Medicare open enrollment season is right around the corner. Beginning October 15th and ending December 7th, open enrollment provides Medicare beneficiaries with several choices. The two main decisions to make are whether to couple a Medicare Supplement with Original Medicare or opt for one of the newer Medicare Advantage Plans.
Medicare Supplement: Also known as “Medigap”, these policies have been the traditional way most people filled the gaps in Original Medicare. Over time insurance regulators mandated certain benefits and in 1990 a federal law was passed limiting Medigap policies to the sale of 10 standardized plans. Starting in 2010 the standardized plans were updated and are generally known as the “modernized” plans.
With Medigap, your doctor bills Medicare who will determine what is covered and how much. If Medicare determines that a procedure is covered, Medicare pays their share, then forwards the information to the Medigap plan, which automatically pays their appropriate share without you having to do any paperwork!
The most popular Medigap plan, called plan F, covers all of your deductibles, copays, coinsurances and excess charges. Note, however, that prescription drugs are not covered; for that you’ll need to buy a part D drug plan. Medigaps include less paperwork hassles and no worries about whether your doctor is in-network or not since you can see any doctor nationwide so long as they accept Medicare.
Medicare Advantage (MA): While these plans must cover all of the same items that are covered by Medicare, a MA plan is essentially a “Medicare replacement” in that those enrolled would no longer be using their Medicare card. When going to a doctor, the bill is sent to the insurance company such as Humana or United Healthcare (marketed by AARP)—the two biggies in Northern Colorado.
Most MA plans embed prescription drug coverage with the medical plan. Most MA plans are either PPOs or HMOs meaning they both have doctor networks that you must be aware of.
While the HMO networks are normally smaller and more restrictive than the PPOs, the price on the HMO networks is the least expensive way to go. Some plans even feature a zero premium! How’s that for a good price point?
While the MA plans cost less than the Medicare Supplement plans, you will have out of pocket expenses each time you go to the doctor, the hospital or for most procedures.
Which should you choose–Medicare Advantage or Medicare Supplement/Medigap? Both are great options, but here are some guidelines:
- If you travel extensively or value the ability to select the best doctors and hospitals anywhere in the country or want a plan where you won’t have to constantly pay out of pocket for every doctor visit or procedure, then choose a Medigap.
- If you want the lowest cost plan and don’t mind paying a portion for most visits, hospitalizations and procedures choose Medicare Advantage. MA plans also sometimes offer extra features, such as free or reduced cost health club memberships, dental or vision.
Finally, be aware that the open enrollment period from October 15 to December 7th applies only for MA plans and Drug plans—NOT for Medigap plans. You, generally, get only one open enrollment period to enroll in a Medicare Supplement without answering medical questions, which normally occurs when you turn 65. Those wanting a Medigap plan after that can still apply, but will need to answer health questions.