Quite often, we see potential Medicare enrollees struggle to decide whether to go with a Medicare Advantage Plan (a.k.a. Part C) or stick with Original Medicare (Part A and Part B) and add Medigap (a.k.a. Medicare Supplement) to it. Remember they are mutually exclusive.
So how do you go about making this important decision? How do you compare and choose? We have tried to answer this below.
Probably the first thing which comes to mind. Medicare Advantage plans typically have lower premiums with higher cost-sharing e.g. deductibles and co-pays. Medigap plans have higher premiums with minimal cost-sharing since they are meant to help with out-of-pocket costs.
MA Plans have a cap on out-of-pocket expenses. Medigap Plans do not have a cap (except for Types K and L) but that may not matter if the plan is picking up most of the Medicare expenses anyway.
MA Plan premiums are the same for everyone in a service area irrespective of age or health status. For Medigap, premiums may go up as you age. Note that whichever Option you choose, you will continue paying Part B premiums (and for Part A, if applicable).
(Pro Tip: You should always look at your total estimated out-of-pocket costs, not just premiums)
Equally important, if not more, is Coverage. Some of the common questions asked are: Does my Plan provide Dental coverage? What about travel? Will the plan cover my prescription drugs? And so forth. You really need to think through your healthcare needs in order to select the right plan.
The question really boils down to what additional coverage is offered by MA and Medigap plans beyond Parts A and B.
Many Medicare Advantage plans offer additional benefits like dental, vision and hearing coverage. Some plans include wellness benefits as well. You may see many more benefits covered in the future. Quite often, MA plans also include prescription drug coverage, in which case they are called MA-PD plans.
Medigap plans, on the other hand, are meant to help with Medicare costs and therefore do not usually provide additional benefits. Every Plan Type has standardized benefits (our website has more details). You may need to enroll in a standalone prescription drug plan (Part D or PDP) to get drug coverage.
(Pro Tip: Whether MA-PD or standalone PDP, you may want to get a Plan which covers your prescription drugs in the lowest cost tiers)
During initial enrollment into Medicare, both Options are available to you. You may either go with Medicare Advantage during your Initial Enrollment Period (IEP) or decide on Medigap during the initial Open Enrollment Period (OEP) when you qualify for guaranteed issue rights.
Once the initial enrollment is over though, things are different. You have the opportunity to change your Medicare Advantage and Prescription Drugs Plans every year during the Annual Election Period (AEP) when you may also go back to Original Medicare (Part A and Part B).
However, AEP does not apply to Medigap. As a result, it may not be easy to enroll into or switch to a different Medigap plan later. Even if you are able to do so, guaranteed issue rights may not apply unless you qualify for a recognized special circumstance.
(Pro Tip: Enroll at the right time unless you have equivalent coverage from other sources. Late enrollment may result in higher costs)
CMS assigns star-ratings to Medicare Advantage plans based on numerous factors. These range from 1 to 5 stars, with 5-Stars being the highest. These ratings may help you get some idea about a plan’s performance, customer service, screening tests, chronic condition management and member experience.
Medigap plans do not have star ratings. In fact, the word ‘quality’ may not have a direct bearing on Medigap plans since they help with the cost of care but do not provide the care itself. To select the right Medigap plan, you may want to look at what Plan Types are available in your service area and which one will be the right fit for your needs and budget.
(Pro Tip: If you like a Plan but are concerned about its Star Rating take a closer look at the Plan’s rating on various factors, not just the overall rating)
And finally Accessibility. Your decision may ultimately rest on a plan’s availability and accessibility. It is important to know that you will have easy access to care from providers you trust.
Since many Medicare Advantage plans have limited networks, you may want to check whether your preferred doctors and hospitals are covered by a plan’s network. Some MA plans may also need you to choose a Primary Care Physician (PCP) and obtain referrals to see a Specialist. You may also want to check whether a plan’s preferred pharmacies are nearby and accessible.
Medigap plans are accepted nation-wide. Referrals or prior authorizations are not needed to obtain services. However, your choices of Plan Types may be limited based on which ones are available in your service area.
(Pro Tip: Carriers have network information available online. Check whether your preferred providers are included)
That’s it folks. Find out which Plans are available in your area, decide on the coverage you need and compare cost and quality. Shortlist Plans and make sure your preferred doctors, hospitals and pharmacies are included. Finalize and enroll.
[Kumar B Goel is President & CEO of Lighted Road Insurance (https://www.lightedroadinsurance.com), a web-based start-up helping people select and enroll in the right Medicare Plan for their needs and budget.]
[Editor’s Note: This is the second article in the series we are publishing on Medicare to help our readers better understand a topic which can be confusing and difficult to navigate.]