Danielle K. Roberts, founding partner of Boomer Benefits, Fort Worth, Texas. She is a Medicare Supplement Accredited Advisor and author of 10 Costly Medicare Mistakes You Can’t Afford to Make.
Should you sign up for a Medigap plan, a Medicare Advantage plan or neither when you become eligible at age 65? Consider these factors…
Medicare Advantage plans typically have low or no monthly premiums. But: Enrollees generally still pay the Medicare Part B premium, which currently is $170.10 per month for most participants.
Medigap monthly premiums usually fall between $50 and $250, depending on the plan, local health-care costs and other factors—plus that Part B premium.
Medicare Advantage participants face co-pays and co-insurance—a $10 co-pay to see a primary care physician…a $50 co-pay to see a specialist…a $300 per-night co-pay for hospital stays. Co-insurance for treatments such as chemotherapy often is 20% of what the provider charges. Read the “benefits summaries” to determine out-of-pocket costs. Annual out-of-pocket maximums can be as high as $7,550. These plans change coverage details from year to year.
Most Medigap plans cover most or all of the co-pays, co-insurance and other gaps in Original Medicare…and that doesn’t change from year to year. Example: Medigap plans cover Medicare Part A co-insurance and hospital costs up to 365 days beyond the Medicare benefit limits…and most Medigap plans cover all Medicare Part B co-insurance and co-pays.
Medicare Advantage: You can sign up for a Medicare Advantage plan during the seven-month stretch that includes the month you turn 65 plus the three months before and after. Once you’ve reached age 65, you also can sign up in any year during Medicare’s October 15 through December 7 open-enrollment period…and if you’re enrolled in an Advantage plan, you can switch plans or switch to Original Medicare from January 1 to March 31. Advantage plans cannot decline coverage or increase rates because of preexisting conditions.
Medigap: You can sign up for a Medigap plan during the six-month window that begins the month you enroll in Medicare Part B. You also can apply for Medigap plans after this window closes, but you could be charged extra or declined coverage based on a preexisting condition. Exceptions: It might be possible to sign up for a Medigap plan after the enrollment window if you live in a state with broad “guaranteed issue” rules, such as Connecticut, Massachusetts and New York, and/or you lose health coverage.
Medicare Advantage plans come in two types—HMO plans, which often provide little coverage outside the plan’s network of doctors and hospitals in non-emergency situations…and PPO plans, which provide some coverage but with higher out-of-pocket costs.
Medigap plans do not have provider network restrictions—participants can obtain treatment from any doctor or hospital that accepts Medicare’s rates.
Medicare Advantage: Most of the plans include prescription coverage.
Medigap plans do not include prescription coverage—a Medicare Part D plan should be purchased separately.