Picking the Right Medicare

As you approach the golden age of 65, your conversation always seems to turn to Medicare. This government health-care program can be confusing, leaving you afraid of not having the information to make an educated decision. When applying for Medicare benefits, decide if traditional Medicare or a Medicare Advantage plan works best for you.

You may feel lost trying to make this important distinction. Most financial advisors understand the basics of Medicare and help you understand the Medicare structure. The expertise often ends there, though, sending you to search the Web for information specific to your situation and questions.

Medicare comes in two main forms:

Traditional Medicare. This encompasses Medicare Part A (hospital coverage and, generally, skilled nursing facility care, nursing home care in some cases, hospice care and home health services) and Part B (medical insurance covering lab tests, surgeries and doctor visits and supplies such as wheelchairs and walkers).

To increase your health coverage, you can purchase a Medicare supplemental insurance policy, also known as Medigap. These provide additional benefits and can reduce out-of-pocket costs by filling in the ‘gaps’  between Parts A and B. These policies are provided by private insurance companies and require additional premium payments.

Because Medigap policies usually exclude prescription drug coverage, you may need to layer on Medicare Part D, which covers prescriptions. That means you might end up managing three different monthly insurance premiums and coverage plans.

Medicare Advantage Plans. These combine Medicare parts A, B and sometimes D, essentially bundling coverage into a single Medicare-approved health plan from a private insurance company. The level of coverage varies depending on the plan; again, you have numerous options.

So which, traditional Medicare or Advantage, is better? That depends on your specific situation.

Health coverage through your employer sometimes acts like a Medigap plan, so usually you don’t need the additional coverage. Otherwise, traditional Medicare with a Medigap plan works great if you have a special health consideration, don’t mind shopping around or are thrifty.

On the other hand, Medicare Advantage plans tend to feel more like the employer health plans you’re used to and are great if you don’t mind paying a little more for the convenience.

The insurance industry helps muddle this since Medigap and Advantage plans differ between states – and sometimes even between counties.

Resources. The Medicare website shows, among other information, plans available in each state. A customized search option lets you filter plans based on the coverage you want, with an estimate of the health-care costs with each specific plan.

While either traditional Medicare or Advantage plans make sense at your enrollment, your circumstances do change; you may need to recalibrate both the plans and your insurance needs in the future. The good news: Open enrollment occurs each year from Oct. 15 to Dec. 7, and we encourage you to shop around at least every three years.

It is easy to feel overwhelmed when trying to understand the options, know the coverage and associated out-of pocket costs, and know when and how to enroll. Check out all resources from both the Medicare program and others (such as Glassman Wealth Services’  Medicare Survival Guide) that help make your options clear.

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Jessica Ness, CFP, was client advisor and director of financial planning at Glassman Wealth Services, a fee-only investment management, financial planning and wealth management firm in McLean, Va.

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