Q & A: September/October 2016

Q & A: September/October 2016

Should I Drop Medigap For Medicare Advantage?

Q:  My Medigap premium is more than $250 per month.  I’m paying $104.60 for Medicare Part B and $40 per month for a Part D plan.  I’ve learned there’s a Medicare Advantage plan in my area that only charges a premium of $30 a month, and that includes Part D and some vision benefits.  I’m 72.  Is it a good idea to try Medicare Advantage?

A:  Medicare Advantage plans merit a serious look, but you need to understand the pros and cons to determine the best fit for your budget without sacrificing insurance protection.  The costly trade - offs to lower Medicare Advantage (MA) premiums often don’t start showing up until you get sicker or need hospitalization.  Some key considerations:

  • Low premiums: MA premiums are typically about 60% lower than Medigap premiums, and despite cut backs to plan reimbursements, MA premiums have remained relatively low.  However, if you live in a rural area your plan choices may be more limited, and no matter where you live, your premiums may climb in the future.
  • MA plans include Part D and other benefits:  Nearly 90% of MA plans come with drug coverage and often include some additional benefits.  Before switching it’s important to check the MA plan coverage for the drugs you currently take and compare that coverage with your best Part D drug plan choice.  If you haven’t checked your Part D plan choices recently you may have less costly choices for stand-alone drug plans.  The best way for you to compare MA plan and drug plan choices is to do a drug plan comparison based on the drugs you take using the drug plan finder on Medicare’s website www.Medicare.gov.
  • Higher out-of-pocket costs:  The drawback to MA plans is higher out-of-pocket costs.  Where Medigap supplements pay most or almost all of your covered out-of-pocket costs, there are co-pays and deductibles for most services received through MA plans.  Depending on the type of MA plan you are considering you may be required to use a narrower network of healthcare providers in order to get the lowest costs.  If you are considering an HMO you will be required to use only the doctors, hospitals and providers in the HMO network, or neither the MA plan nor Medicare will reimburse your bills.
  • Annual limits on out-of-pocket costs:  Unlike Medigap supplements, MA plans have annual out-of-pocket limits, which can vary and rise annually.  In 2016 the maximum annual out-of-pocket that plans can charge is $6,700, so your costs would need to be that much before catastrophic coverage begins.  On the other hand, the limit protects you in years when you have very high out-of-pocket costs.  Medigap plans may have lifetime limits that you could potentially exceed as you get older and sicker.
  • You may not be able to get your Medigap plan back:  Under federal law you are only guaranteed the right to purchase a Medigap plan during your initial enrollment period.  If you drop your Medigap plan and later want to get it back you must do so within a year of trying an MA plan.  After that, an insurer may deny coverage or impose 6 - month waiting periods for pre-existing conditions.

This is a tough decision, for which you need independent advice from someone other than the marketing agent of a MA plan.  TSCL strongly recommends that you contact your area agency on aging or senior services department and ask for one-on-one counseling available through your State Health Insurance Assistance Program (SHIP).  The service is available at no charge.  To find a counselor in your area, visit the SHIP website online at: https://www.shiptacenter.org.

 

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