The Medicare Crossroads: Do I Buy a Medicare Advantage or Medicare Supplement Plan?
Ah, the legendary question that every senior encounters nearing their 65th birthday and thereafter. Not only does each program have hundreds and hundreds of companies and plans to choose from, but the rules, networks, and coverage details can be extremely difficult to grasp.
Entering Medicare is a confusing, intimidating, and even vulnerable time, mostly because there are so many predatory insurance companies and salespeople vying for your dime. If you want to make the best Medicare decision possible that will support you when you need it and not break your bank account in the meantime, it’s critical for you to stay informed about all your options. Like, for example, did you know that if you enroll into a Medicare Advantage plan, you are thereby dis-enrolling from original Medicare. They are two completely separate entities.
Let us help you on your journey as you navigate your way through the Medicare knowledge to be known. Here is our pros and cons breakdown of both Medicare Supplement (or Medigap) plans and Medicare Advantage plans.
We’ll start with Medicare Advantage.
- Medicare Advantage monthly premiums are fairly inexpensive. Some can cost $0 per month.
- Part D drug plans are typically included. (*Note: This is a pro for convenience, not efficiency.)
- Sometimes they include fitness memberships or other extra incentives.
- Small and intricate medical networks determine your available medical providers. In many cases, you have to change your doctor to become “in-network” before your plan will cover claims.
- You run the risk of VERY high out-of-pocket costs (OPCs) if you don’t remain perfectly healthy.
- If your OPCs get too high due to illness or injury, you are unable to enter back into original Medicare and can get stuck paying the high OPCs forever.
- Limited nationwide coverage due to network restrictions. Traveling becomes an issue because your insurance is usually not applicable at remote medical facilities. (*Note: The Mayo Clinic is one of those major hospitals that will NOT take Medicare Advantage plans.)
Medicare Advantage plans may be cheap, but as my mother always told me “you get what you pay for.” This is true with Medicare Advantage, or as we call it in our office Medicare DIS-Advantage. The cons almost ALWAYS outweigh the pros when it comes to a Medicare Advantage plan.
Next, the Medicare Supplement or “Medigap” plan.
- Depending on your plan, almost everything is covered. Out-of-pocket costs (OPCs) are relatively low or non-existent.
- Anytime you become eligible, you can enroll in a supplement plan, not just during the Annual Election Period (AEP).
- Coverage is more predictable and easier to understand.
- You can keep your doctor! Chances are, he or she accepts original Medicare and your corresponding supplement plan.
- Almost always accepted when you travel nationwide.
- Medicare supplement plans are more expensive than Medicare Advantage plans.
As you can see, Medicare supplement plans do cost more, however the coverage they provide is exemplary.
Let’s create an example. Two best friends, Jane and Beth, each chose coverage recommended to them by their insurance agents three months prior to their 65th birthdays. Jane was enrolled into a Plan G Medicare Supplement plan from Banker’s Fidelity at $183.47 per month. Beth decided to dis-enroll from original Medicare and enroll into a Humana Medicare Advantage plan at only $37 per month. As they compare their enrollments, Beth gloats about how much money she is saving for her coverage. Jane does wonder why her plan is so much more than Beth’s, but she trusts her advisor and believes in her decision.
Later that year, Jane discovers she has a rare form of curable cancer, and Beth also learns she has progressing heart disease. Both women are in and out of doctors’ and specialists’ offices. While Jane gets to keep seeing the doctors she knows and trusts during this scary time, Beth’s plan requires her to visit only in-network doctors and specialists, some who mandate traveling far from home.
A few months later, the women start receiving their doctors’ bills and statements. Beth is shocked and terrified to discover that she already owes thousands, and it’s continuing to add up. Her out-of-pocket maximum will eventually kick in, but it’s a high number. Beth is not only worried about the future of her health, but also her financial future.
Jane, on the other hand, doesn’t owe anything other than her premium. She can rest assured because the money she pays every month in premium protects her from unexpected costs and expenses. While she’s moving towards recovery of her health she can rest easy knowing her Medigap coverage will insulate her pocketbook.