By Susan Stewart, Licensed Insurance Agent
This past summer, I turned 65. Though I am still employed, it was my opportunity to decide whether to keep employer insurance or move to Medicare. I made the move to Medicare. Even with my employer, my premiums and copays were high. How did I decide which way to go? Medicare Advantage or Medicare Supplement (also known as Medigap)?
I thought about it for months, considering my finances and what retirement will look like for me.
A Medigap policy is the easiest way. I know that. No networks. These plans let you see any provider that accepts Medicare, and in a world of ever-shrinking health networks, a Medigap would make life simpler, especially in the event of major health problems requiring multiple providers and facilities. However, a Medigap policy requires an additional premium on top of my Part B premium, which put me off.
I could have considered a High-Deductible Plan G, which is a type of supplemental health insurance that covers additional medical expenses not covered by traditional Medicare. The plan has a deductible of $2,870. I would pay 20 percent for all my medical care until I reached the deductible, at which point my plan would cover 100 percent of my care.
However, I know myself. I would put off medical care to avoid such a large deductible. Only in dire need would I consider paying. With a Part G, premium would have been about $60 a month, in addition to my Part B premium of $185 in 2025. I would need a prescription drug plan and would not have any dental coverage. And in exchange for Plan G with a lower deductible of $257, I would have had to pay about $140 a month on top of my Medicare Part B. As with other premiums, which always rise and do not decrease, that cost would have only grown in the future.
On the other hand…
A Medicare Advantage plan generally has low or no premiums, but there are networks and copays or coinsurance. These plans offer prescription drug coverage (required by Medicare at age 65), as well as some dental, vision, and hearing benefits.
I decided to bank on my good health and went with a Medicare Advantage plan. But even today, six months after turning 65, I still think about it. There’s no way to know what could change with my health, but in looking at my finances in the future, retirement is going to be tight. An ever-increasing premium is not something I can financially carry. I paid attention to the maximum out-of-pocket when I chose my Medicare Advantage plan, as that is the point: Should I become very ill, my plan would go to 100 percent.
Pay up front or pay as I go. That’s the risk. The decision. In a perfect world where I wouldn’t eventually need to live on a tight, fixed income, I would have a Medigap policy. Hands down. I would buy a good dental plan, too. But the world isn’t perfect, and sometimes you have to make risky decisions.
If you’re about to turn 65 or take up Part B at retirement, here are a few questions you should consider:
· Are you a risk taker? Or do you prefer to pay more now and know what your costs will be/could be?
· What do you or will you live on each month? Look at your budget and calculate what you can afford.
· How is your health? How often do you see a doctor? If your health is fragile, your financial risk increases, and you have fewer provider choices with a Medicare Advantage plan and its networks.
· What’s available in your area? Some areas of the country have few or no Medicare Advantage plans. Investigate your options.
· Does your state allow changing from one Medigap plan to another? This can be tricky to do because only some states allow you to change, under specific circumstances. Once you’re in a Medigap, you’re generally in it going forward.
Some states and circumstances can permit changing from one plan to the other, but that can be tricky. Talk to your insurance agent. Get a quote for all your options. Be informed. That’s the way forward.
I realize there’s no perfect answer when it comes to choosing a Medicare plan. It’s a deeply personal decision that depends on your health, your finances, and how much uncertainty you can live with. The important thing is to take the time to understand your options and make the decision that seems right for you.