People often ask us why they would need additional coverage if they are getting Medicare from the government. This is a question that we as agents try to answer for the people with whom we help.
Medicare is an insurance program that comes from the federal government. However, there are two major holes in the coverage of Original Medicare (Parts A and B).
Original Medicare does not cover any prescription drugs that you would fill at your local pharmacy. However, if you do not pick up drug coverage when you are first eligible for Medicare Part B, there is a penalty for not having coverage. This forces you to either buy a stand alone Medicare Part D prescription drug plan or enroll in a Medicare Advantage plan that includes Part D prescription drug coverage. If you do not pick up drug coverage and are assessed a penalty, then you will pay a higher premium for the rest of your life. Don’t get stuck with a penalty when you could have picked up coverage for no additional cost if you would have enrolled in one of the many Medicare Advantage plans in the area.
The second hole in Original Medicare is that Medicare leaves people responsible for 20%. Medicare only reduces your risk to 20%. Medicare does not cap your risk. This is the only major type of insurance that I know of that leaves you with open end- ed risk. Insurance is supposed to cover risk, and Medicare only reduces your risk. Twenty percent of large numbers are large numbers. A hip replacement can cost in the $80,000 range. Twenty per- cent of $80,000 is $16,000. Don’t be left out in the cold by only having Original Medicare or you could end up owing large medical bills.
The great thing about Medicare and turning 65 is that you only have two choices for coverage. It may seem like more due to the mail and advertisements that you will receive as you get ready to turn 65. You can either choose to go with a Medicare Supplement Plan, also known as Medigap, or you can choose to go with a Medicare Advantage plan. We will go into why you would choose one plan over another. You must make sure that if you go with a Medicare Supplement that you also choose a Medicare Prescription Drug plan, also known as Part D. If you choose a Medicare Advantage you must make sure that it includes drug coverage because there are some that only cover medical.
Original Medicare is just a starting point. I would recommend that everyone add a supplement or an advantage plan to their coverage so you reduce risk and make sure that you have drug coverage, even if you don’t feel that you need drug coverage at this point.