Farrell: The Medicare coverage puzzle means homework

Q: Could you explore how we can best use our limited fixed income when it comes to purchasing health care options? My wife and I are going to be eligible for Medicare in one year.

Doug

A: I’m glad you’re starting your research early. Parts of the universal health insurance program for Americans 65 and over — covering some 50 million — are reasonably straightforward. But some aspects of the program have become increasingly complicated.

The main components of Medicare include premium-free Part A, which pays for hospital services. Part B covers the costs of physician services, such as doctor visits and outpatient procedures. Part B comes with a monthly premium, adjusted to some degree for income.

Medicare Part D is the prescription drug benefit provided by private companies. It’s trickier to navigate, and premiums vary by coverage. One choice is Medicare Advantage, a managed-care option offered by private insurers. You must be in Part A and Part B to enroll in Medicare Advantage and the premium is affected by the extent of coverage.

The government’s Medicare website — www.medicare.gov — offers a number of online resources, from finding programs offered in your area to the annual book “Medicare and You.’’ You can get it at www.mymedi care.gov. The Medicare Rights Center at www.medicarerights.org is helpful, including a free interactive online reference tool for navigating health insurance. The Minnesota Board on Aging offers its Senior LinkAge line at www.mnaging.org/Advisor/SLL.

Among the questions you’ll want to research is whether you, your wife or both of you will work past age 65 and, if so, will you keep your employer-sponsored health coverage? Does it make sense for you and your wife to choose different plans, depending on your individual needs? On the cash-flow front, you have the greatest flexibility to tailor the cost of the program with Part D and Medigap insurance, as well as Medicare Advantage.

Speaking of Medigap insurance, since Medicare Parts A and B come with various deductibles and copays, most people turn to supplemental Medicare insurance to help meet those costs. You’ll want to be ready to act on your Medigap decision since you have six months after you’re enrolled in Medicare to buy a Medigap policy regardless of health. After that, insurers can turn you down.

“You’ll want to do the math,” says Dr. ­Robert Kane, professor of health policy management at the University of Minnesota. “You don’t want to overinsure.”

Kane rightly emphasizes that questions about Medicare really are part of the much bigger task of thinking through health care needs in your elder years. For example, Medicare doesn’t cover the cost of long-term care. I would investigate long-term care insurance. Despite the steep annual cost of long-term care policies and a relatively small number of insurance companies writing these policies, it’s well worth researching the option. How will you meet out-of-pocket expenses not covered by Medicare and Medigap insurance, such as vision and dental care? Most older Americans would like to age in their home. Is your home easy to navigate when eyesight is failing and knees are creaking?

Also, you aren’t locked into one plan and one choice forever. You have the option of changing plans annually.

Chris Farrell is economics editor for “Marketplace Money.” His e-mail is cfarrell@mpr.org.

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