Last Wednesday I discussed the Medicare Advantage programs, and today we finish with the Part B Supplemental (or Medigap) coverage. By the way, open enrollment began yesterday, and you have until Dec. 7 to apply for a change of plan.
If you have not, I suggest you set up your online account at Medicare.gov. On it, you will see your current coverage and be able to find and compare 2020 plans. The website is somewhat cumbersome to navigate. It will not easily return you to earlier pages, but at least it is easy to log back into it. Note you can choose your health status between excellent, good and poor.
Choose the Medigap Policy Only button to investigate these plans. The one titled Drug Plan + Medigap Policy does not get you to the Part B coverages, only the Part D Drug Plans for some reason.
For my ZIP Code in Independence, there are 11 options listed for those over age 65. These are listed in order of lowest potential premium per month.
Therefore, the Plan F High Deductible is first. It lists a premium range with the insurance companies available in your area. In my case, it is $30 to $93. This is in addition to the $135.50 Part B cost deducted from your Social Security payment (or your bank account if you are not drawing your Social Security yet). There are 17 companies offering this plan in this area.
Plan F High Deductible shows that you are responsible for the first $185 of the year’s doctors’ and ancillary expenses but then have another $2,300 of deductible before the insurance company pays everything else. There is no additional deductible for hospitalization.
The total estimated out-of-pocket costs shown will be a shock. Even though you are only trying to compare hospital, physician and related medical coverage and expense, it lists $1,626 for the required Part B premium (as though you have a choice), $4,054 for drugs, $504 for dental, and another $768 for all other services per year or $6,932 additional.
For those in excellent health, the total out-of-pocket cost is estimated at $4,630, with $7,520 estimated for those in good health, and that for each person in poor health is $14,990 per year. For some reason, the worse your health status, the less you are expected to spend on dental care!
My advice is to examine just the amounts for monthly plan premium, inpatient care, and all other services when trying to make this decision. By that measure, a person in good health is expected to pay only $1,458 per year for his out-of-pocket costs (except drugs). Out of that horrendous $14,990 estimate for a person in poor health, the same cost is only $2,430 per year.
Other plans provide better coverage, but the premiums are higher each month. For example, Plan G is offered by 34 companies for my home area, and premiums range from $123 to $248 per month. You pay the first $185 for Part B expenses per year, but thereafter the insurance company pays the annual hospital (Part A) deductible and every other Part B cost for the 20 percent not paid by Medicare itself.
The software system apparently chooses a mid-point monthly premium of $165.78 instead of the lowest possible, but the estimated out-of-pocket cost as I suggested above is only $2,265 per year for someone in good health. The estimate for one in excellent health is only $2,181 and for poor health is $2,781 per year.
Part D for prescription drugs is truly an ugly camel. You know, it was to be a magnificent horse but it was designed by Congress. If you choose a Part C Advantage Plan, drug coverage is generally included, but is absolutely not included in Part B insurance. For my neighborhood, there are 28 different plans available. The website again does a pretty good job of showing you a range of benefits from less than $20 per month to a high of $89 per month for me.
(Past performance is no guarantee of future results. Advice is general in nature and not intended for specific situations.)
Ron Finke is president of Stewardship Capital in Independence. He is a registered investment adviser. Reach him at email@example.com.