Take look at your Medicare coverage

Steve Merrell |

Once again Medicare open enrollment season has arrived. Between October 15 and December 7, you have the opportunity to make changes to your Medicare coverage.

If you are 65 or older, Medicare is probably an important part of your financial picture. However, if you are new to Medicare you may be surprised by Medicare’s complexity and the gaps in the coverage it provides. There is a lot to learn and I encourage you to do your research. The following summary will help get you started, but the official Medicare website, Medicare.gov, is also a valuable resource. From the homepage, click on the link labeled “Preview 2021 Health & Drug Plans” to compare the various options available to you.

Medicare coverage is available in two general forms: Original Medicare and Medicare Advantage. Original Medicare is what most people think of when they refer to Medicare. It’s a bit like your dad’s old Buick—solid and trustworthy, but not the most user-friendly vehicle.

Medicare Advantage is something completely different. It combines the basic coverage of original Medicare with a prescription drug benefit and a Medigap policy. As a result, you pay a monthly premium in addition to your standard Part B premium, but the combination is simpler to use than original Medicare.

Original Medicare is divided into two parts. Part A covers inpatient hospital care and very limited care in a skilled nursing facility. It also covers some hospice and home health care services. There is no premium charged for Part A, but you will pay a deductible ($1,408 in 2020) and coinsurance for hospital stays longer than 60 days (starting at $352 per day in 2020).

Part B covers doctor visits, outpatient care and other medically necessary services like ambulance services, clinical research and durable medical equipment. In 2020, the base premium for Part B was $144.60 per month for individuals with incomes below $87,000 and couples with income below $174,000.

In addition, Part B charges a deductible and coinsurance. In 2020, the deductible was $198. After meeting the deductible, you are responsible to pay for 20 percent of the approved Medicare rate for a given treatment or procedure, including those your doctor performs while you are in the hospital.

In a catastrophic scenario, there is no limit to the amount you can owe under Original Medicare. Consequently, many people purchase a supplemental policy, also known as Medigap insurance. Medigap insurance is issued by private companies, but the policies are standardized by law to comply with Medicare requirements. You can also buy optional Medicare Part D coverage to help cover the cost of prescription drugs.

If you find this confusing, you are not alone which is why Medicare Advantage plans have become so popular in recent years. Except for hospice care, Medicare Advantage plans are required by law to provide at least everything that is covered by Original Medicare. Even for those covered by a Medicare Advantage plan, hospice care continues to be covered by Original Medicare Part A.

The sole provider of Medicare Advantage plans in Monterey County is the Aspire Health Plan. Its network includes all four Monterey County Hospitals (including CHOMP and Salinas Valley Memorial) and more than 700 doctors and other service providers. In addition to all the services provided by original Medicare, Aspire plans also cover chiropractic care, acupuncture, wellness centers, health coaches, and even transportation.

Aspire Health Plan offers three different plans targeting a range of customers and budgets. The most basic plan, Aspire Health Value will be available in 2021 for a monthly premium of $52 (on top of the standard Part B premium), up from $32 in 2020. The plan’s maximum out-of-pocket is also increasing in 2021 to $7,550 from $6,700 in 2020. The costs of other Aspire options are also increasing in 2021. You can compare the costs and benefits of all three plans at the Aspire website, www.AspireHealthPlan.org.

Despite the cost increases, the Aspire Medicare Advantage plans are hard to beat in terms of services, breadth of coverage and cost. Deciding which Medicare option is right for you is a very personal decision. If you are interested in learning more, you might want to register for one of their free webinars.  You can sign up at the Aspire website.



Steven C. Merrell  MBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., an independent wealth management firm in Monterey.   He welcomes questions you may have concerning investments, taxes, retirement, or estate planning.  Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA  93940 or email them to smerrell@montereypw.com.