Original Medicare verse Medicare Advantage Plans
Original Medicare or Medicare Advantage …that is the question.
In retirement, for those that are 65 or older and who are no longer covered by health insurance from an employer of spouse’s employer we are faced with the decision of having to choose between either enrolling into Original Medicare or opting for a Medicare Advantage Plan (MA Plan).
Now, this is not an easy decision as each type of coverage has its pros and cons and, currently, there is, actually, way too much of information to sift through so it is urged that you seek advice from a trained health care professional before making any decision.
**Note: you cannot own both types of coverage at the same time**
A. Original Medicare:
With Original Medicare you will enroll into what is widely known as the “alphabet of coverage” which is:
- Part A – covers all hospital costs if you are admitted as an inpatient for a medically necessary procedure.
- Part B – Physician visits (as long as they take Medicare)
- Part D – Prescription Drug coverage (this form of coverage is administered by private health insurers that do set the terms and conditions, but must adhere to Medicare requirement
- Supplemental Coverage or a MediGap Plan – this just covers the co-pays, deductibles and excess charges that come with Parts A & B while it will also extend coverage for certain things like hospital stays & blood. ***This is the big difference between the two options***
Keep in mind that with Original Medicare you will have separate premiums, co-pays, deductibles and excess charges for each type of coverage.
As of 2014, Part A is free, Part B premiums are automatically deducted from your Social Security benefit with an option to have your Part D premiums deducted as well and MediGap Plan premiums will be paid to the private insurer that administers your plan.
What is great about this coverage:
1) As long as the physician, the facility or the care provider (things like ambulance provider) accept Medicare and you have a “medically necessary” reason to use Medicare you are covered.
This means NO Networks.
This also may mean that a physician who doesn’t accept Medicare may not see you.
2) If you are “fully covered” meaning you have a MediGap Plan the opportunity to stay in a hospital indefinitely is available.
A big pro for this is for people who have chronic ailments later in life that need medical attention, but may not be either progressing or regressing. Under these “Gap” plans as long as you are admitted as an inpatient and the physician deems your stay to be “medically necessary” then your stay will be covered.
3) Your ability to receive care/coverage anywhere in the United States, again, as long as the provider accepts Medicare (this is great if you plan on traveling).
4) The overall cost, when doing apples to apples comparison verse Medicare Advantage plans is usually cheaper under “normal circumstances”.
As you age, even if you experience no health issues at all, the cost of a MediGap Plan may increase (these plans are based on age, residency and gender in most States).
What is not that great about this coverage:
1) Obviously the payment structure
As you age there is about a 50% chance of a you having some form of memory loss past the age of 80 years old, with the payment structure being broken up into parts there may be the off chance that a bill is not paid.
2) Lack of Coverage since Medicare does NOT cover:
- Most routine physicals or exams unless they are part of a “medically necessary” procedure.
3) Due to reimbursement rates continuing be lowered the as stated above, some providers of care are starting to decline Medicare beneficiaries.
4) If you select a MediGap Plan the rate may increase annually.
Please note: that there is a 6 month period of guaranteed insurability from the time you accept Medicare Part B (if you are not late) for MediGap Plans.
This means that your health history can NOT be used against you when determining cost or acceptance. The insurer you choose must accept you at the best rate available at that time.
If you miss this 6 month window of guaranteed insurability you can still purchase a MediGap Plan at any point, but you will be subject to the terms & conditions of that private health insurer – meaning you could be charged a lot more for coverage than before or even rejected entirely.
Please see – http://www.medicare.gov/find-a-plan/staticpages/learn/rights-and-protections.aspx
B. Medicare Advantage Plans (MA Plans)
This is coverage through a private health insurer who, by law, must provide at least the exact same coverage that Original Medicare (Parts A & B) provides, but still can offer a wide variety of other types of coverage as well.
Please note that:
Each health insurer that is offering a MA Plan is subject to oversight by the Centers of Medicare/Medicaid Services (CMS) and must adhere to its rules and regulations.
Even if you select to enroll into an MA Plan the Part B premium that your are subject to will still be deducted from your Social Security benefit (this includes the surcharges for Parts B & D too).
In order to purchase an MA Plan you must first enroll into BOTH Parts A & B and then select coverage during your Initial Enrollment Period.
What is great about this coverage:
- Possible better coverage, as there a multitude types of plans to choose from depending on your residency and budget that can also provide for things not covered by Original Medicare, like Vision, Hearing, etc…
- There is the possibility of “free” coverage as most carriers receive subsidies for selling plans, which they, sometimes, pass on to you, the insured (with recent legislation being passed the subsidy may be lessened over time though.)
- Possible caps on how much out pocket costs you may face in retirement.
- One bill and the opportunity to also have your Part D (prescription drug) coverage paid for through the same carrier as well
- In network coverage which may be a double edged sword as you may not get to see the specialist you want, but those care providers who are in the network do really want to see you.
What is not great about this coverage:
- In terms of a possible extended hospital stays, it may depend on how you are progressing or not as the MA Plan provider may not cover a stay where you have stabilized for an extended period of time.
- Possible cuts, due to the Affordable Care Act, may place pressure on those private health insurers to raise either cut coverage, raise rates or change terms.
- Other terms in the Affordable Care Act provide possible better benefits for Original Medicare beneficiaries (another discussion point).
- There may be larger co-pays, deductibles and extra fees depending on the type of plan or even the private health insurer who is administering the plan.
- There can be the opportunity to be denied care as either you are not in the network or the private health insurance provider just denies the claim.
- This breakdown is not to persuade in either direction, but is meant only to provide some very basic information on the differences between these the two types of coverage. For those that need more information, please, and I urge this, ask a health insurance professional for help as well contacting CMS too.
The issue with the choices of health coverage in retirement is that with either selection of coverage not all of your needs may be covered, but with proper investigation and help from professionals the possibility of having a retirement as stress free of health coverage as possible can be met.
Please feel free to add suggestions and or comments as health care, for the present time, is a moving target. Any other information, even comments that are critical of this post, will lead to helping others.
Thank you for your time and I hope some value may be found from this post.