Which Medicare Plans Are Right for You?

Medicare consists of many moving parts and plans. Because of this, many people find it confusing as they approach and prepare for retirement. However, it’s important to understand how it all works, as the plan decisions someone makes will impact how they receive their care.

Understanding Medicare

Before choosing what kind of Medicare plans you want, you must understand how the program works. To begin learning, you need to know there are four different parts to the Medicare program: Medicare Part A, Part B, Part C, and Part D.

Part A helps cover room and board for inpatient hospital stays as well as skilled nursing, nursing home, hospice, and home health care. Part B provides coverage for outpatient care, which includes various services such as doctor’s visits, surgeries, certain preventive care, and more. Both parts are provided by the federal government and are often called Original Medicare. 

Part C is another name for Medicare Advantage plans, which combine Part A and Part B benefits into one plan from a private insurance carrier rather than the federal government. Advantage plans can be confusing, but a good choice for some people. You can learn more about Medicare Advantage plans in 2024 at https://boomerbenefits.com/best-medicare-advantage-plan-2024s-top-choices-explained/

Part D covers retail prescription medications.

To be eligible for Medicare, you must be a U.S. citizen or a permanent resident for at least five consecutive years.

Types of Medicare Plans

When you enroll in Medicare, you have two options: a Medicare Supplement plan or a Medicare Advantage plan. These two plan types are very different from one another, so be sure you have a complete understanding of both before making a decision.

Medicare Supplement Plans

Medicare Supplement plans, also known as Medigap plans, are secondary to Original Medicare and are provided by private insurance carriers like UnitedHealthcare or Blue Cross Blue Shield. Medicare pays first for approved services, and the Medigap plan will cover some or all the associated costs, such as deductibles, copayments, and coinsurance. 

There are ten Medigap plans to choose from, all labeled with a letter, like Plan G and Plan N, two of the most popular policies. Each plan offers different benefits. The Centers for Medicare and Medicaid Services (CMS), the governing body for Medicare, standardizes Medigap plans, so they provide the same benefits no matter the carrier you go to.

Also, note that Medigap plans do not cover prescription medications. Because of this, people who choose a Medigap plan will also want to sign up for a Part D plan if they have no other creditable prescription coverage.

Medigap Plan Costs

Medigap plans have monthly premiums, so they are not free. These monthly premiums vary from plan to plan and person to person, based on someone’s gender, age, zip code, carrier, and more, so there are no set costs. However, you can expect higher monthly premiums for the Medigap plans with higher benefits.

Medicare Advantage Plans

Medicare Advantage plans work very differently from Medigap plans. Unlike Medigap plans, Advantage plans are not secondary to Original Medicare. Instead, an Advantage plan is an alternative way to receive your Medicare benefits.

When you sign up for an Advantage plan, you receive your Original Medicare benefits through a private insurance carrier rather than the federal government. Most Advantage plans also include Part D coverage as well. Because of this, people sometimes think of these as all-in-one plans.

Medicare Advantage Plan Costs

Most Advantage plans have either a $0 or a low monthly premium. However, because of the low monthly cost, these plans come with more out-of-pocket costs whenever you receive medical services. Each Advantage plan has different prices for services, so exact costs will vary.

Also, if you enroll in an Advantage plan, you must keep Medicare Part B, which has a monthly premium. So, having an Advantage plan doesn’t mean you’ll have no monthly cost.

How to Choose a Medicare Plan

Choosing between a Medigap and Advantage plan can be overwhelming. Here are a few factors you’ll want to consider to help you make an informed decision.

Medigap & Advantage Plan Costs

The first place to start is the difference in costs between Medigap and Advantage plans. Generally speaking, Medigap plans have higher premiums in exchange for lower out-of-pocket costs, while Advantage plans have lower premiums in exchange for higher out-of-pocket costs.

If you see the doctor frequently or anticipate seeing the doctor often in the future, a Medigap plan may be a good fit. This way, you would not be hit with a large amount of out-of-pocket expenses each time you receive medical services.

On the other hand, an Advantage plan may be a good fit if you don’t receive medical services often. With an Advantage plan, you’d have lower monthly costs and would only have out-of-pocket costs if you receive services. Remember that each Advantage plan charges differently for services.

Medigap and Advantage Plan Networks

Another factor to keep in mind is provider networks. Medigap plans offer a lot more flexibility compared to Advantage plans. With a Medigap plan, you can see any provider across the U.S. as long as they accept Original Medicare. This also includes U.S. territories like Puerto Rico, Guam, and more. So, if you plan to travel a lot, a Medigap plan may be the way to go.

Unlike Medigap plans, Advantage plans operate within network areas, and some plans can have more lenient network areas while others are more restrictive. Be sure to check each plan’s network carefully and verify that your preferred providers are included.

Medicare Plans and Underwriting

One of the most important things to remember when choosing a plan is that joining a Medigap plan down the road can be challenging if you do not sign up for one when you first begin Medicare. This is due to underwriting.

Underwriting is a series of health questions that insurance carriers can ask when someone is outside their Medigap Open Enrollment period. The health questions determine if a carrier will accept someone into their plan. In other words, if you have certain health conditions, an insurance carrier can choose to deny your application.

Fortunately, during someone’s Medigap Open Enrollment Period, insurance carriers cannot deny someone’s application due to preexisting conditions. This is a one-time enrollment for most people that takes place six months from their Part B effective.

If you sign up for an Advantage plan, consider that you may need to pass underwriting if you want to switch to a Medigap plan later.

Some states have additional Medigap Enrollment periods, so where you live also plays a part.

Final Thoughts

Medigap and Advantage plans are very different, so you must understand all the differences before making a plan decision. Consider factors such as costs, provider networks, underwriting, and Part D coverage to guide you in the right direction.

One plan may be a good fit for someone but not for someone else. Be sure to select a plan based on your budget, health conditions, lifestyle, and preferences.