As you approach Medicare eligibility, you’ll be faced with the decision of how to best supplement your government provided Part A and Part B Medicare insurance coverage.
You want to know which options and which plan(s) provide the most benefits at the lowest price. There are Medicare supplements and Medicare Advantage plans to choose from, but you can’t have both simultaneously.
There are only three options to consider when it comes to supplementing your Original Medicare:
Supplemental insurance prices will vary from state to state and zip code to zip code. There are several factors that will determine your monthly premiums. Rates are usually only locked in for one year and can increase as you get older.
However, the underlying question some of our clients ask is, “What is the cost if I don’t purchase coverage?” The short answer is we simply don’t know. Consumers who are already in poor health will almost always purchase a Medicare supplement right away. Missing your personal 6 month Open Enrollment window can make it hard, if not impossible, to purchase a Medigap later.
But Medigap plans are like any other insurance. You purchase comprehensive coverage and hope that you don’t need it. Really, the best insurance is the kind you don’t use. You don’t want to use your home, auto, life, or disability plan because that means something has likely gone wrong. However, you do want to know you don’t have open ended costs if a health issue arises.
So to answer the question – yes, Medicare supplement insurance is usually worth the cost. There are several different plans to choose from and each will fill in most or all of the gaps in Medicare. In this way, you can know exactly what your out-of-pocket exposure is each year. And with almost all supplements, you don’t have to worry about referrals or network restrictions. This means that you can use any doctor or hospital that accepts Medicare patients.
Really, you’re purchasing peace of mind. With most Medigap plans, you know you can go where you want when you want without facing significant out-of-pocket expenses. You have paid into Medicare your entire working life, so it makes sense to close or minimize your gaps with a supplement like F, G, N or High Deductible F.
Another option to supplement Medicare is to purchase an Advantage plan. You will still pay your Part B premiums, but Advantage plans will insure you for what Medicare A and B covers as well as some of what they do not. Additionally, many plans will include rx coverage as part of the coverage. Part D drug is not included with a supplement and must be purchased separately.
Medicare advantage plans are popular with some of our clients simply based on price. If you live in Florida for example, Medicare supplement plans can be expensive. Advantage plans are usually less expensive for a couple of reasons.
The primary reason is most Advantage plans have more out-of-pocket exposure. It is important to ask about your maximum out-of-pocket each year both in and out of network. And that brings up another point; Advantage plans rely on participating networks of doctors, hospitals, and medical facilities in order to offer lower monthly premiums.
This can be a problem if you need care outside of the network of if you spend a lot of time in multiple states. As an agent, the issue I see most with consumers is the need to visit a certain specialist (or facility) and that provider does not accept their coverage because they’re out of network.
The Centers for Medicare and Medicaid Services allows a one year free trial period for consumers who choose Advantage plans. After one year, medical underwriting will be necessary with most Medigap providers in order to enroll into a traditional Medicare supplement. Consumers can be denied coverage due to poor health if they wait longer than a year.
In a nutshell, Advantage plans are not perfect and traditional supplements are not always the best option either, but going without coverage can be the most ill-advised choice.
I don’t recommend it. Why? Well, there are may reasons, but most of all because you cannot time your health. You may need coverage before you have a chance to buy it. If we had the elusive crystal ball, we would buy insurance the day before we needed it.
There are some consumers who will roll the dice and not purchase any insurance, but they need to know that it is very difficult to purchase a Medicare Supplement or Advantage plan if you are already in poor health.
That is to say that if you missed your open enrollment window, then you can be denied coverage. There is this misconception that the time period between October 15th and December 7th each year is Medicare open enrollment for supplemental coverage. This is not correct!
This time of year (referred to as the annual election period or AEP) can be used to change Part D drug plans or to disenroll from an Advantage plan, but not to purchase new supplemental coverage on a guaranteed issue basis. This means you must be in reasonably good health to purchase most supplemental plans unless you are using your one year free trial period provided by CMS.
Timing your insurance purchase can be a foolhardy plan. Most people do not try and time any of their other insurances, so your health coverage should be thought of in the same way. You can avoid the insurance company declining the application, monetary penalties, and mandatory delays simply by purchasing coverage when you were supposed to originally.
Call an agent and talk to them. Call us! The Medicare puzzle can be complex at first glance, but we’ll make it simple. It’s a good idea to speak with our experts, learn from other’s mistakes, and avoid future complications when it comes to Medicare.
Hyers and Associates is a full service insurance agency working in several states across the country. We specialize in Medicare supplements, Medicare Advantage, and Part D prescription drug plans. We offer all plans direct and at no additional cost.