Medicare/Medicare Advantage/Medicaid-How do you decide?

One of the milestones of reaching retirement age, and particularly reaching the age of 65, is the realization that you finally have reached the age where you qualify for Medicare to cover your healthcare needs. It can be a pretty exciting time. I remember being able to save over $700 a month in insurance premiums because I qualified for Medicare.

Let me spend a little time explaining the difference between Medicare, Medicare Advantage, and Medicaid. Understanding the differences in these plans is very important.

MEDICARE - Visit here for Medicare info

Medicare is a U.S. federal government health insurance program that subsidizes healthcare services. The plan covers people over age 65, younger people who meet specific eligibility criteria, and individuals with certain diseases. Medicare is divided into different plans that cover a variety of healthcare situations—some of which come at a cost to the insured person. While this allows the program to offer consumers more choice in terms of costs and coverage, it also introduces complexity for those seeking to sign up.

For many years Medicare was the only choice that you had and it did a great job covering most, but not all, of your medical needs. It only covers 80% of your expenses, which can leave a huge hole (gap) if you aren't prepared with a supplement to go along with Medicare. Supplements are an additional insurance plan that covers the gap between what Medicare covers and what you would be responsible to pay for. Supplements can be quite expensive plans, but they are something that most people feel are necessary. The good news is, most of your insurance needs will be taken care of if you choose Medicare and buy an additional supplement. MEDICARE ADVANTAGE - Visit here for Medicare Advantage info

Medicare Advantage Plans are a type of Medicare health plan offered by a private company (currently mine is United Health Care) that contracts with Medicare to provide all your Part A and Part B benefits. Most Medicare Advantage Plans also offer prescription drug coverage. Your Medicare services aren't paid for by Original Medicare.

This plan does not include a supplement option. There may be a small monthly cost or there may not be. I chose this option and the first couple of years, I paid $10 a month and then they came out with a ‘no cost option’, and now I pay $0 per month for the coverage.

The biggest difference in the two plans are the out of pocket expenses. With Medicare Advantage, you will pay pretty much each time you see a doctor. And specialists will cost more. I pay $10 for a visit to my general practioner, and $40 per specialist. Depending on your health needs, the amount of times you see a doctor during the year, and medications you need to take, will all be important factors to pay attention to when deciding which to choose, Medicare or Medicare Advantage. When I signed up for Medicare Advantage, I was fairly healthy, had money available for doctor visits, and had money put aside for more expensive healthcare needs.

MEDICAID-Visit here for Medicaid.gov

Medicaid provides health coverage to 7.2 million low-income seniors who are also enrolled in Medicare. Medicare enrollees who have limited income and resources may get help paying for their premiums and out-of-pocket medical expenses from Medicaid (e.g. MSPs, QMBs, SLBs, and QIs). Medicaid also covers additional services beyond those provided under Medicare, including nursing facility care beyond the 100-day limit or skilled nursing facility care that Medicare covers, prescription drugs, eyeglasses, and hearing aids. Services covered by both programs are first paid by Medicare with Medicaid filling in the difference up to the state's payment limit.

Regardless of the plan that you choose or qualify for, you should see a reduction to your healthcare costs. This is a major decision in your later years, and understanding your choices before you have to make them will pay off in the long run for you and your family.