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Veterans: we thank you for your service. If you are approaching age 65, or at this age already, you might be wondering about Medicare and how it works with your Veteran’s Affairs (VA) benefits. The good news? You have options for your health insurance. The bad news? Yes, it can be confusing. In this article, we discuss how your VA benefits work with Medicare.
VA Benefits And Medicare
VA benefits and Medicare don’t coordinate. That is, your VA benefits will provide coverage only if you go to a VA hospital or use VA services. Medicare won’t pay.
Conversely, Medicare will provide coverage only if you use non-VA facilities and services. Your VA benefits won’t pay for non-VA services / Medicare services.
It’s pretty simple. The two don’t mix.
Should You Obtain Medicare?
This is the big question that needs answering. We at My Family Life Insurance recommend that you obtain Medicare, even if you have and primarily use your VA benefits. Why? You will have another set of options and flexibility if you enroll in Medicare or a Medicare insurance plan. Instead of going to the VA, you can go to a non-VA facility and receive covered medical services (provided the services are covered by Medicare).
We will get into the different types of Medicare insurance plans in a bit. First, a little about Medicare.
Usually, part A is “free.” It is hospital insurance. We say “free” in quotations because you paid through your Medicare payroll tax while working.
Part B is not. You have to pay. In 2017, the standard rate for Part B is $134. However, the Part B rate is less for those who let Medicare draft the premium from their social security checks. Part B is for outpatient and doctor services.
Together, parts A and B are known as Original Medicare. It has copays, coinsurance, and deductibles. Medicare insurance plans can cover or limit these out-of-pocket expenses. We discuss those types of plans next.
Before we do so, a word to the wise. Sign up for parts A & B when first eligible, or you will face a later enrollment penalty. If you are still working with qualified employer health coverage, you can delay your Part B enrollment date without penalty. We have written about Medicare extensively and Medicare enrollment periods.
Option #1 Medicare Advantage Plans
These plans combine parts A & B (Original Medicare) with a part D prescription drug plan. They usually have other benefits as well such as dental or vision services. Monthly premiums range widely. Some plans a $0 monthly premium while others are high as $180 per month or more!
When you go to McDonald’s or another fast food restaurant, usually you can buy a combo or value meal. Purchasing the value meal is much cheaper than purchasing the items separately. We like to call Medicare Advantage plans as a “combo” plan. As mentioned, your parts A & B are integrated with part D with some extra benefits, usually at a relatively lower monthly premium.
We also identify these plans as “copay” plans as you, generally speaking, will pay a copay every time you use covered services. You will have out-of-pocket expenses, and the limit is $6,700 in 2018. Contrast with Original Medicare, where you have UNLIMITED out-of-pocket costs.
If your Medicare Advantage plan includes a part D prescription drug plan, you will have the option to have drugs filled by non-VA doctors. This option gives you flexibility.
Option #2 Medicare Supplement Plans
These plans are different than Medicare Advantage plans. Let’s go back to McDonald’s or your favorite fast food restaurant of choice. Instead of buying the value meal, you purchase each item within the value meal separately. Notably, your costs are higher versus the value or combo meal.
The main benefit is that these plans will pay for some or all (nearly – depends on your resident state) of your out of pocket costs. They don’t include a part D Medicare prescription drug plan. You would have to buy a separate part D policy. There are many Medicare Supplement plan options available, depending on the state you live in.
What’s the catch, you ask? You usually have to pay a higher premium, usually much higher than a Medicare Advantage plan. However, most or all of your out-of-pocket costs are covered. Is it worth the price? That is up to you. If you obtain most of your care from a VA, then probably not. A $0 or low monthly Medicare Advantage plan should work just fine for flexibility.
However, if you are hundreds of miles away and/or don’t usually get care from the VA, then a Medicare supplement plan (or a Medicare Advantage plan) could be appropriate.
Do I Need Part D Medicare Prescription Drug Coverage?
Medicare part D is the prescription drug coverage. Do you need it? If you get all of your drugs from the VA, then no. Probably not. If you have a Medicare Advantage plan with part D coverage, then it is back up for any prescriptions from non-VA doctors or services.
Just as with the health side, VA drug coverage and Medicare Part D coverage are separate. VA drug benefits are offered through VA pharmacies. Part D prescription drugs are available through a network of pharmacies or mail order.
If you don’t get your drugs through the VA, then yes, you need an appropriate part D Medicare prescription drug plan for your needs.
The good news: VA drug coverage is creditable coverage which means if you switch, you won’t pay a late enrollment penalty.
If You Are A Low Income Veteran
We still recommend signing up for Medicare. If you are low income, you may qualify for extra help from your state’s Medicaid program or your state’s Medicare savings program.
We hope you have a better understanding of how VA benefits work with Medicare. As we always say here at My Family Life Insurance, the right decision is based on your needs. You! Not what your friends, relatives, or neighbors have.
We have helped many veterans navigate Medicare and determine if a Medicare insurance plan is right for them. We understand the Medicare maze and can guide you to the right decision.
If you have any questions, feel free to contact us, comment, or use the form below.