You have been working for years with your current employer. You have always had wonderful coverage through that employer’s Group Insurance. However, you are nearing your 65th birthday and the world is telling you to go sign up for Medicare. Is that really the right decision? Is a Medicare health plan better for you than your current Group Insurance? Did you know you were not required to leave your Group Insurance and go on a Medicare health plan?
A common misconception regarding Medicare is that you are required to sign up for Medicare when you are eligible for it. Reality is Medicare is not a requirement. Medicare is a benefit you are entitled to typically at the age of 65. Many people choose to take Medicare to gain coverage they either did not have prior to turning 65 or to save money as compared to their current coverage. No one is forcing anyone to have Medicare. In fact, if your current Group Insurance is deemed creditable coverage you can delay your enrollment into Medicare and avoid penalties for enrolling in Medicare late.
Is the decision to not enroll into a Medicare health plan and keep your current Group Insurance the right decision for you? IT DEPENDS. This is a common answer I give many of my clients. There is not a one size fits all or even most when it comes to Medicare. There are many different insurance companies and health plans to select from. In addition to that, Group Insurance comes in all shapes and sizes. So, what does this decision depend on?
Over the years I have been able to narrow this answer down to 3 categories: Premiums, Out-of-Pocket Costs, and Network/Benefits. While there are certainly other factors that go into making the decision as to leave your Group Insurance for Medicare or to stay put, these 3 factors tend to be the ones that guide us to our answer best.
How much does your Group Insurance cost you each month? We know that Medicare will cost individuals a minimum of $148.50 per month. If you were to sign up for a Prescription Drug Plan, a Medicare Advantage health plan, or a Medicare Supplement (Medigap) plan there can be additional costs depending on the plan selected. This monthly premium sets the stage for projecting your costs each year under each option.
In addition to the premium, you pay every month, most health plans have additional costs for using the plan. Things such as deductibles, copays, coinsurances, maximum out of pocket cost, and prescription coverage can add up very quickly. We have been trained to look at insurance coverage on a monthly cost basis. This is wrong! To compare Group Insurance to a Medicare health plan, we need to focus on annual cost projections. For example, if your Group Insurance has a small monthly premium but the deductible is large, by the end of the year you could be spending much more than a Medicare health plan would have cost you. If your Group Insurance premium is expensive monthly, but you have little to no out-of-pocket cost with your prescriptions, it may be worth keeping if the alternative option with Medicare will triple your annual cost due to the drug pricing.
Network and Benefits, unlike premiums and out-of-pocket costs, can not be measured just with cost. To many people ease of using their plan, access to certain doctors, along with extra built-in benefits such as fitness memberships and dental benefits hold significant value. For example, if a Medicare health plan costs more than your projected Group Insurance monthly premium, but the Medicare health plan offers broader access, less restrictions, and additional benefits you are looking for, a Medicare health plan may be a better fit.
Without breaking down your past costs, calculating your future projected costs, and comparing your current Group Insurance to Medicare health plans available to you, there is no way to determine which route is better. Many of our clients have transitioned from Group Insurance to a Medicare health plan because it was the right fit for them. Some of those individuals did not come on board with us right when they gained eligibility, while others transitioned as soon as their Medicare eligibility was available. It all depends on your current coverage and the Medicare health plan options available in your area.
The best thing you can do is sit down with one of our trusted advisors for a FREE plan evaluation and consultation. Together we can paint a picture of your options to assist you in finding the right health plan coverage path to take.
Sometimes fear of the unknown, fear of change, and comfort with the coverage you know, creates hesitation to shop your options. Insurance companies, whether private or associated with a group, are banking on your fear to make changes. Can you afford to not evaluate your options for health plans? Is a Medicare health plan a better fit for you? IT DEPENDS!
There is not a one size fits all answer. There are many factors to consider when evaluating your options for coverage. Let us help provide you that clarity.