Given the cost of private insurance, Medicare can be a retiree’s saving grace. We encounter patients who praise their Medicare Advantage plan and others who swear by their Medicare combined with Medigap (also called supplementary plan or supplement). The plans differences are great in helping the customer choose which is best for them.
Medicare (i.e. Part A or Part B) is a federal plan run by the government. This plan covers basics like hospital services (Part A) and doctors’ visits (Part B). You can add a Medigap plan to cover the cost gaps in Medicare.
Medicare Advantage plans are privately managed and cover all services Medicare covers. A Medicare Advantage plan may even cover additional services that Medicare does not cover, such as dental, hearing and vision.
If you purchase a Medicare policy within 6 months of starting Part B at age 65, the company can’t turn you down for any reason. If you have ongoing medical issues or any chronic condition that requires frequent doctor visits, you may want to go with a Medigap policy. You will end up paying the same amount every month no matter how many times you visit your doctor, so a Medigap policy may reduce your total costs.
With Medicare, you do not have to choose a Primary Care Physician, because referrals are not a requirement of this plan. You can shop around for the care and treatment you want. You can also choose to see any provider that accepts Medicare. Medicare Advantage plans can be more restrictive in terms of provider networks and it may be difficult to find a doctor if you are in a remote location.
It is important to remember that if you initially choose a Medicare Advantage plan you may be unable to switch to a Medigap policy after a year. Signing up for a Medigap policy initially allows for you to see how your health situation develops and, if after a few years you have no major medical problems, you can switch to a Medicare Advantage Plan if that option makes more sense for you.
Lastly, Medigap policies all pay for the same things – which makes comparing costs simple. These are used all over the country, so you can make decisions about costs even if you move. The same is not true of Medicare Advantage plans, which differ state by state.
Not everyone would be better off with a Medigap plan. Medicare Advantage plans are lower cost to the consumer. The average premium in 2014 was between $0 and $100 per month. These plans may also include drug coverage options to cover your prescription medications.
Medicare Advantage plans also allow consumers to switch and change plans freely during open enrollment periods.
Figuring out the Medicare plan that’s the most appropriate for your needs is probably not a do-it yourself activity. One you understand the basics of Medicare, get some help.
Medicare.gov provides tools that will allow you to compare plans, but the decision is complicated. It is recommended that you work with a licensed insurance agent who can show you both Medigap and Medicare Advantage plans from multiple companies.