Imagine a once-in-a-lifetime trip. Are you at the beach, in the mountains, or maybe in a faraway country? We spend a lifetime accumulating assets, anticipating the day we retire and take this very trip. But then life throws a curveball in the form of a medical crisis, and these same assets you saved are now being used for medical bills. By having the proper insurance policies in place, financial situations such as this can be significantly reduced. This means having someone to help many retirees navigate and understand how Medicare works and what it covers. At age 65, individuals can go on Original Medicare or Medicare Advantage. Knowing how they both work will allow you to choose the right plan for you.
Doctor and hospital choice
On Original Medicare, you can go to any doctor or hospital that accepts Medicare and can go to a specialist without a referral. With Medicare Advantage, in most cases, you can only see a doctor who is in the plan’s network and services. You also may need a referral to see a specialist.
Cost of Care
With Original Medicare, Part B is your medical insurance that covers 80% of your Medicare-approved expenses. The other 20% is the responsibility of the patient. Many people buy a Medigap plan, also known as a Medicare Supplement policy, to cover this coverage gap. Medicare Part B and the supplement policy have their own monthly premium. You also need a Part D prescription plan to help cover the cost of prescription drugs.
Under Medicare Advantage, you pay the same Part B monthly premium as with Original Medicare, and there can also be the plan’s premium. You also do not need to buy a prescription plan with Medicare Advantage as this is already incorporated into the plan.
Coverage
Original Medicare covers most medically necessary services and supplies in hospitals, doctors’ offices, and other healthcare facilities. Original Medicare doesn’t cover routine physical exams, eye exams, or dental care. However, vision and dental plans can be purchased, and, in most cases, you do not need prior authorization to see a doctor. With Medicare Advantage, plans must cover all medically necessary services that Original Medicare covers. Some plans may use their coverage criteria to determine what is medically necessary. In many cases, prior authorization is needed. Some Medicare Advantage plans also cover essential dental and vision.
Foreign Travel
Original Medicare does not generally cover medical care outside the United States. However, you may be able to purchase a Medicare Supplement policy that covers emergency care outside of the United States. With Medicare Advantage, plans generally do not cover medical care outside the United States. However, some plans may offer an extra benefit covering emergencies and urgently needed services.
As holistic planners, one of the five pillars of financial planning is to know how insurance policies such as Medicare act as a form of asset protection. As the name suggests, asset protection is a way to safeguard the nest egg you have accumulated. If a financial advisor is acting in your best interest, they should address this matter with their clients to ensure they have the proper type and amount of coverage.