May 17, 2016
by: The My Medicare
Matters Team
This is the second
article in our New to Medicare series. You can read the first article here: “I’m New to Medicare. Should I
Sign Up for a Medicare Advantage Plan?“
For every friend who sings the praises of
their Medicare Advantage plan,
you’re sure to encounter a different friend who urges you to follow their lead
and sign up for Original Medicare combined
with Medigap (also
called a supplementary plan, or supplement).
Original Medicare (combined with Medigap)
and Medicare Advantage are actually pretty similar. They are two
different ways of covering many of the same services. So, how do you choose
what’s right for you?
1. What is the difference between Original
Medicare and Medicare Advantage?
Option one is Original Medicare (i.e. Medicare Part
A + Medicare Part B), which is run by the federal government and
covers basics like hospital services (Part A) and doctors’ visits (Part B). It
is called Original Medicare because it was the first type of Medicare program
ever created. You can add an optional Part D plan to your
Original Medicare to get your prescription drugs covered, and you can also add
a Medigap plan (aka
supplemental coverage) to cover the cost gaps in Original Medicare. In this
article, we are discussing how Original Medicare combined with Medigap compares
to Medicare Advantage.
Option two is the Medicare Advantage (MA)
plan. MA is a privately managed alternative to Original Medicare, which is run
by the federal government. An MA plan covers all of the services of Original
Medicare, and usually includes Part D (drug coverage) as well. An MA
plan may even offer additional services that Original Medicare does not cover,
such as dental, hearing or vision coverage.
One way to look at these two choices is the
way you look at the difference between a monthly gym membership versus paying
per individual exercise class. For individual classes, your total monthly bill
depends on the number of classes you take. For example, you could pay $20 in
September for taking two yoga classes, and $50 in October for taking five yoga
classes.
At a membership gym, you would pay the same
$50 fee every month, no matter how many (or how few) yoga classes you sign up
for. Medicare Advantage plans
charge by the visit, much like that “pay per class” yoga studio. With Original
Medicare + Medigap, your Medigap policy charges one set price per month, just
like a monthly gym membership.
Read on for some additional pros and cons of
choosing Original Medicare combined with a Medigap policy.
2. What are some of the advantages of choosing
Original Medicare combined with a Medigap policy (versus Medicare Advantage)?
A better fit for individuals with ongoing medical issues
If you buy a Medigap policy within 6 months of
starting Part B at age 65 or older, the company can’t turn you down for any
reason. If you have a history of cancer or have recently been diagnosed
with heart disease, chronic
obstructive pulmonary disease (COPD), diabetes, or another
chronic condition that will require frequent doctors’ visits, you may want to
go with a Medigap policy. As we discussed above, this is your “gym membership”
option. You will pay approximately the same amount every month no matter how
many times you visit your doctor, so a Medigap policy may reduce your total
costs. If you are trying to diagnose a new health condition and need to seek a
lot of second opinions, this can be especially helpful.
More flexibility with your treatment options
With Original Medicare you don’t have to
choose a Primary Care Physician (a
requirement of some Medicare Advantage plans), so you don’t have a “gatekeeper”
who has the final say on which providers you see. You can shop around for the
care and treatment that you want. You can also choose to see any physician who
accepts Medicare. On the other hand, MA plans are more restricted in terms of
the provider networks they work with. Individuals in rural and isolated areas
may have difficulty finding MA plans that work with their local healthcare
services.
Additionally, it’s important to remember that
if you choose an MA plan initially, and then try to switch to a Medigap policy
after a year has gone by, you may not be able to. Signing
up for a Medigap policy initially gives you some time to see how your health
situation is developing. After a few years with no major medical problems, you
may feel more comfortable switching to a Medicare Advantage plan.
Medigap policies can be easier to understand
Perhaps “easy” isn’t the best term, but with
Medigap there are 10 types of policies that all pay for the same things–which
makes comparing costs relatively simple. These 10 categories are used all over
the country, so you can also make decisions about what your costs might be if
you move. The same is not true of MA plans, which differ by state and often go
by totally different names depending on where you live.
3. What are some of the disadvantages of
choosing Original Medicare combined with a Medigap policy (versus Medicare
Advantage)?
More expensive
More systems to keep track of
With Original Medicare, a Part D drug plan, and Medigap you have
three cards to keep track of and two monthly bills to worry about. For those
who feel that they are already burdened by too many monthly bills and pieces of
paper, this just adds to the pile.
More decisions to make
Sometimes choices can be a burden. MA plans are
supposed to navigate the system for you to contain costs and increase
communication. Many people value having a Primary Care Physician (common with
many MA plans) to take charge of some of the decisions and find the appropriate
specialists.
To get drug coverage, you’ll need to choose a
Part D plan
For some beneficiaries, trying to find the
right Part D plan is about as fun as a root canal. An MA plan takes care
of that for you by including drug coverage already. If you go with an MA plan,
remember to make sure that whatever MA plan you choose will cover your existing
prescriptions at an affordable price.
4. What if I sign up for a Medigap policy and
then change my mind? Can I drop it and just use Original Medicare, or switch to
a Medicare Advantage plan?
Yes, you can do both. When you buy a Medigap
policy, you have a 30-day “free look” or trial period. If you change your mind
within 30 days of the day your policy started, you can switch from one type of
Medigap policy to another, or cancel it and get a refund. After those 30 days,
you can still cancel your Medigap policy but you will not get a refund. To
cancel your Medigap policy, simply contact your insurance company and tell them
you would like to cancel.
Realize you would prefer Medicare Advantage?
You can switch from a Medigap policy to Medicare Advantage during the annual
7-week Medicare Open Enrollment period from
October 15 through December 7. During this time, anyone with Original Medicare
can switch to a Medicare Advantage (MA) plan. If you chose this route, remember
to cancel your Medigap policy–it doesn’t work with an MA plan.
If you’re still not sure what plan type is
right for you, try discussing these options with a licensed Medicare benefits
adviser. You can access their help for free by taking the Medicare Questionnaire assessment,
created by the nonprofit National Council on Aging. Or call your local State
Health Insurance Assistance Program (SHIP) for federally-funded
Medicare counseling.
Seeking professional advice (and doing your
research upfront) can make a huge difference to your health and finances for
years to come.
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