What to Avoid When Picking a Medicare Plan
Choosing the right Medicare plan is crucial for ensuring you have adequate coverage for your medical needs without unnecessary costs. It’s important to understand the potential drawbacks of certain plans so you can avoid costly mistakes. In this article, we review what to avoid when picking a Medicare plan.
1. Limited Coverage with Original Medicare (Parts A and B)
While Original Medicare offers broad access to providers, it lacks several key features that might leave you vulnerable to unexpected costs:
- No coverage for prescription drugs. Original Medicare doesn’t cover prescription medications unless you have supplemental insurance or enroll in a Part D plan. Without prescription drug coverage, you could face expensive out-of-pocket costs for essential medications.
- No out-of-pocket maximum. One of the most significant disadvantages of Original Medicare is that it does not have a cap on out-of-pocket expenses. You will pay deductibles, coinsurance and copayments throughout the year without a limit on how much you could potentially spend.
- Limited coverage for vision, dental and hearing. Original Medicare does not provide coverage for routine vision, dental or hearing care, such as eyeglasses, dentures or hearing aids. These costs can add up quickly, especially for those who need frequent care in these areas.
2. High Premiums and Limited Provider Networks with Medicare Advantage (Part C)
Medicare Advantage, also known as Part C, is a private insurance plan that offers an alternative to Original Medicare. These plans are required to provide at least the same benefits as Part A and Part B, but many also offer additional services such as dental, vision, hearing and wellness programs. However, Medicare Advantage plans can vary widely in terms of cost and coverage.
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Here are a few things to avoid when choosing a Medicare Advantage plan:
- High premiums. Some Medicare Advantage plans have high monthly premiums, especially if they offer additional coverage like dental or vision care. If you opt for a plan with a higher premium, make sure the additional benefits justify the cost.
- Restricted coverage for specialized care. While Medicare Advantage plans typically cover a wide range of services, they may not offer the same flexibility as Original Medicare when it comes to specialized care. For instance, certain treatments, therapies or out-of-state care may not be covered under a Medicare Advantage plan.
- Limited choice of plans. Not all Medicare Advantage plans are available in every area, and some may have limited options for prescription drug coverage. Be sure to check the availability of plans in your area before committing.
3. Inadequate Prescription Drug Coverage (Part D)
Medicare Part D is a prescription drug plan designed to help cover the costs of medications. These plans are offered by private insurance companies, and it’s important to carefully review their formularies (the list of covered drugs) to avoid issues with getting the medications you need.
Here are common pitfalls to avoid when it comes to Part D plans:
- Lack of coverage for certain medications. Not all Part D plans cover the same medications. If you have specific medications that you take regularly, ensure that the plan you choose covers them. Some plans may have a narrow formulary or exclude certain drugs altogether.
- High out-of-pocket costs. Part D plans can have varying premiums, deductibles and co-pays for prescription medications. Be sure to look beyond the monthly premium and assess your total annual drug costs, including co-pays for your medications. High-cost plans may not always be the best choice if you take low-cost or generic medications.
- Coverage gaps. Some Part D plans have a coverage gap, also known as the “donut hole,” which means that after you reach a certain spending threshold, you will be responsible for a higher percentage of your medication costs.
4. Avoiding Medigap Missteps
Medigap, or Medicare Supplement Insurance, helps cover the gaps left by Original Medicare, including deductibles, copayments and coinsurance. However, there are some important things to watch out for when selecting a Medigap policy:
- Not buying Medigap during open enrollment. If you don’t buy Medigap during your initial open enrollment period (the six months after you turn 65 and enroll in Part B), you could face higher premiums or be denied coverage altogether due to pre-existing conditions.
- Overlapping coverage. Medigap policies don’t work with Medicare Advantage plans, so if you have a Medicare Advantage plan, you don’t need Medigap coverage. Be careful not to pay for duplicate coverage, which could lead to unnecessary costs.
What to Look For When Choosing a Medicare Plan
- Affordable premiums and co-pays. Compare premiums, deductibles and out-of-pocket costs to ensure the plan fits your budget. Remember that the cheapest plan isn’t always the best, especially if it comes with high co-pays or limited coverage.
- Provider network. If you have a preferred doctor or hospital, check that the plan you choose includes them in its network. If not, look for a plan with a broader network or consider a plan that offers more flexibility.
- Prescription drug coverage. Ensure that your medications are covered under the plan’s formulary and assess the total cost of prescriptions, including co-pays and the potential for a coverage gap.