A Refresher on Medicare Plans for 2024

Open enrollment is here, so as I offer every year, here is my latest recap that goes over the different Medicare Part/Plan options and their costs:

Part A Hospital Insurance: 

There is no premium to people (and usually their spouses) who’ve paid into Medicare for 40 quarters, and you would have automatically enrolled upon turning 65. If you’ve put in less than 40 quarters, you can buy into the program. For 2024, there is a $1,632 “benefit period” deductible for a hospital stay (an increase of $32 from 2023), which is often misinterpreted to mean annual. A period begins the day that you enter a hospital. Once you are discharged from the hospital and do not receive care for a continuous 60 day period, the period officially ends. If another health event occurs, you’ll be responsible for another $1,632 deductible. There is also a daily co-insurance when remaining in the hospital beyond 60 days ($408/day through day 90).  You also receive 60 lifetime reserve days (they seem to love the number 60). These are capped at $816/day during periods of hospitalization. 

Skilled care has a separate co-pay system. Days 1-20 are covered, 21-100 bills $204/day to the patient, anything beyond 100 will be fully charged to the patient. For reference, private pay skilled care at a long-term care community is around $500/day depending on the room and location.

Part B Medical Insurance:

There are three levels of cost with this plan: annual deductible ($240), co-insurance (~20%) and monthly premium (starting at $174.70). The monthly premium is sometimes forgotten by seniors as it’s typically deducted from your Social Security. However, if you’re a recent retiree holding off on social security you’ll be paying this amount directly. The premium can vary for a few reasons:

• You pay an ongoing penalty for not enrolling during your seven-month window when turning age 65.
• You may qualify for assistance, thereby lowering your premium.
• Your tax return reports MAGI higher than $97,000 (single filer) or $194,000 (married filing jointly), causing you to pay a higher premium as shown in the 2024 IRMAA chart below *click to expand.* Being aware of these limits may allow you to better plan throughout the year to stay under these thresholds if possible 

Medigap and Plan 1 Supplements (optional): 

A supplement attempts to fill in the gaps and extend coverage beyond Part A and B plans. If you’re not sure what I mean by gaps, consider the revolving Part A $1,632 deductible as an example. With a Plan 1 supplement, you’ll receive nationwide coverage and won’t have the concern of being “in-network.” The cost among insurers for Plan 1 varies despite the fact that all providers are offering the same coverage as required by law. That said, you may encounter alternatives to the Plan 1, such as Core or Plan 1a supplements with a more attractive price tag. Core has large gaps in coverage that likely dwarf any savings. Plan 1a, is usually something in between Core and Full Coverage, such as requiring a small deductible and co-insurance for certain services. An example of this can be seen when comparing Blue Cross Blue Shield Medex Bronze, Sapphire, and Core options for 2024. The Bronze option is a true Plan 1 supplement where you pay a single monthly premium and no co-pays, co-insurance or deductibles related to Part A or Part B coverage. This makes accounting for healthcare within a fixed budget far more predictable.

 https://www.medicare.gov/health-drug-plans/medigap/basics/compare-plan-benefits/massachusetts

Part D Prescription Insurance (optional – sort of): 

Plans now average to about $55 a month, may include co-pays, and have a deductible of no more than $545 for 2024. The deductible usually only comes into play if you’re using brand name medication. For people that aren’t able to use generics, the “donut hole” has been an issue, however, as of 2020 this coverage gap has been addressed differently. In 2024, once you reach $5,030 in prescription costs, the patient is then responsible for 25% of the ongoing costs until they reach $8,000 of out-of-pocket expenses. You’re responsible for 25% for both brand name and generic prescriptions, but what’s included toward your out-of-pocket is calculated differently for each. For brand names, manufacturers pick up the tab for 70% of the cost, and that amount goes toward your out-of-pocket cost. For generics, just what you pay is counted. At that time catastrophic coverage kicks in. Catastrophic coverage means you’ve met the plan’s out-of-pocket limit for covered drugs so you’ll no longer be responsible for covering prescription costs for the remainder of the year.

Other things to consider are late enrollment penalties and income-related increases to premium, both similar to what’s done with Part B coverage. What’s very important to keep in mind is that covered prescriptions and co-pays may alter within the plan year-to-year. It’s critical to evaluate each year whether your plan is still the best option. Click HERE to learn about enrollment agents that can help.

New for Medicare Part D plans are options that comprehensively cover diabetic patients. This directly addresses concerns about insulin becoming overly expensive. These plans cost no more than $35/month. Also new are free vaccines. While many were already covered (like the flu), more have been added to the list (like Shingles). 

Advantage Plans (optional): 

An Advantage Plan is a private insurance that takes the place of everything described above; however, you’ll still pay the Part B premium separately. Some people enjoy the convenience of working with just one insurance provider, especially since the prescription plan is included. It resembles an HMO or PPO, meaning you’ll want to ensure your preferred doctors are in-network and remember that you may need referrals to see specialists. The monthly premiums are likely less than the Plan 1 Supplement, but you’ll also be responsible for co-pays and possibly co-insurance, which potentially makes this the more expensive option if you have a health event.

So what are the financial implications for an average person enrolled in the Plan 1 supplement that utilizes generic prescriptions?

Part A: $0

Part B: $2,096.40 ($174.70/mo premium)

Plan 1 Supplement: $2,880 (assuming a $240/mo premium)

Part D: $900 (assuming $55/mo premium and $20/mo generic co-pays)

Total: $5,876/year or $490/month