I am often asked about the health insurance coverage offered by the State Teachers Retirement System (STRS) of Ohio and whether a retired teacher should stay on the STRS coverage once they turn 65 and go on Medicare. I will be assuming here that the retiree had 30+ years of service with STRS.
As with all situations there is never a hard fast rule for everyone, but in most cases for the employee it is what I call a “no brainer.” The current premium in Ohio for the employee is $81/month. The plan offered by STRS is the Aetna Medicare Plan (PPO) which is a group Medicare Advantage Plan. The plan has a $500 deductible and a $1500 annual out of pocket maximum (which includes the deductible). More importantly, the prescription drug plan does not have the infamous donut hole like Medicare Part D has. So if you are a retired teacher, be very wary of “advisors” recommending you leave STRS to go on a Medicare Advantage plan on your own. If you have already made this mistake, don’t worry because you may be able to get back on your STRS plan. Just give them a call to find out what to do. You may have to wait until the Annual Enrollment Period (AEP) before you can get out of your current plan.
For the spouse of a retired teacher the story is much different. The current premium for the spouse is $290/month for the same Aetna Medicare Plan (PPO). On the surface it may seem like the answer is cut and dry, but not so quick. There is no doubt that you can get much better medical coverage for a much lower premium. But like I tell all of my clients, premium doesn’t tell the whole story. We can’t forget about the prescription drug coverage. Like I said above, you have to deal with the donut hole when you leave STRS and go with the Medicare Drug Plan. So whether it makes sense to leave STRS and go out on your own will depend on your medications. This is where you would be wise to contact a professional who can analyze the costs for you. Here are two clients I have worked with in the past, with two very different outcomes:
This gentleman was in good health and only on three generic medications. We were able to put him on a Medicare Supplement Plan G for $106/month and a Part D prescription drug plan for $25/month for a total of $131/month. He wasn’t even close to having to worry about his donut hole. With Plan G his annual out of pocket maximum on medical expenses is $140. So for this gentleman he saved $159/month and now has much better medical coverage.
This lady was in fair health but had a very long list of medications including several brand name meds. We could have put her on the same Plan G for $106/month and given her better medical coverage, but the real story was her medications. With her meds she was going to go WAY into her donut hole. This seriously raised her cost. The premium for her drug plan was only $25/month, but because of the donut hole her total cost was going to average $333/month. This combined with his $106 for Plan G made it a total monthly cost of $439/month, which would be $149/month more than she was currently paying. We obviously told her to stay on STRS.
As you can see, you can’t just look at premiums when you are making a decision on the best plan for you. Looking at the two examples above, the premium was the same for both clients, $131/month. But the expenses were VERY different. So before you make a decision you may regret contact a professional (not a salesperson) who can help.
If you know a retired teacher, please pass this article along (just click the SHARE button below). I’m sure they would appreciate it!