Dave Ramsey, the personal finance expert and bestselling author, has shared some candid thoughts on Medicare, offering practical advice to retirees who are enrolling in or already using the federal health care program, the Street reports.
At age 65, all US workers automatically become eligible for Medicare, regardless of when they retire or start collecting Social Security benefits. While the program provides vital health coverage for retirees, Ramsey points out that it can be overwhelming for many due to its complexity.
“Why does this dang Medicare feel so confusing?” Ramsey asks.
He acknowledged that the program’s complicated structure is partly a result of its government origins. He notes that understanding the various parts of Medicare and the different options available is a significant challenge for many retirees.
Ramsey stresses the importance of assessing individual health care needs when considering Medicare coverage. This includes evaluating potential hospital stays, doctor visits, prescription drug needs, and other services such as dental and vision care. Enrollees must also consider costs, including premiums, copayments, and deductibles, which can vary depending on the plans chosen.
Medicare is divided into several parts:
- Medicare Part A covers hospital insurance and does not require a premium for most enrollees who have paid Medicare taxes during their working years. However, it does have deductibles.
- Medicare Part B covers outpatient and preventive care. For 2024, the standard monthly premium for Part B is $174.70, but higher-income retirees may face higher premiums. This amount will rise to $185 in 2025.
- Medicare Part C (also known as Medicare Advantage) is a private health plan that combines the benefits of Part A and Part B and may include additional services like dental, vision, and hearing coverage.
- Medicare Part D covers prescription drug costs.
Ramsey offers straightforward advice for retirees navigating these choices. One of his key points is that Original Medicare, which includes Part A and Part B, does not have an annual out-of-pocket maximum, unlike many employer-based health insurance plans. However, it offers flexibility in terms of doctor and hospital selection, with no referrals typically needed to see specialists. To cover prescription drugs, retirees must add Part D, which usually renews automatically.
For those whose health care needs go beyond what Original Medicare covers, Ramsey explains that supplemental insurance may be necessary to fill gaps.
Ramsey also takes time to discuss Medicare Advantage, which provides a more comprehensive health care plan through private insurers. While Medicare Advantage plans often include prescription drug coverage and additional benefits such as dental and vision care, Ramsey points out that these plans typically have limits on the number of available providers. Enrollees may also face issues if a private insurer denies access to a specialist, requiring retirees to pay out-of-pocket for certain services. Additionally, Medicare Advantage recipients still need to pay the separate premium for Medicare Part B in addition to their Medicare Advantage plan premium.
Ultimately, Ramsey notes that Medicare Advantage may be the best choice for some retirees, particularly those seeking a more all-inclusive plan, but it may not suit everyone. He encourages retirees to carefully compare their options to determine which plan best fits their health care needs.
