Medicare

Q&A: Tapping into a Health Savings Account while on Medicare

February 18, 2025 By Liz Weston

Dear Liz: I’m on Medicare but I also have a health savings account with a fair market value of over $9,000. Am I able to spend this on prescriptions, eye care, etc.? I hate to waste this money. My wife passed away and it’s been sitting there for a while.

Answer: You can’t contribute to an HSA once you’re on Medicare, but you can certainly spend the money you’ve accumulated.

As mentioned in previous columns, HSAs offer a triple tax break in that contributions are deductible, the account grows tax-deferred and withdrawals are tax-free for qualifying medical expenses. Those expenses can include dental and vision costs as well as Medicare premiums.

If anyone other than a spouse inherits the account, the HSA becomes taxable so you’ll definitely want to spend that money while you can.

Q&A: Benefits of Medicare Advantage HMOs

February 10, 2025 By Liz Weston

Dear Liz: You mentioned that Medicare Advantage Plans have networks that can change from year to year, as well as other disadvantages. This is not true for our Medicare Advantage HMO, according to my experience. The HMO has its own doctors and hospitals, but I have not noticed them pulling any surprises. And they do look after your health much better than the traditional Medicare that some of my friends are on. My friends’ care is entirely in their own hands, and some are getting very old and would benefit from the care that my HMO provides.

Answer: You’ve highlighted one of the key advantages of a Medicare Advantage HMO, which is coordinated care.

There are two main types of Medicare Advantage plans, the all-in-one private insurance alternative to original Medicare. With PPOs — preferred provider organizations — people are generally allowed to see medical providers outside their networks, although those visits will cost more. With HMOs — health maintenance organizations — you’re expected to stay in the network for most care, and you often need a referral to see a specialist. You could pay up to 100% of the cost if you use a doctor or hospital not in the HMO.

In exchange for those restrictions, people get a primary care provider who coordinates all of their care. That’s in contrast to PPOs or original Medicare, where a patient may have many providers who never talk to each other.

Q&A: Medicare Advantage to Original Medicare

January 27, 2025 By Liz Weston

Dear Liz: I just read your answer about switching from Medicare Advantage plans to original Medicare, and how you might not be able to get an insurer to write you a supplemental Medigap plan. I was with a Medicare Advantage plan for years and then my medical group stopped participating. I have many preexisting conditions and would not be able to find adequate or affordable coverage if I had to apply for a supplemental plan. Luckily another insurer gave automatic acceptance to the 32,000 of us who were thrown out of our medical group so I was able to get full coverage through a Medicare supplement.

I hope you will repeat this info in several columns so consumers are better informed. I had no idea you couldn’t easily switch back and forth.

Answer: To recap, Medicare Advantage is the private insurance alternative to original Medicare. Like other private coverage, Medicare Advantage plans have networks and benefits that can change from year to year. Original Medicare benefits typically don’t change, but many expenses aren’t covered so you generally need a private insurance supplement to pay for those costs.

If you want to switch from Medicare Advantage to original Medicare after the first year, however, you normally don’t have “guaranteed issue” rights for a Medigap supplemental policy and you could pay a lot more for this important additional coverage.

There is a “nuclear option” that would give you guaranteed-issue rights again, and that’s moving out of your Medicare Advantage plan’s coverage area. You have to actually move, not just temporarily relocate. But you would be able to switch to original Medicare and get a guaranteed-issue supplemental plan.

Q&A: Be aware of these issues when switching between Medicare Advantage and Medicare

January 7, 2025 By Liz Weston

Dear Liz: I am planning to retire this year. If I choose a Medicare Advantage Plan, am I able to switch back to original Medicare without paying a fine?

Answer: Medicare won’t charge you extra, but you won’t necessarily have “guaranteed issue” rights for a Medigap supplemental policy. If you want to switch after the first 12 months, you could pay a lot more for this important supplemental coverage.

To recap, Medicare Advantage plans are the all-in-one alternative to original Medicare.

