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3 Ways to Lower Your Medicare Healthcare Costs and Risk
As we retire, there are two things we all want: to save money and be healthy to spend it. However, as we age, we need more medical attention and costs are continuously rising. So, here are three ways you can save money and lower your financial risk without compromising your benefits.
FREE Money
My dad used to tell me, “Son (he called me son because I was so bright), there’s nothing in life that’s free.” Good advice and true. So, when I say FREE money, there’s always an exchange. The key is to add the costs and savings, and see which serves you best.
Part-B Premium Credits
Many Medicare Advantage plans have Part-B premium credits. In other words, they credit a portion of your $148.50 monthly Part-B premium back into your social security check. The way it works is, the plan provides a credit (let’s say $100). Medicare sees this credit and only deducts the difference from your social security check. In this example, Medicare would only deduct $48.50, leaving the $100 in your check.
If you aren’t receiving Social Security yet, then you would see your Part-B premium bill be reduced by $100. Either way, you are saving $1,200 for the year.
Now, there may copays in the plan that are higher than a plan without the credit. For example, a PCP visit may be $0 copay in a plan without the credit, and be $10 or $20 with the credit. A specialist may be $0 to $20 without the credit; but it may be $20 to $35 with the credit. In this case, you need to crunch some numbers to see if it’s a better deal.
Let’s say you go to your primary care provider twice a year, and to a specialist four times a year, on average. If we take the higher copayments, they add up to $20 X 2 = $40. Plus, $35 X 4 = $140. The grand total is $180 in copays. That leaves a savings of $1,020.
Over-the-Counter (OTC) Allowance
Everyone buys self-care items from their favorite store (Walgreens, CVS, Walmart, etc.). We may buy:
- Toothpaste and toothbrushes
- Mouthwash
- Shampoo, conditioner and soap
- Theraflu, NyQuil or other treatment
- Tylenol, ibuprofen or aspirin
- Bandages, Bengay and bandage wraps
- Vitamins
- Etc.
Depending on your needs, you may spend $20 to $100 per month. This is money coming our of your bank account for these purchases. But what if you could get these items and have them delivered to your home, at no cost to you up to a certain limit? That would leave that money in your bank account for other needs like food, gasoline or entertainment. Many Medicare Advantage plans offer OTC allowances that vary from $20 to $100 per month.
Let’s assume you had a plan that offered an OTC allowance of $30 per month. That would equal $360 in savings annually.
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Lowering Your Financial Risk
With the two previous examples, you’ve saved $1,560 for the year ($130 per month). But even if your Part-B premium was only $50 or you had none at all, just the OTC allowance of $30, this next tip is something you want to consider strongly.
Unless you are on a Medicare Savings Program (Medicaid), your plan probably has an in-patient hospital daily copay for the first X number of days. For example, it may be $200 for the first five days. In this case, if you were hospitalized for five days, you would need to pay a $1,000 copay. This applies to each benefit period (read more on benefits periods, what they are and how they work, here). Plus, there are typically non-medical expenses like:
- Travel for your spouse or family
- Eating out
…for example. Then there may be an ambulance copay of $200 to $300, depending on your plan. You can avoid these costs with a hospital indemnity insurance policy.
Hospital Indemnity Insurance
Hospital indemnity insurance is an inexpensive way of ensuring you have no surprises when you have an illness that will affect your finances. A hospital indemnity plan pays you a set amount for a set number of days you choose, per day you are hospitalized. For example, if you chose you wanted $300 per day for five days, it would pay you $1,500 (if you were hospitalized for five days) directly to you to use as you wish. If your copay is $1,000, it leaves you with $500 to handle the extra spending that always accompanies a hospital stay.
Plus, if you need to pay again, because it’s a new benefit period or you were hospitalized for a different condition, the plan will pay you again. It’s not limited to just one instance, as long as you continue to pay your premium.
Plan premiums vary; however, they are reasonable and offer a lot of value. Remember, insurance is affordable because you don’t currently need it. But when you DO, it’s too late to get. When you consider your OTC allowance savings, you could put that money toward a policy and have peace of mind.
Also, keep in mind that many people choose not to go to the hospital in an emergency for fear of the cost. They wait until the fear of life or the pain is stronger than the fear of cost. Sadly, for many, this comes with consequences. But, with a hospital indemnity plan, you need not second guess whether you should go, because you have that added protection.
Therefore, take a look at your Medicare Advantage plan. See where you are realizing some savings. Then reinvest a portion of those savings and lower your financial risk while increasing your peace of mind. After all, peace of mind has its own benefits on your health.
