Open enrollment for 2019 continues for several more weeks, until December 7th, and if you’re like many you may have been putting off making some important decisions concerning your health coverage. Last week, in order to help our radio listeners and readers be better informed, we presented this AgingOptions blog article describing the advantages (and the drawbacks) of Medicare Advantage plans. This week we’ll take a look at the chief alternative to Medicare Advantage – the Medicare Supplement plans, typically referred to as Medigap plans. Are these plans a good fit for you? The answer is, “It depends.” Let’s take a look.
Medigap Plans: If You Have Medicare, Why Do You Need a Supplement?
For our research we chose to ignore insurance company websites, and instead looked at this recent article from a website called VeryWell Health, written by Dr. Michael Bihari. He answers the first question many people have about Medigap plans: “If I have Medicare, why do I need a supplement?” The answer lies in the way Medicare works. “Original Medicare (which includes Part A Hospital Insurance and Part B Medical Insurance) pays for most of the cost of enrollees’ health-related services and medical supplies,” Bihari writes. “But there is some cost-sharing (coinsurance and deductibles) that can result in a lot of out-of-pocket expenses, especially if you are hospitalized, need skilled nursing facility services, or receive extensive outpatient care such as ongoing dialysis.” In other words, by relying on Medicare alone with no Medigap to absorb those added costs, you could be on the hook for a lot of extra charges.
Medicare Supplement Insurance policies, or Medigap plans, are designed – literally – to fill in the gaps. Depending on the policy you select, Medigap picks up all or most of the out-of-pocket costs that Medicare alone doesn’t cover. Some Medigap policies go further, covering certain health services outside the United States – a benefit to retirees who travel – and also paying for some preventive services not covered by Medicare. No one is required to purchase a Medigap policy. If you do opt to buy one, the insurance company will send you a bill, usually monthly or quarterly, which is separate from and in addition to your Medicare Part B premium. Paying that Medigap premium is your responsibility.
The Basic Choice: Medicare Advantage versus Medigap Plans plus Medicare
It’s also important to explain that a Medigap policy is something you can choose to buy instead of a Medicare Advantage plan, not along with it. Dr. Bihari writes, “As long as you are enrolled in a Medicare Advantage Plan, you do not need to buy a Medigap policy. In fact, it is illegal for anyone to sell you a Medigap policy if you are in an Advantage plan. The benefits offered by a Medigap policy are covered by your advantage plan and the Medigap supplement does not pay for your advantage plan’s deductibles, copayments, or coinsurance.” For most of us, our basic choice boils down to Medicare Advantage versus the Medicare-plus-Medigap combination.
The VeryWell Health article goes into much more detail than we can address here about various Medigap levels of coverage, and also about which plans are available, so we’ll just cover the basics and encourage you to dig deeper before you decide what’s best for you. The article by Dr. Bihari is a good source, and there are plenty of others, but the most authoritative place where you can compare plans and review your options is on the official Medicare website site, using the Plan Finder tool. Still, no matter which Medigap plan you choose, when you have a claim, Medicare pays its portion first, then your Medigap policy pays its share. Any further charges are paid by you. Generally, your Medigap plan will not cover things Medicare doesn’t cover, such as long-term care, dental care, and vision care. They mainly cover added out-of-pocket costs.
Medigap Plans Offer Identical Benefits but Charge Different Premiums
Medigap policies are sold by private insurance companies and must be clearly identified as Medicare Supplement Insurance. Policies are regulated by federal and state laws, and each different type of Medigap plan, no matter who sells it, must offer the same basic benefits, regardless of insurance company or location. Plans are identified by letter – Plan A through Plan N – although some letters are missing because of plans that have been discontinued through the years. (Just to make things more confusing, three states – Massachusetts, Minnesota and Wisconsin – have their own rules and offer a different set of policy options.) If you choose, say, Plan G, all companies offering that plan in your area must offer identical benefits, but they can charge different premiums, so it pays to shop carefully.
“In general,” says VeryWell Health, “Plan A, which provides the fewest benefits, generally has the lowest premiums. Medigap plans that offer more benefits, such as Plan F and G, usually have a higher premium.” The average premium for the most popular plan, Medigap Plan F, was $143 per month in 2018, according to the article, but that plan is no longer being offered to new enrollees after this year. (As we said, it pays to shop carefully.) Medicare offers this publication called “Choosing a Medigap Policy”, but before you decide to print your own copy, be forewarned – it’s 52 pages long. Once you sign up for Medicare Part B, you typically have six months during which you can enroll in any Medigap plan you choose, regardless of your medical history. “But after that window ends, it’s gone forever,” says Dr. Bihari. From then on, insurance companies can refuse coverage or charge higher premiums based on your health. So, if you have some ongoing health concerns and want to be able to choose from the widest possible network of doctors and specialists, choosing a Medigap plan right from the start might be best for you.
For Everything Concerned with Retirement, Careful Planning is Essential
There’s so much confusion and misinformation out there about health insurance! This article made us realize once again how important it is for seniors to get solid, professional and objective advice about every aspect of growing older. That certainly applies in the area of retirement planning. Instead of relying on a so-called investment advisor or insurance consultant who has a product to sell, we encourage you to seek the advice of an experienced professional like Rajiv Nagaich from AgingOptions. Rajiv will show you how all the pieces of your retirement plan need to fit together, just like the pieces of a puzzle: financial, legal, medical, housing and family. The result is a seamless plan called a LifePlan, a blueprint that will guide you as you create the fruitful and secure retirement of your dreams.
Why not invest just a few hours and find out more? Join Rajiv Nagaich at an upcoming LifePlanning Seminar – a free session packed with valuable information to show you what a wonderful experience a well-planned retirement can be. For dates, times and locations, visit our Live Events page – then register online or call us during the week. We’ll look forward to meeting you and answering your retirement questions. Meanwhile, age on!
(originally reported at www.verywellhealth.com)