There’s no getting around it.
You’re going to spend money with a Medicare plan, even after covering your monthly premium. By 2030, Medicare enrollees are expected to spend 50 percent of their Social Security income on health care, a Kaiser Family Foundation study predicts.
But there’s good news: Medicare has made it easier to compare out-of-pocket costs between plans, and it offers direct aid for curbing out-of-pocket expenses. Even more savings are available to seniors who shop around for the most affordable Medicare supplement plan on the market.
Before you start shopping, it’s important to know factors affecting cost: Where you live (This is the reason you enter your ZIP code in out-of-pocket estimator tool above), prescriptions and services you need and how often you need them.
For example: If you’re healthy, a high-deductible, Medicare Plan F might be your best option.
“This plan offers the same benefits as a standard plan, but its monthly premiums are significantly lower,” says Ruth Linden, Ph.D. and founder and president of Tree of Life Health Advocates in San Francisco.
The catch: You’ll pay all costs for Medicare-covered services until you reach your annual deductible.
“But few people actually reach their deductible, because they will pay out of pocket for only 20 percent of their Medicare-allowable charges,” she notes.
Below are seven simple steps to getting what you need with minimal out-of-pocket spending:
1. ‘You better shop around.’
Even if you love your plan, know that every plan can change premiums, deductibles and its list of covered drugs and tiers from year to year.
“Make sure you are on the best plan based on the drugs you are taking, not based only on the monthly premium,” says Keith Murray, an independent agent working in the Medicare market for the past 22 years.
If you are on original Medicare with a stand-alone drug plan, shop for drug coverage every year during the annual enrollment, Murray says.
2. Stick with 90-day supplies
“If you get a 30-day supply, you’ll have a co-pay for each prescription that is filled every month,” says Murray. “When you get a 90-day supply, you will only pay the equivalent of two months’ co-pay.”
Thus, he says, if your 30-day supply has a $30 co-pay, a 90-day supply will cost you $60.
3. Take another look at your income
If their adjusted gross income is above $170,000, a married couple filing jointly will pay $53.50 per month extra — $642 per year — in Medicare Part B premiums.
“If they can get below the threshold, however, they can save that $642 for the year,” says Mike Piershale, president of Barrington, Ill.-based Piershale Financial Group.
Above certain income thresholds, premiums for Medicare Part B and Medicare Part D go up, but adjusting gross income could remedy that. This can be done by sheltering income in IRAs or annuities, buying growth stocks that pay less income or eliminating tax on required minimum distributions by taking them as a qualified charitable donation, Piershale says.
4. Think outside the numbers
Don’t jump into a Medicare Part C Advantage plan just because the benefits have a lower cost than original Medicare (Medicare Part A and Part B), Piershale warns.
“Be sure you can live with the fact that Medicare Part C plans require you to only see in-network doctors, and you also need a referral before you can go see a specialist,” he says.
5. Condense labs into one day when possible.
Most Medicare Advantage plans charge a co-pay of about $30 per lab, says underwriting specialist Eric Kossian of Washington-based InsurePro.
“However, if you do all your lab work in the same day, most Medicare Advantage carriers will only make you pay one co-pay,” he advises.
6. Consider your regular meds
Medicare Advantage plans, while they usually do include prescription drugs, typically only have one drug to choose from.
“Consequently, if you’re on a lot of prescription drugs, you may actually save hundreds of dollars a month with a standalone drug plan in combination with a Medicare Supplement plan,” says Kossian. “Under that scenario, you’ll have about 20 different drug plans to choose from.”
7. Stay up-to-date with a few clicks
Sign up for Medicare program updates and tips through its e-mail update list. These can provide timely and useful advice and reminders.
Jason Hargraves is managing editor for insuranceQuotes.com.
