Whether you are just turning 65 or retiring and joining Medicare for the first time, there are several decisions you will need to make regarding your health insurance. After you’ve enrolled in Original Medicare (Part A & Part B), most people decide to purchase some sort of additional health insurance to supplement the coverage provided in Parts A & B. Without supplemental insurance you are subject to various deductibles, copays, and coinsurance costs, some of which can be quite expensive.
There are two different ways to get this coverage. The first option is to enroll in Medigap, also referred to as Medicare Supplement. Medigap plans are standardized health insurance policies that are designed to fill the “gaps” that lie in Original Medicare. They help cover out of pocket costs associated with deductibles, copays, and coinsurance. The second option is to enroll in a Medicare Advantage plan. Medicare Advantage, or “MAPD” plans work very differently than Medigap plans. These plans combine the benefits of Original Medicare and in most cases include prescription drug coverage. One of the attractive aspects of Medicare Advantage plans is that in many cases they are less expensive than Medigap plans, with some plans being offered at $0 premium. Let’s discuss some of the differences between the two ways to get your Medicare and some of the common pitfalls individuals encounter when making these decisions.
Choosing an Insurance Company, Not a Plan:
When looking at the first option we discussed, Medigap, it is important to note that each plan is the same with the various insurance carriers that offer them. For example, Plan G with Carrier A is the exact same plan and has the same coverage as Plan G with Carrier B. There may however be differences in cost. The most important thing to keep in mind when selecting a Medigap policy is choosing a reputable carrier with a competitive premium. This may not be the cheapest option, but in most cases, you will be able to find a strong carrier with competitive rates.
Choosing the Cheapest Plan:
We discussed a bit about the differences between Medigap and Medicare Advantage plans and how they differ in cost. Many times individuals will be attracted to Medicare Advantage because of the low or $0 premium option plans. These plans can be great for some people. If you’re healthy and don’t use the healthcare system often, Medicare Advantage can be a great option. Conversely, if you have chronic conditions and see multiple doctors or foresee upcoming surgeries, you may fare better with a Medigap policy. Even though the premium cost is higher, you will likely pay less out of pocket when you utilize healthcare services.
Not Enrolling in Drug Coverage (Part D):
When you join Medicare for the first time, this is your opportunity to enroll in Part D. Part D is the drug coverage portion of Medicare, and if you choose a Medigap policy, you will need to enroll in a standalone Part D plan. If you do not enroll in Part D during your initial election period, you may be subject to penalties. The longer you wait to enroll in Part D, the higher the penalty. Sometimes individuals who do not take any prescription drugs choose to forego enrolling in Part D because they do not need it at the time. That may be true, but it is always wise to enroll in Part D when you first join Medicare. In most cases there are low cost prescription drug plans available for individuals who take little or no medications.
Making these decisions is not easy. That’s why Midwest Medicare Advisors is here to help guide you through every step of your Medicare journey. Contact us to speak with a licensed agent that can assist you today!
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