Q & A: October/November 2021

Should I Replace My Medigap Insurance?

Q:  What’s the best way to compare what I currently spend on my Medigap supplement and Part D plan with the costs I would pay in a Medicare Advantage plan?  My Medigap premium has increased by double digits over the past 5 years. 

A:  Comparing Medicare Advantage costs with what you are currently paying with a Medigap and a Part D plan is a good thing to do once a year, in order to get the best coverage for the money you must spend.  It’s an essential first step to take before making any decision to drop your Medigap insurance to enroll in Medicare Advantage.  If you drop your Medigap insurance, you probably won’t be able to get your supplement back again if you change your mind about your Medicare Advantage plan a few years from now.  Unlike almost every other type of health insurance, Medigap insurers can impose waiting periods, and may deny coverage for preexisting health conditions.

Although it takes some bookkeeping work, don’t guesstimate your current expenses and healthcare needs.  Take time to confirm important details.  Here are some tips to get you started:

  • Get your health expense records up to date: You may keep a record of medical expenses for tax purposes, and that’s a great place to begin.  In order to compare costs, break down what you pay for all premiums, Medicare Part B, Medigap, your Part D plan, as well as premiums for dental, vision and hearing services insurance, if any.  List any out-of-pocket costs that you typically pay.  This includes the Medicare Part B deductible, and any co-insurance or excess payments, as well as deductibles and out - of - pocket for Part D prescription drugs.  List what you spend out - of - pocket on dental, vision and hearing services as well as expenses such as eye glasses and hearing aids.  To compare with Medicare Advantage, you will need to know what sort of services you are using and what you typically pay out - of - pocket now for those services, if anything.
  • Learn all your options for Medicare Advantage plans by using Medicare’s health plan finder FIRST:  We recommend using this tool rather than attempting to check plans or insurers individually, which can quickly overwhelm ANY human brain and exhaust all of your patience.  You can talk to insurers later to get details when you are ready, and when you have narrowed down your best bets.
  • Free one-on-one counseling is available to assist you in comparing health plans through your State Health Insurance Program (SHIP):  Check https://www.shiphelp.org for your local program and make an appointment with a counsellor.  Medicare Open Enrollment starts October 15 and runs through December 7, 2021.
  • Search for health and drug coverage based on the drugs you actually take:  If you have good internet skills, then try a search on Medicare.gov,  and input the drugs you take to help pull up a list of the most appropriate plans.  You may want to print out the list for later reference.
  • Understand the type of plan:  If you live in an area with multiple choices, you will likely find different types of Medicare Advantage Plans such as Health Maintenance Organizations (HMOs), Preferred Provider Plans (PPOs), Private Fee for Service plans (PFFS).  HMOs tend to have the smallest networks of participating doctors and hospitals, PPOs tend to cover bigger networks.  Private Fee for Service plans may offer more flexibility, but the out-of-pocket costs can be higher— even more than what you would pay under basic Medicare.
  • Select about two or three Medicare Advantage plans and compare details between these plans:  You will need to check the plan to learn if your preferred healthcare providers participate in the plan — this is one point where you may need to check the insurers’ website to learn if your providers participate in your plan.  You may learn that your doctor or the hospital that you tend to use are not listed.  Would you be willing to change doctors and other healthcare providers to join the plan?  If you have several complex health conditions, be very careful to find out if there are specialists available for your conditions, and all the charges.
  • While you pay more for premiums with Medigap, there are lower or even no out of pocket costs.  You have lower premiums and frequently higher out of pocket spending with Medicare Advantage plans.  While Medicare Advantage Plans have annual out of pocket caps, those caps can exceed $5,000 for in- network services. Look beyond the low or zero premiums and get detailed information about co-pays and co-insurance.  Often, you will pay considerably more for hospital stays under a Medicare Advantage plan than you would with a Medigap supplement.  If you have several chronic health problems and require expensive treatments, Medigap may be a more cost-effective choice, especially when you are older and health declines.
  • The cheapest plan is usually cheap for a reason, and not always a good one:  For example, it may be a new plan and is enticing you with no premiums.  However, you may quickly discover problems, such as lack of coverage for a key pricey drug, or the doctors and hospitals are located two hours away.