If you want to start a heated debate among retirees, get them started on the relative merits of Medicare versus Medicare Advantage. Talk about strong opinions! One person has nothing good to say about Medicare Advantage and is an outspoken advocate for traditional Medicare, while the next person is just as vehement but in precisely the opposite direction. If you’re the one trying to decide between one and the other, already facing a baffling barrage of options, the views of your opinionated friends don’t help much – indeed, they seem to create more heat than light.
Choose Wisely Today or Face Restrictions Tomorrow
But the choice you make today between Medicare and Medicare Advantage can have a major impact on your future ability to purchase another type of insurance, referred to as Medigap Coverage. Because this is such an important and sometimes misunderstood topic, we felt we should bring to your attention this recent article we discovered on the website of Kaiser Health News. Written by Judith Graham, an expert on aging-related issues, this article offers what Graham calls a “primer” on Medigap coverage. At the same time, it presents a warning to consumers: the policy choice you make today can affect your ability to buy additional coverage tomorrow.
“Every year,” writes Graham, “older adults can opt out of a Medicare Advantage plan and opt in to original Medicare during open enrollment season, which begins on October 15. But unexpected problems can arise with this change. Notably, seniors who want to return to original Medicare might not be able to purchase Medicare supplemental insurance, also known as Medigap coverage.” That’s because private insurers – the ones who sell Medigap policies – are only required under federal regulations to offer this extended coverage when people first enroll in Medicare (with the exception of a few special circumstances). Once that window closes, insurers have the right to refuse to cover people with preexisting conditions, such as diabetes and heart disease. But sadly, many seniors fail to read the fine print and are surprised when their Medigap coverage is declined.
Filling in the Gaps
These supplemental plans are important to seniors, writes Graham in the Kaiser article, because they literally fill in many of the gaps in Medicare coverage and put a cap on a policy-holder’s financial exposure. “Medigap covers some or all of the out-of-pocket costs associated with Medicare (deductibles, copayments and coinsurance),” says Graham, “minimizing the financial risk to seniors.” It may come as a shock to many but, the article says, original Medicare policies do not limit a beneficiary’s out-of-pocket liability. Medicare Advantage plans, on the other hand, limit out-of-pocket costs to a maximum $6,700 a year, which is part of their appeal. As we’ve recently explained here on the AgingOptions blog, the MA plans are also popular because of low premiums and plenty of extra features. However, part of the reason these plans are less expensive is because they restrict coverage to doctors and hospitals that are in the plan’s network. If you’re facing a health crisis, you may find that your Medicare Advantage plan won’t cover the costs of the particular specialists or procedures you need.
The Kaiser Health News article does go into a bit of detail concerning Medigap policies which we won’t attempt to summarize here, but it’s worth explaining a few basic facts. As of 2016, the most recent year with available data, more than 13 million people (almost all older adults) had Medigap policies to augment their Medicare coverage. These plans are offered in ten different types, each with a standardized list of benefits. (You’ll find a very helpful summary of these plans here in Medicare’s 2018 Medigap Policy guide – just be careful before you print it out because the document runs more than 50 pages.) All the plans cover the costs of coinsurance and copayments for Medicare Parts A and B, and hospice care, either in full or in part. Premiums vary but typically range between $100 and $250 per month.
The Chief Concern: Eligibility
The big consideration consumers must bear in mind before assuming they’ll be covered is the issue of eligibility. “Once you’ve enrolled in Medicare Part B, insurers are required to offer you a Medigap policy, regardless of your health status, over the next six months,” says Kaiser. However, once that period ends, so does your window of unrestricted eligibility: insurers can exclude you from coverage or charge you more for a policy if you have a preexisting condition or even if you’ve been recommended for surgery. There’s also another window of eligibility to bear in mind: “If you’ve chosen a Medicare Advantage plan, you have 12 months to change your mind, select original Medicare and qualify for a Medigap policy regardless of your health status. This [eligibility period] ends after you’ve been enrolled in Medicare Advantage for a year. From this point on,” warns the article, “Medigap insurers can take your medical status into account in deciding whether to offer you coverage.”
Our suggestion is that before you make the Medicare-versus-Medicare Advantage decision, you need to do some serious fact-finding. An excellent place to start is on Medicare’s official website. There’s also this site (maintained by the Washington State Insurance Commissioner) where you can obtain free and unbiased assistance with health care choices, including Medicare. Of course, we always encourage you to contact us at AgingOptions so we can help make certain you get the advice you need.
A Comprehensive Plan
Remember, though, that medical coverage – as important as it is – is only one part of a successful retirement. Unless you’ve taken a comprehensive approach to retirement, like the strategy we use in our AgingOptions LifePlanning process, you are almost certainly leaving out vital pieces of the retirement puzzle. LifePlanning blends together medical coverage, housing choices, financial security, legal protection and family dynamics, creating a seamless plan that helps you protect your assets in retirement while avoiding becoming a burden to those you love. Please accept our invitation to come and find out more, at an upcoming LifePlanning Seminar with Rajiv Nagaich – a fast-paced, highly informative session that’s absolutely free. We’re confident you’ll be very, very glad you came. For dates, times and locations, click here for the updated LifePlanning Seminar calendar – then register online for the event of your choice.
We’ll look forward to meeting you!
(link to www.khn.org)