Medicare Advantage plans may offer types of coverage that original Medicare does not, such as hearing, dental or eye care. Many people like the fact that their Advantage plans seem to include more than original Medicare, and do so for a low or even no additional monthly premium.

But Medicare Advantage plans are offered by private insurers, which typically have networks of medical providers. These networks, as well as other benefits, can change from year to year. If you get care outside the networks, you typically pay more — sometimes a lot more. The rap on Medicare Advantage plans is that they can be great when you’re healthy, but depending on the plan may not be so great if you get sick.

With original Medicare, benefits remain the same and you can use any provider that accepts Medicare (the vast majority do). But original Medicare coverage has significant gaps, which is why you’ll need a Medigap plan offered by a private insurer.

If you opt for original Medicare when you are first eligible, insurers are required to issue you a Medigap policy and can’t charge you more based on your health status. Without guaranteed issue, an insurer can refuse to write you a Medigap policy or charge you a lot more.

You also have guaranteed issue rights if you buy a Medicare Advantage plan when you first become eligible for Medicare, but decide within 12 months to switch to original Medicare.

Q&A: Medicare Part D Premiums: Balancing Costs and Coverage in 2025

December 23, 2024 By Liz Weston

Dear Liz: I would like to comment on your response to the letter about the high cost of Medicare Part D prescription drug coverage. You correctly noted the $2,000 cap on covered drug costs, starting next year. However, there is no cap on the cost of the monthly premiums. My cost for the Part D monthly premium went up about 25% for the 2025 year. So, although my annual out-of-pocket expense for my prescription drugs will be less in 2025, my total costs including premiums will be higher when compared to 2024.

Answer: The original writer implied that Medicare’s prescription drug coverage is always expensive, when in reality people’s costs vary depending on the drugs they take and the coverage offered by the private insurers they choose.

Monthly premiums for Part D range from $0 to more than $100, according to KFF, the nonprofit health research firm. The average premium for a stand-alone Part D plan is projected to decrease from $41.63 in 2024 to $40 next year, according to the Centers for Medicare & Medicaid Services.

As noted in a previous column, insurers are constantly changing their “formularies” of the drugs they cover. That’s why it’s important to shop each year during Medicare’s open enrollment to make sure you’re getting the best deal.

Q&A: Why Shopping for the Right Medicare Plan Matters

December 2, 2024 By Liz Weston

Dear Liz: In the past, you’ve discussed the pros and cons of Medicare Advantage plans versus original Medicare. There is one more point I think you need to tell readers, and that is the high cost of Part D prescription drug coverage for people who choose original Medicare. For example, if you need just a few expensive drugs that are Tier 3 or higher, coupled with the monthly premium, you can easily pay $3,000 a year or more. I am not saying original Medicare is bad. On the contrary, it gives you great freedom of health choice. However, Part D is expensive.

Answer: Let’s start with the news that in 2025, Medicare Part D will have a $2,000 out-of-pocket maximum. The cap applies to Part D plans purchased by people on original Medicare as well as to Medicare Advantage plans that have prescription drug coverage. Once you hit the limit, you won’t have to pay more for covered drugs for the rest of the year.

Note the phrase “covered drugs.” Prescription drug coverage is provided by private insurers, and their lists of covered prescriptions can change every year. An insurance plan that covers a drug this year may not cover it next year, so every year during Medicare’s open enrollment — which ends Dec. 7 — you should be shopping to make sure your plan provides the coverage you need. If you don’t comparison-shop during the annual open enrollment period, you can wind up paying substantially more than you expected.

As background, Medicare Advantage plans are provided by private insurers as an alternative to original Medicare. Whereas original Medicare allows you to choose any doctor who accepts Medicare — and the vast majority do — Medicare Advantage has provider networks and may not cover care outside those networks, or may charge more. Also, Medicare Advantage networks and benefits can change from year to year.

Fortunately, Medicare offers a comparison tool to help you sort through your options. Entering the drugs you take and your preferred pharmacy can help you select the best plan for your circumstances. Now’s the time to compare and switch plans if necessary.