September 26, 2017 — The Open Enrollment Period for Medicare Part D and Advantage Plans starts soon; it runs from October 15 to December 7. Since this is your window to make changes in your plan or sign up for new coverage, it is an excellent time reconsider if Medicare Advantage or Original Medicare is your best option, as well if you have the right Prescription Drug coverage plan (Part D). We gained a new appreciation for how complex this topic is as we wrote this article. It will provide you with some basic background information to start thinking about this issue, but do not make any important decisions like this without careful thought and research. This is part of a 5 Part series on Medicare.
Signing up for Medicare and Medicare Basics
You have 7 months to sign up for Medicare in all its forms when you turn age 65 with no penalties. That 7 month period starts 3 months before the month you turn 65, the month of your birthday, ends 3 months afterwards. Thereafter there are open enrollment periods when you have the option to change plans and coverage.
As a refresher, original Medicare includes Part A (hospital coverage) and Part B (doctor services). Almost everyone eligible for Medicare gets Part A at no cost, but Part B requires you to pay a premium ($134/month for most people, higher income taxpayers pay more). Medigap policies are available from private insurers and provide coverage on top of original Medicare. Part D is Prescription Drug coverage (you pay a premium). Part C is the Medicare Advantage program, which is offered by a list of government approved companies. Your Part C premium will which vary by type of plan and provider – sometimes it is $0 for certain “skinny” plans.
More about Medicare Advantage
According to the Kaiser Health Foundation about 28% of people on Medicare have Medicare Advantage plans, and that percentage is climbing. If you join a Medicare Advantage (MA) Plan you’ll get your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage from the Medicare Advantage Plan and not Original Medicare. The government pays your MA provider a fee every month, and if you need services the MA pays them. However, each Medicare Advantage Plan can charge different out-of-pocket costs. They can also have different rules for how you get services, like whether you need a referral to see a specialist, or if you have to go to doctors, facilities, or suppliers that belong to the plan. Most Medicare Advantage Plans offer extra coverage like vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug coverage (Part D). You usually pay a monthly premium for the Medicare Advantage Plan, which might or might not include your Part B premiums.
If you have a Medicare Advantage Plan you should receive a notice prior to the Oct. 15 enrollment period from your insurance company notifying you of changes in the plan for the coming year. It is important to review those changes to decide if: you want to stick with that company, shop around, or switch to original Medicare plus Medigap. Medicare Advantage has a separate Disenrollment period from Jan. 1 to Feb. 14 – this is when you can drop Part C and choose Original Medicare – but not vice versa.
Which Plan is better for you – Original Medicare (Parts A and B, plus optional Medigap coverage) or Medicare Advantage (Part C)?
There are two options for the people who want supplemental coverage beyond Parts A and B. You can opt for original Medicare Part A and B and add on a Medigap policy, or you can opt for Medicare Advantage for your supplemental coverage. Garrett Ball was interviewed in an informative article on the SquaredAway Blog about the advantages and disadvantages of Medical Advantage vs. original Medicare plus Medigap plans. Approximately 10% of his clients end up with Medicare Advantage vs. 90% who elect Medigap coverage. Ball is an insurance broker and the owner of Secure Medicare Solutions in North Carolina (his website, 65medicare.org has some great resources on this complex issue).
Some pros and cons of Original Medicare vs. Medicare Advantage
There are “advantages” and “disadvantages” to both types of plans.
– A big advantage of Original Medicare is you get out of network coverage. This is usually very important if you live in two places, travel frequently, or have to be able to access a wider network of medical providers or use services not authorized by your MA provider
– If you have a Medigap policy on top of your original Medicare, coverage on that cannot change (at least as long as we have Obamacare)
– Prescription drug coverage is a separate plan (and added expense)
– You probably need to consider adding a Medigap plan to pick up uncovered expenses and co-pays.
Medicare Advantage (MA)
– A big advantage is lower premium costs (even $0), since this is more of an HMO type approach to health care. However the lower the premium the higher your co-pays and deductibles might be
– MA plans might pick up deductibles and co-pays not covered by original Medicare
– MA plans offer the convenience of 3 plans in one – Medicare, prescription drug, and supplemental insurance
– Emergency and urgent visits are covered everywhere in the U.S.
– Prescription drug coverage and sometimes vision and dental are normally part of MA plans, while those are an extra expense and more providers to pay with original Medicare
– A disadvantage is that you must stay within a network of medical providers; going outside the network can be expensive
– You might be charged more if you later decide to switch from Medicare Advantage to a Medigap plan, since the latter can ask about (and charge you more for) pre-existing conditions.
– Doctors can come and go in networks. For that reason you need to check to see if your doctors will still be in your Medicare Advantage network
– You might have to get a referral to get approval for some services, which might not be covered by the plan.
– Congress has targeted the extra expense paid to Medicare Advantage providers in Obamacare repeal efforts, so in the future these plans might not be as attractive as they are now
What can I do in the Oct. 15 – Dec. 7 Enrollment Period
So, back to the upcoming Medicare enrollment period. Here are the things you can do during this 7 week period:
– Change from Original Medicare to a Medicare Advantage Plan.
– Change from a Medicare Advantage Plan back to Original Medicare.
– Switch from one Medicare Advantage Plan to another Medicare Advantage Plan.
– Switch from a Medicare Advantage Plan that doesn’t offer drug coverage to a Medicare Advantage Plan that offers drug coverage.
– Switch from a Medicare Advantage Plan that offers drug coverage to a Medicare Advantage Plan that doesn’t offer drug coverage.
– Join a Medicare Prescription Drug Plan.
– Switch from one Medicare drug plan to another Medicare drug plan.
– Drop your Medicare prescription drug coverage completely.
Whew! There is a lot to think about here. The big thing is to confirm that you have the right kind of plan for your needs, and that it will still do that next year. If it looks like your lifestyle or health is changing, or if your insurer is changing the plan or providers in a way that doesn’t fit you, this enrollment period is your chance to make things right. If you are shopping for a Medicare plan, go to https://www.medicare.gov/find-a-plan/questions/home.aspx and medicare.gov.
Comments? Do you questions or war stories about deciding to use a plan from original Medicare or Medicare Advantage? Please share your thoughts in the Comments section below.
For further reading:
Part 1: So You’re Turning 65: Here Is Your Medicare 101 Course
Part 2: “Topretirements Members to Washington: We Like Medicare, Please Keep It That Way”
Part 3: What to Do about Medical Insurance When You Retire Early
Part 4: Medicare Advantage vs. Original Medicare
Part 5: What Is Medigap Insurance and How Can I Find the Right Policy for Me