Health Care Decisions: Traditional Medicare vs Medicare Advantage

One of the first decisions I need to make is health care. 

I must have health insurance. I have health insurance coverage through my employer currently. That will go away after I retire in June. 

I needed to sign up for Medicare Part A (Hospital) when I was within three months before or after I turned 65. Part A pays for inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care. Because I've paid at least 10 years Medicare taxes, I don't have to pay a premium for Part A. Had I not enrolled during the enrollment window (a seven month period around my 65 birthday), I would have a 10% surcharge on the Part A portion of my premium for Original Medicare or Medicare Advantage.

To avoid a tax penalty, I must stop any deposits in my Health Savings Account (HSA) at least 6 months prior to my retirement date. My employer makes a single annual deposit into my HSA in October - that money can be used past my retirement date. 

Because I have health care coverage through my employer, and that policy (with Kaiser-Permanente) covers hospitalization, Part A has been painless for me - no monthly premium. But that coverage will go away when I retire, which will either be June 30 or August 31 2025.

And that presents a choice: Within three months of my retirement date, I must choose either Original Medicare or Medicare Advantage. Both have a monthly premium and deductible costs. 

Original Medicare includes Parts A and B. Part B covers doctor visits, outpatient care, durable medical equipment, and preventive health care. I would pay a monthly premium ($174.70) for Part B. These are for services you likely have through your employer. You must be in the US to have Medicare pay for Part A or Part B services. Part B only covers 80% of outpatient costs.

Original Medicare does not cover: Eye exams (for prescription eyeglasses), long-term care; massage therapy; routine physical exams; hearing aids or their fitting; services from providers opting out of Medicare; and most dental care. People on Original Medicare can get Supplemental plans ("Medigap" plans) to cover services that Parts A and B do not cover.  These include Part D plans which cover the cost of medications. Medigap plans applicable to my age and coverage date are Part G plans (confused yet?) Part G plans will cover Part A and B co-insurance and co-pays; they can cover up to 80% of emergency health care out of the US. But there is no cap on out-of-pocket expenses.

Alternatively, instead of Part D & G, I could get a Part C plan (Medicare Advantage).  Kaiser offers several. For Medicare Advantage, there is a cap on out-of-pocket expenses. They can include vision, dental, and hearing services  

Medicare Advantage plans are offered by private insurance companies, who usually require prior authorization for any service outside their network. Original Medicare is provided by any provider who accepts Medicare. Both plans are funded in part by the federal government  

The New York Times reviewed some of the choices here. They also discuss this meta-analysis by KFF of consumer experience. Most respondents reported high satisfaction with their choice.  Advantage clients had procedures turned down more often, but those denials were approved 83% on appeal. However, very few people appealed denials.  Advantage clients also tend to wait longer for procedures because of the approval process. Providers providing complex care are less available to Advantage clients. Medications are included in most Advantage plans, but companies choose which medications they cover.

You can change plans during open enrollment periods. That’s relatively easy between Advantage plans, but not easy if you go from an advantage plan to Original Medicare - Medigap plans can deny coverage based on pre-existing conditions. 

My takeaway if which plan is better depends a lot on whether you have chronic, high cost conditions. If so, it seems Original Medicare is better. If you don’t have such a condition (yet), perhaps Advantage is better because of the cap on out-of-pocket expenses and availability of dental, vision, and hearing services. But this is gambling with your future.  In other words, your mileage may vary widely. 

First Things First - what is retirement?

So, you're reaching a certain age.  You've realized that maybe your retirement system will allow you to quit work, and maybe survive financially. Or, your partner is retiring and wants you to have freedom to travel when they want. Or, you're just done with it.

I am 69 years old. I've been a school psychologist for the last 45 years. Even before that, I worked doing mental health and education related jobs since I was 15. Most of my social contacts have been school psychologists and other school staff. 

I've reached an age when I can retire at the end of this school year (June 2025), take my full social security and pension amount, and could work and keep income with no penalty on my social security and pension amount.  Working can be on my terms. I can work if I want, on what I want, for whom I want, when I want, without worrying about income (I think). That tentativeness is because there are complications I am still trying to figure out.  My dream is to travel in the fall of each year, work on professional projects in the spring. I know I can't just play video games all day; staying health is going to mean doing things that interest me, connecting with interesting people, and keeping active. 

Thus this blog. I will write about things I learn about and choices I am making. You can come along on this adventure - I am hoping you share your ideas with me as I go.