Tufto: How to make smooth transition from employer’s health plan to Medicare
Dan Tufto
Posted
By Dan Tufto | Humana
More than four million Americans will turn 65 this year, more than ever before. Whether this milestone means retirement or not, these individuals need to make important choices about their health care.
For many Arizona residents, the transition from an employer-sponsored health insurance plan to Medicare may feel overwhelming. New Medicare beneficiaries will need to do some research to understand the options and decide what meets their personal needs. While employer-sponsored health insurance typically includes medical coverage, prescription drug coverage and preventive care, and may also include dental and vision coverage, this is not always the case with Medicare.
What are the Medicare plan options?
The main decision is between Original Medicare, which is federally managed, or Medicare Advantage, plans administered by private insurance companies that have contracts with the federal government. They both cover the same Part A (hospital insurance) and Part B (medical insurance) services, but Medicare Advantage plans typically include additional coverage and services.
Original Medicare includes Parts A and B. If a beneficiary wants coverage beyond hospital and medical services — like for prescription drugs (Part D) or dental and vision care –— separate insurance coverage is needed. Since Original Medicare only covers about 80% of an individual’s health care costs, many people choose a Medicare Supplement (Medigap) plan to help with out-of-pocket expenses, like copayments, coinsurance and deductibles.
Medicare Advantage plans, similar to employer-sponsored insurance, can provide all-in-one coverage, often including dental, vision, hearing and prescription drug benefits, and may also include additional health and well-being benefits. Medicare Advantage plans also have maximum out-of-pocket costs, making expenses more predictable. The Centers for Medicare and Medicaid Services (CMS) annually rate Medicare Advantage plans to help beneficiaries evaluate the quality of the plans available.
What costs should be considered?
Similar to comparing out-of-pocket costs when choosing among different employer-sponsored options, consider premiums, copayments/coinsurance, deductibles and prescription drug costs when deciding on a Medicare plan. Original Medicare’s premium costs are standardized and set by CMS. In 2024, the Part B premium is $174.70, but it may be higher depending on income.
Premiums for Medigap and Medicare Advantage plans vary plan to plan. There is still a Part B premium with these plans, although some Medicare Advantage plans offer reimbursements for part of that cost.
What are the provider options?
Where Original Medicare coverage includes any provider accepting Medicare patients, Medicare Advantage plans have networks. Just as many employers offer both HMO and PPO plans, Medicare Advantage plans are also offered as HMOs and PPOs. HMOs tend to have lower costs but only allow beneficiaries to use in-network providers, where PPOs may have higher out-of-pocket costs, they provide flexibility to receive care outside of the network.
What if I am not retiring at 65?
Many people choose to work past 65, maintaining coverage under their employer’s group plan. For those who have paid into Medicare via payroll deductions, I recommend enrolling in Medicare Part A when eligible, if there is no premium to pay. Individuals who have health insurance from their current employer may be able to delay Part B enrollment (and its monthly premium) and avoid a late-enrollment penalty.
If you are turning 65 this year, now is the time to learn about your Medicare plan options. For more information, visit Medicare.gov or seek out a licensed sales agent for assistance.
