People approaching retirement — or already retired — face some important decisions regarding their health care coverage, including the task of selecting the Medicare plan in which they wish to enroll.
Former NBC Today Show financial editor Jean Chatzky has some major thoughts for Americans on Medicare, particularly about simplifying the complicated nature of the enrollment process.
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As host of the Your Money Map show, Chatzky explained that one good place to start is by understanding some frequently used terms related to the federal Medicare program, including its various parts.
Medicare Part A involves hospital insurance. It covers hospital stays, skilled nursing care, hospice services and some home health care costs. As long as an individual or their spouse paid Medicare taxes during their working years, a premium payment is usually not required for Part A.
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Medical insurance for services such as outpatient care, doctor visits, preventive measures and medical supplies is covered by Medicare Part B. It typically requires a monthly premium.
Medicare Part C, also known as Medicare Advantage, provides alternative plans for Original Medicare’s Part A and Part B that are offered by private insurance companies. Medicare Advantage plans often include coverage for health care costs that are not offered by Original Medicare, such as vision, dental and hearing services.
Prescription drugs are covered by Medicare Part D through private insurance companies that are approved by Medicare. Part D coverage often involves a monthly premium, which can vary in cost depending on the plan chosen, a person’s income and their individual health circumstances.
Chatzky has some strong words to say about Medicare enrollment and the process people confront to participate in it.
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Jean Chatzky offers blunt words on Medicare enrollment
In a Your Money Map episode, Chatzky explained that the Medicare enrollment process is complex and difficult, but also offered some reasons for optimism about the federal program.
“If you’re enrolled in Medicare, or plan to be soon, you know selecting coverage to fit your needs can be enough to make your head spin,” Chatzky wrote. “Complicating matters, as you get older, health care issues — and expenses — become more frequent.”
“Luckily, there are things we can do to manage the maze that is Medicare, as well as better handle health care costs during the second half of life,” she added.
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Chatzky discussed the Medicare parts with Larry Kotlikoff, a Boston University economics professor, and author Phil Moeller, who both provided some key background on important specifics that people should be mindful of when choosing plans.
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Jean Chatzky discusses Original Medicare and Medicare Advantage
Chatzky explained that if a person decides to enroll in Original Medicare (also referred to as traditional Medicare), they will often also need a supplemental policy, which can be costly.
Medicare Advantage can be cheaper, Kotlikoff said, because traditional Medicare only covers up to 80% of outpatient care.
Kotlikoff also warned that Medicare Advantage plans can vary widely in their reliability for good health care coverage — and even in their trustworthiness.
“A subset is engaged in basically scamming the public,” Kotlikoff said. “One has to be really sure that you’ve got a very reputable plan.”
In 2023, Moeller added, there was widespread misleading information spread by some Medicare Advantage plans to the point that the federal Medicare program ordered them to do a better job of policing their marketing activitites.
Chatzky also noted that Medicare for health care coverage in retirement is only a part of the coverage people need to consider. It is also important to purchase long-term care insurance.
But Kotlikoff worries that high inflation rates can make finding a good long-term care plan difficult. If a person has a plan that grows 3% per year, but inflation increases dramatically, the plan can be devalued.
“The policy’s value is wiped out,” Kotlikoff said. “You (can be) left with (very little) having paid for years.”
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