B call in all the time and want to enroll. The unfortunate part? They most likely cannot. They would have to pick up B, pay a penalty, and wait until it’s effective date (which used to be July 1) to enroll in one of our plans. The frustration abounds and we have then an unsatisfied prospect.
Where does that leave us then as we sort through this quagmire? Again, it is my opinion that in Maryland it is wise to decline Part B but if your state has good advantage plans like the ones I have mentioned, then it is probably a good idea to pick up B and enroll in an Advantage plan. Why? Because your federal plan’s premiums are going to increase and the plans like the ones of the company I represent have additional benefits like hearing, dental, vision, and free gym memberships that you can get for a zero premium. In addition to NY, states like Florida and California have big senior populations and have some excellent advantage plans as well. Finally, use extreme caution when planning, and remember to use a broker who is a fiduciary and will put your needs first to get you the exact coverage you need. Here at JB Medicare and Health, we have been doing that for over 16 years.
Cheers!
Brendan Basmajian
