Marvin Kolodny couldn't be happier with the way he gets health insurance: It's through a Medicare Advantage plan he'd found when he turned 65. For a $29 a month premium, (in addition to his regular Medicare premium deducted from his Social Security payment) he gets Medicare insurance, along with certain other benefits, such as eye care and gym membership coverage — although dental would be an extra charge.
Kolody "would absolutely" recommend what he has — an AARP Medicare Complete Advantage preferred provider plan, insured by United HealthCare. Sure, it has an in-network list of doctors and hospitals. But that's fine for the "relatively healthy" Carmel, Ind., resident. In fact, the most he'd ever have to pay out of pocket for using in-network providers would be $6,700 annually.
But are Advantage plans the right personal finance path for many people to take?
That issue grows ever more pressing, both for some people right now, during Medicare's annual fall open enrollment period, and broadly, for the hoards of baby boomers, who reach age 65 each year. That's the age when Americans — with some exceptions — need to sign up for Medicare to avoid higher costs later. (Typically, they automatically get Medicare Part A hospitalization coverage but have to sign up for Part B — covering the cost of doctors' visits, tests and the like, and pay a premium for that part.)
Where a key choice — with potentially long-term affects — comes in: Whether to get a package of Medicare benefits through Medicare Part C, which involves buying a Medicare Advantage plan from an insurance company, or get Medicare from the government, and then buy a supplemental "Medigap" plan from an insurer and get a separate Medicare Part D prescription drug plan.
(Choices available during Medicare's fall open enrollment period, which ends Dec. 7: enroll in a Medicare Part D prescription drug plan or switch Medicare drug plans, change from an Advantage plan to Original Medicare and visa versa or change Advantage plans.)
But picking between Advantage and Medigap gets tricky because they serve different purposes. While Advantage plans provide a one-stop package of Medicare benefits, typically including drug coverage, and involve copays for services, Medigap aims to cover costs that Medicare doesn't.
Evidently, Advantage is proving to be the hotter ticket: Today, 31% of Medicare beneficiaries have an Advantage plan, according to the Kaiser Family Foundation (KFF). By comparison, the KFF's most recent data show 30% of beneficiaries have an employer- or union-sponsored retiree medical plan, 23% have a Medigap plan and 14% no supplemental coverage. (The percentages exceed 100 because some people have multiple sources of supplementary coverage.) By 2026, the Congressional Budget office projects that about 41% of Medicare recipients will have Advantage plans.
Cost is one striking consideration. Illustrates insurance agent Bryan Gay: "As a rough national average, a person turning 65 would pay a premium of around $140 a month" for a top-of-the line Medigap (so-called Plan F) offering "plus a prescription drug plan. But with an Advantage plan that person's monthly premium would be about $30. And in many larger cities it's zero," says Gay, of Boomer Insurance Group, Richmond, VA. (Figures exclude the separate premium for Medicare Part B.)
Among other Advantage attractions: Offerings typically include a dental plan, as well as extra features not covered by Medicare, such as eye care and hearing-related costs, and annually cap policy holders' out-of-pocket outlays for health services.
On the downside: Advantage plans often limit participants to in-network doctors and hospitals. But if unhappy with network options, people — especially with health issues — may not be able to switch to Medigap, experts say. Why? Insurers might not accept them. Moreover, those with high ongoing medical costs might spend more on health care with an Advantage, than a Medigap.
Thus, "if a person can afford a Medicare supplement plan, I will always recommend that over an Advantage plan," holds independent agent Natalie Cooper in Columbus, Ohio. "The truth is, the older people get, the more medical services they require. With a Medigap plan, they wouldn't get bogged down with obtaining referrals and authorizations."
Moreover, "snowbirds (who go to warmer climates in winter) are much better off with a Medicare supplement because they won't be limited to a specific network of doctors and hospitals in their hometown area," says Cooper of Best Quote Insurance.
Consultant Diane Omdahl says most of her clients choose a Medigap policy. "Many have concerns about health and want to protect themselves against sudden out-of-pocket costs," she explains. "With a Medigap plan, they face higher monthly premiums than they would with most Advantage plans. But they may not write as many checks for services," says Omdahl, president of 65 Incorporated, a Medicare enrollment assistance group in Mequon, Wis.
But whatever the individual coverage choices, there's one point of wide accord: Medicare is dauntingly complex. Experts cite a sea of factors to weigh, from pricing of policies to the ability — with some exceptions — even to qualify for a Medigap policy if you missed your Medigap open enrollment period, which is when you can get a Medigap policy without regard to your medical history or pre-existing conditions.
So how does one find the best choices? Some helpful sources:
by Margaret Price |
Author: Margaret Price
Source: Investor's Business Daily, Inc.
Retrieved from: www.investors.com