by Ron Pollack
Medicare health coverage is fairly comprehensive. But if you need a lot of care, Medicare can leave you with significant out-of-pocket costs. That’s why most people have some kind of supplemental insurance to help cover the costs that Medicare doesn’t.
Choosing a supplemental plan that makes sense for you is not always easy. Here are some tips that will help.
About a third of people with Medicare have supplemental insurance from a former employer. If you are lucky enough to have this type of coverage, it is probably your best option. Be careful if you ever decide to drop it—you may not be able to get it back.
People with low incomes may qualify for their state’s Medicaid program (and other related programs) that cover Medicare premiums and prescription drug costs.
If you don’t fall into these categories, you may want to consider buying either a private Medicare supplement plan (often called “Medigap”) or a Medicare Advantage plan. Both options have advantages and disadvantages, and you should do careful research before selecting one or deciding to change your current coverage.
Medigap plans work with original Medicare and pay costs that are left over after Medicare has paid what it covers. Depending on the plan, they pay for some amount of Medicare’s deductibles and co-insurance. They do not usually offer additional services, so they will not pay for an item or service that Medicare does not cover. For example, they do not cover prescription drugs, so most people with original Medicare and a Medigap plan also buy a Part D plan.
Medigap plans are sold by private insurance companies. These plans come in several different categories, each designated by a letter: For example, “Medigap Plan F.” Every plan with the same letter must offer the same benefits, so it is easy to compare plans from different insurers. In addition, these plans have to follow state and federal rules.
Medicare Advantage plans are different from Medigap plans. Medicare Advantage plans are run by private insurers that contract with Medicare to provide all Medicare benefits. Many of these plans include prescription drug coverage, and some plans also offer extra services that are not covered by traditional Medicare. Medicare Advantage plans usually have provider networks that limit which doctors and hospitals you can go to.
Medicare Advantage plans also have rules about what you will have to pay out of pocket that differ from the rules for traditional Medicare. Sometimes these rules are beneficial and can protect you from high out-of-pocket costs. For example, a Medicare Advantage plan may have a low copayment for office visits. But sometimes you may pay more for a service if you have a Medicare Advantage plan compared to traditional Medicare.
There is no insurance that is right for everyone. Here are some key factors to consider:
Medicare Advantage premiums may be more affordable than Medigap premiums; Medigap may offer better protection against high out-of-pocket costs (deductibles, copayments, and co-insurance) than Medicare Advantage; Medicare Advantage plans may offer extra services not covered by Medicare; Medicare Advantage plans can change what services they cover every year. Medigap plans usually do not change what they cover, but they can, and do, raise premiums; Medicare Advantage may limit your choice of doctors to a particular network and may require you to get a referral from your primary care doctor to see a specialist. Medigap will not.
One key concern is that in many states, Medigap premiums can increase as you get older. And if you decide to drop your Medigap plan, you may have to pay a much higher premium to get that plan back in the future—if you can get it back at all. So be careful about making any changes to your Medigap coverage.
Normally, you can enroll in a Medicare Advantage plan only during Medicare’s annual open enrollment period, which runs from October 15 to December 7. Once you pick a Medicare Advantage plan, you must stick with it for the whole year (unless you qualify for a special enrollment period).
Sign-up periods for Medigap plans vary from state to state.
Anyone with Medicare can get help from a local counselor through their State Health Insurance Assistance Program (SHIP). Call 1-800-MEDICARE and ask for a referral to your local SHIP, or go to www.Medicare.gov