Traditional Medicare or Advantage? How to choose your coverage
It’s that time of year again, when celebrities of a certain age appear on TV to pitch insurance plans and people covered by Medicare have to figure out which of the dozens of options makes sense for them.
Open enrollment for Medicare runs until Dec. 7. People who are newly eligible can enroll whenever they turn 65, but those who are already signed up generally can only make changes once a year.
While it might be tempting just to go on Medicare’s website and choose an insurance plan with four or five stars, the ratings aren’t always useful in deciding whether a plan will work for any particular person. And the plan someone chooses can determine which doctors they see, which medications they can easily get and how their care costs them.
The first step in picking the right plan is to determine if signing up for Medicare is actually the best option, since some people who are still working would rather keep their employer-sponsored coverage, said Clarice Ambler, lead counselor for the State Health Insurance Assistance Program at the Denver Council of Regional Governments. SHIP programs are state-funded and offer free help navigating the Medicare sign-up process.
Once someone has decided to enroll in Medicare, they face an array of choices. A person living in Denver’s 80220 ZIP code could choose between 36 Medicare Advantage plans, which are administered by insurance companies. If they chose traditional Medicare, which is run by the federal government, they’d still have to sort through 23 drug plans and 12 supplemental Medigap plans.
Medicare Advantage plans offer some extra benefits, like coverage for dental care, vision and hearing, Ambler said. The trade-off is that the plans have networks of providers, meaning that a person who travels often or splits their time between two states might have trouble getting care, she said.
Traditional Medicare doesn’t offer extras, but providers accept it anywhere in the United States.
“You want to look at what kind of flexibility you need,” she said.
Advantage plans also are more likely to require referrals for care, so if it’s important to stay with certain doctors, it’s worth checking if they’re in-network, Ambler said. Plans can also be designed differently, so people should understand how much their prescription drugs will cost them and what out-of-pocket costs they might face before signing up, she said.
Medicare Advantage plans typically have cheaper monthly premiums and a survey commissioned by a group representing insurers found about 94% of people enrolled in them were satisfied. On the other hand, people who need home health care or who are in the last year of their lives are more likely to switch out of their Medicare Advantage plans, suggesting the plans may not meet their needs, according to the Government Accountability Office.
A report from the Office of the Inspector General also found that about 13% of a sample of care denied by Medicare Advantage plans should have been approved under Medicare rules, and doctors have reported sometimes lengthy battles to get approval to provide care.
Advantage plans do offer greater simplicity in one way, though, because all of a person’s coverage is bundled together. People who use traditional Medicare have to choose a Part D prescription drug plan and decide if they want supplemental coverage to cover their out-of-pocket costs.
Prescription plans vary in which drugs they cover and how much patients pay out-of-pocket, so it’s a good idea to call the insurer and make sure you have the latest information before buying a plan, Ambler said.
Medicare beneficiaries could change Part D or Advantage plans every year if they wanted. It’s not so simple for supplemental coverage, known as Medigap plans. People who have just signed up for Medicare have a six-month window where insurers that sell Medigap plans must let people buy any plan they want, and can’t charge extra if someone has health problems. Once that six-month window closes, insurers are free to deny coverage or charge more if they think the customer is in poor health, with some limited exceptions.
Medigap “is the one part of Medicare where you don’t get any flexibility,” Ambler said. “If they decide to sell you a plan (after the enrollment window), it’s going to be more expensive.”
Some people have discovered that when they decided to switch from Advantage to traditional Medicare, only to find they were priced out of supplemental coverage. That means people need to consider the possibility that they might need help covering their out-of-pocket costs in the future, even if they’re healthy and financially stable now, Ambler said.
“You want to think, ‘What am I going to need 15 years down the line, 20 years down the line,’” she said.
People who are confused about their options can reach out to their county SHIP program for help sorting through the available choices, Ambler said. Brokers also can help with the sign-up process, but they often get paid on commission, so customers can’t be certain that their recommendations are based on an unbiased assessment.
“It sounds like a lot when you lay it out like that, but there are tools that make it more manageable,” Ambler said.
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