But Which Medicare Strategy Is Best?

Part of what keeps many high-income clients from transitioning off the group plan is the fact that Medicare can be complicated. Contrary to popular opinion, you don’t just “go on Medicare.” There are actually 18 different Medicare strategies available to eligible Americans. These include Medicare A, Medicare B, Medicare Part D, Medicare Advantage, Medicare supplement plans, employer retirement plans and combinations thereof.

The best strategy for your client will depend of their unique circumstances. But in many cases, the best Medicare strategy for a high-income professional like our attorney is one that lowers their deductible, offers a wider network and costs thousands less than staying on the firm’s group plan.

Not to mention, when Medicare-eligible employees transition off the group plan, it can also reduce the rate of premium increases for the rest of the employee group due to reduced liability.

But the devil is in the details, right? Here is how an attorney can save thousands per year by switching to Medicare.

Let’s say your client earns $400,000 per year in MAGI, currently has coverage through his group plan and is Medicare-eligible. For the sake of simplicity, he has no dependents. The client spends about $3,000 per year on health-care services including tests and prescriptions.

The group plan has a $2,000 in-network deductible and monthly premiums of $1,500. If he stays on the group plan, your client will spend about $20,000 on health care annually—assuming he says in-network and hits his deductible.

The Options

His first option is “traditional” Medicare. This is the combination of Medicare Parts A ($0) and B ($428.60 per month), plus Medicare Supplement F ($130 per month) and Medicare Part D for prescriptions ($100 per month).

This translates to about $8,000 per year, or annual savings of $12,000, and the client can see any doctor who accepts Medicare—which is basically all of them. This means less worry about in-network versus out-of-network costs. If he wants to go to MD Anderson for cancer treatment, he can.

The next option is Medicare Advantage. These plans are operated by private carriers as regulated by the federal government. These typically cost less than Medicare supplements and often include prescription coverage and other benefits like dental and vision, but the trade-off is that these plans often have cost-sharing copays and network considerations.