Should I Switch? Medicare vs Medicare Advantage vs Medigap

Judy H. wrote to ask me about her Medicare coverage. She says she’s confused by all the information and choices out there. She’s not alone! She’s looking at Medicare Advantage vs Medigap (Medicare Supplement).  Or should she return to Original Medicare and pay the 20% on her own?

While I’m not a Medicare expert, I do understand some of the basics. I also did some online snooping to hopefully help guide her to finding an answer that’s right for her. Here is her question and my response. Your situation may be different, but hopefully this can help you decide too:

Decision: Medicare vs Advantage vs Medigap

Dear Ronnie Ann,

I am on a fixed income. I am currently enrolled in a Medicare Advantage plan, specifically in Blue Cross/Blue Shield Senior Blue. My monthly premium is $109 + the $164.90 that’s automatically deducted for my Medicare. This plan includes Medicare Part D [drugs]. I have co-pays for doctors, medicine + a hospital co-pay of $285 a day for the 1st 7 days in a hospital.

I’m beginning to wonder if I should just drop the Medicare Advantage plan & go with straight Medicare & pay the 20% co-pays or if I should look into a Medigap (Medicare Supplement) plan. There are dozens of supplement plans out there. It’s very confusing as to whether it pays to keep things as they are or make changes.

Thank you in advance, Ronnie Ann. Any input on my dilemma would be much appreciated.

~ Judy

——–

Dear Judy,

It’s a really great question. Many people face the Medicare Advantage vs Medicare Supplement (Medigap) question every day. As for going back to Original Medicare only, I think that one is easier to answer for you. I’ll get to that in a moment.

Unfortunately the answer to which Medicare Part C plan would suit you best depends on your specific circumstances. Your physical condition, how much regular medical care you need, what prescription drugs you depend on, etc. But I will do my best to help guide you to finding the right answer for you.

Why not Original Medicare only?

First, I think we can eliminate Medicare on its own, (original  Medicare) with you paying the other 20%. Because of your circumstances, I think that would leave you the most financially at risk. This summary from CNBC offers some good reasons:

“If you’re thinking about having basic Medicare without any supplemental coverage, experts have a message for you: Don’t.

With deductibles, copays, coinsurance and — this is a biggie — no out-of-pocket maximum, the program has a variety of costs that make having no backup insurance a huge financial risk.”

“All it takes is one big hospital stay and you could be out tens of thousands of dollars…”

As for Medicare Advantage vs Medigap

Unfortunately the answer depends on your specific circumstances. Your physical condition, how much regular medical care you need, what prescription drugs you depend on, etc. But I will do my best to help guide you to finding the right answer for you.

You say you’re on a fixed income, and according to Medicare & You (official Medicare publication) for plain old Medicare “There’s no yearly limit for what you pay out-of-pocket.” So just one expensive hospital stay or costly treatment could wipe you out — and land you in debt. So finding the best plan for you matters.

Where to start looking for help

You can find some very helpful articles by googling “Medicare Advantage vs Medicare Supplement.” These will answer some of your basic questions and provide a solid framework for going elsewhere to ask for more help. (Good to know the native lingo.)

I’d also contact your current insurance provider. Most of them can guide you through at least some of the Medicare Advantage vs Medicare Supplement issues. In addition, most communities have a non-profit or governmental organization that can help with decisions like this, since many of us find all this unnecessarily confusing.

And if you can’t find a local place for answers on your own, try calling a local government official’s office (Congressperson, State Senator, council member) and explain what you’re looking for. At least one of them should be able to point you in the right direction.

Medicare Advantage vs. Medigap (Medicare Supplement)

So now we turn to your current Medicare Advantage plan versus the Medicare Supplement (Medigap) option, of which each has … ugh … lots of additional subsets of choices. (I’ll just stick to the overview here.)

Although I wish there were a one size fits all answer, you are going to need to look at your own needs and see how well each plan serves you. Include which plans are available in your area and which doctors they cover. I know … it’s a lot!

To do that, I’d suggest making a Pros & Cons chart for each of the two plan types for your particular needs.

Also make sure to pay special attention to things like part D. You have it now with Medicare Advantage. But if you switch to Medigap, you’ll need to buy it:

“Part D premiums range from $10-$100 per month (depending on the plans available in your area and on the particular plan you choose). The maximum deductible — the amount you must pay out-of-pocket before Medicare will contribute to your prescription costs — in 2016 is $360. After you meet the deductible, Medicare will pay roughly 75% of your prescription costs.” ~ Source: Nolo.com

Also, you’ll want to pay attention to things like deductibles for each Medicare plan option. And any annual / lifetime caps for your own spending, and whether you can choose the doctor you want. In addition, your conditions and special medical needs may play a role in what each may cost you. Or even if you qualify at all for the Medigap plan you want.

What about asking a broker for help?

When I first heard about insurance brokers, I had some doubts. And I’m sure some are better than others. But if you ask around or do online research, a good broker can cut through all the confusion and zero in on what would work best for you.

I’ve had friends who have used them (again do your research) and they are very happy with the results. Not only were their brokers up-to-date on the latest plans and any changes in regulations, but they keep my friends informed as changes occur. Can’t guarantee they all do that, but a good one will.

A few more thoughts

Again, a really good starting point would be your own current insurer (assuming you like them), since I believe they have both types of plans. If not, worth a call to an insurer or two who do have the type of plan you’re considering.

Now you can see why figuring out the best way to go when it comes to Medicare Advantage vs Medigap (Medicare Supplement) is hard for so many people. And again, within each there are more options to think about. For me, this is not the time to go it alone. Find good help and be patient with both the helper and yourself.

I know this sounds like (and is) a LOT of work, but hopefully you’ll get some good answers that make sense for you. And the answers you find now can be there to serve you for a long time to come. Good luck with your decision!

~ Ronnie Ann

NOTE:  Not every area of this country offers both Medicare Advantage and Medigap (Medicare Supplement). So do a search online or contact your local Social Security office to make sure what’s available where you are. For instance, I was surprised to find out that New York City only offers Advantage plans, except for a handful of extremely costly Medigap / supplement plans.

Want to know more about money?

How To Create a Cash Flow Spreadsheet

How To Create a Budget Plan Spreadsheet

Advantages of SEP IRA Plans for Freelancers

Why Diversified Investing Is So Important

I Want To Learn To Invest in Stocks

Roth IRA vs Traditional: What’s the Difference?

When Should I Use My IRA If Out of Work?