Ten questions to liven up your Thanksgiving conversations.
As families and friends gather around the table for Thanksgiving, conversations can get quite lively. There are football rivalries, family stories, and fashion trends to discuss. And look out for anyone getting close to age 65 or already on Medicare. They may bring up the scintillating topic of Medicare plans.
Much like the long-standing debate of whether pumpkin pie or sweet potato pie is THE pie for dessert, the battle rages on whether you should have a Medigap plan with your Medicare Parts A and B. Or if you should tack on a Medicare Advantage plan once you are enrolled in Parts A and B as a packaged option.
Where do you stand on these two very different options? And, how do you know you are right? Let’s first dive into the differences between these two hotly advertised products. Then, take a look at a list of 10 questions to help narrow down your decision.
Medigap and Medicare Advantage Plans are sold by insurance companies
You recognize the insurance companies from their ads: Blue Cross, Humana, Aetna, United Healthcare, and so on. These big players in the health insurance market offer products you need once you’re in Medicare. Medicare is not free, and it won’t cover all the costs of your healthcare.
After you enroll in Medicare Parts A and B—most enroll online at SSA.gov—the next decision is downright daunting.
“It can be incredibly complicated for people who have never dealt with health insurance to decide Medigap or Medicare Advantage,” David Dupuy of Senior Health Insurance Advisors in Middleboro, Massachusetts states. “It can be overwhelming, extremely time consuming, and then you can end up with a plan that costs too much or doesn’t work the way you thought it would.”
That’s because while both Medigap and Medicare Advantage (MA) plans pair with Medicare, they operate very differently, have completely different cost structures, and require distinct levels of involvement.
Structural differences and budget implications
At the most basic level, Medigap plans sit under Medicare Parts A and B to pick up the crumbs. These plans pay your share of Medicare-eligible costs. Without a gap or supplemental plan, you will be responsible to pay (in 2023):
- $1,600 when you land in the hospital,
- $200 per day in skilled nursing rehab if you stay more than 20 days, and
- 20% of your doctor bills, outpatient services, and chemo treatments.
- And more…
Buy a comprehensive Medigap plan and you only pay a set monthly premium. And, importantly, all doctors, clinics, specialists, hospital systems, etc. across the country automatically accept your supplemental insurance if they otherwise take Medicare. These plans offer as much flexibility as you can get in the land of health insurance.
With Medicare Advantage plans, you aren’t buying secondary insurance. Rather you are buying into a network healthcare system. You agree to use doctors, specialists, and hospitals in your local area network. In return, your monthly premiums are low or zero. You will, however, pay nickel and dime copays every time you use any part of the network. You’ll pay your share of costs up to an out-of-pocket maximum of $8,300 for in-network care in 2023.
“If all their doctors and specialists are in the same HMO network already, a Medicare Advantage plan can be considered,” Dupuy shares how he helps his clients assess their options. “But if several key doctors are out-of-network, even a PPO or HMO-POS is going to cost more than a Medigap. And that’s a budget-buster for many people.”
HMO, PPO, HMO-POS – so many acronyms
In the last dozen years, the MA options have become more complicated. There are several “flavors” of these plans each person can consider:
HMO—Health Maintenance Organizations are the most restrictive MA plans. Monthly premiums are $0 or low-cost but you must use network doctors and facilities. One doctor oversees all parts of your health care, and you must get referrals and pre-authorizations for specialists, surgeries, hospitalizations, and treatment options for chronic conditions.
PPO – Preferred Provider Organizations offer a wider range of flexibility with fewer restrictions. You can use in-network or out-of-network providers without referrals. However, you pay significantly more when using out-of-network providers. It’s common to see maximum out-of-pocket costs structured along the lines of $7,550 in-network and $11,300 in and out-of-network.
HMO-POS – Health Maintenance Organization with a Point-of-Service option. This hybrid product has the restrictions of the HMO network and generally requires referrals for additional care. But referrals can go to out-of-network providers. However, you’ll pay a higher cost.
There are a few other options with MA plans, but most people choose between the HMO and PPO.
Notable differences between dental and drug coverage
In the original Medicare Act of 1965, prescription drug coverage and dental plans were specifically and intentionally left out of the law. When MA plans first started, they included coverage for both drugs and dental (and several other benefits) as an “advantage.” Today, coverage for dental and drugs is readily available regardless of the plan you choose.
Dupuy mentioned that dental coverage benefits are often a big piece of the decision-making for his clients. “Even if they will only get $1,000 toward dental procedures, which is typical, that can be a big help for many seniors.”
In MA plans, dental and drug coverage are rolled into the packaged products.
- Most plans offering a dental benefit pay a set amount for major dental work such as a root canal or bridge (around $1,000). And you won’t have a copay for cleanings and basic x-rays if you stay in-network.
- MA plans that include prescription drug coverage are MAPDs. If you choose a MA without drug coverage, you generally cannot buy a stand-alone Part D plan.
If you go the Medigap route, you can also get dental and drug coverage.
- For about $35 or $50 per month, you can add on dental coverage. Just do the math first. Will you spend $600 most years on your dental care? You will pay that in premiums. Check with your dentist to see if they have a different pricing option once you’re on Medicare.
- Shop for stand-alone Part D drug plans that cover your prescriptions. You’ll pay a monthly premium to use that plan. And drugs will be priced in tiers and based on the pharmacy you choose.
Talkin’ turkey at your Thanksgiving table
Now that you are armed with the basics between Medigap and MA, which plan is going to work for you? Each person will make their individual choice.
To encourage a healthy discussion about the merits and downfalls of both options, start with these 10 questions. Hear from others’ experiences and consider both options before making your final decision.
- Are you willing to give up your doctor and be assigned a new one who is a gatekeeper in a MA HMO network?
- Is it critical to stick with your specialists and hospitals for your ongoing care?
- Do you spend weeks at a time out-of-state—perhaps grandkids live in another state, or you have a second home?
- Do you have cancer or an auto-immune disease that requires outpatient treatments?
- Is your budget flexible enough to handle inconsistent, but potentially high, out-of-pocket costs some years during retirement?
- How much do you have socked away in a Health Savings Account (HSA) or other “bucket” to cover an OOP of $8,300 or higher if you have a significant health event during the year?
- Are you willing to be highly involved in your plan’s rules and advocate for yourself if you do not get a referral or specialist you want?
- Is your spouse or your health care proxy equipped to fight with your insurer for care you need?
- Will a $1,000 dental benefit be enough to influence your decision?
- Can you patiently navigate the appeals process when you disagree with a claim or payment?
Last note
Medicare’s Open Enrollment Period (OEP) is going on right now. Each fall between October 15 and December 7, you take a fresh look at your plans to see if any changes are needed. It’s especially important to look at your prescription coverage. You can change your Part D plan or MAPD during this period. Otherwise, you’re generally stuck with the plan you have after December 7th.
Have a wonderful Thanksgiving, and enjoy the conversation as you pass the dressing. Or is it stuffing?
Source: The Street
