Understanding Your Medicare Choices

If you're 65 or older, you're eligible to apply for Medicare. But first, you'll have to consider all the ways you can receive your Medicare coverage:

• Original Medicare only, or with retiree health insurance from an employer
• A Medicare Advantage plan
• Original Medicare combined with a Medigap (supplemental) policy

The last two options are similar in that they are two different ways of covering many of the same services.

What are my Medicare choices?

There are four key factors to consider when choosing a Medicare plan type:

1. Difference between original Medicare and Medicare Advantage

Original Medicare (Medicare Parts A and B) covers basics like hospital services (Part A) and doctors' visits and other outpatient services (Part B). It is called Original Medicare because it was the first type of Medicare program created. Adding an optional Part D plan to original Medicare gives you coverage for prescription drugs, while adding a Medigap plan helps cover the cost gaps in original Medicare coverage.

Medicare Advantage plans are a privately managed alternative to government-run original Medicare. A Medicare Advantage plan covers all the services of original Medicare and typically includes Part D (but not always). Many people often ask, "Are Medicare Advantage plans worth it?" The answer is that it depends on your unique health care needs, lifestyle, and budget. This type of plan may offer additional benefits that original Medicare does not cover (such as dental, hearing, or vision coverage). It is important to check the "enhanced benefits" for the particular Medicare Advantage plan you are considering enrolling in.

2. Advantages of choosing original Medicare combined with a Medigap policy (versus Medicare Advantage)

What exactly is Medigap? A Medigap policy can help pay some of the remaining healthcare costs not covered by Medicare, including coinsurance and deductibles. If you biu a Medigap policy within six months of starting Part B when you’re initially eligible, you have "guaranteed issue protection." This means that the insurance company cannot reject your Medigap application for any reason.

If you do not enroll in Medigap during your initial eligibility period, the insurance company may consider things like your health history when deciding enrollment and cost.

So what are the benefits of selecting Original Medicare plus Medigap instead of a Medicare Advantage plan?

• More flexibility in choosing a provider: The biggest advantage of original Medicare plus Medigap is that it allows you to see any provider who accepts Medicare. This may be a good fit if you have ongoing medical issues.
  
  Medicare Advantage plans, in contrast, are more limited in terms of the provider networks they work with. Many require you to choose a primary care physician (PCP) from within their network. The PCP coordinates your care including, in some cases, referrals to specialists. If you’re in a rural or isolated area, you may have difficulty finding plans that work with your local health care providers.
• Controlled costs: If you have a history of cancer or a recent diagnosis of heart disease, chronic obstructive pulmonary disease (COPD), diabetes, or another chronic condition that will require frequent doctor visits, original Medicare plus Medigap may be a better fit. Your monthly payment will be the same every month, no matter how many doctor visits occur—so a Medigap policy may help reduce your total costs. This can be especially helpful if you’re trying to get a diagnosis for a new health condition and need to seek second opinions.
• Standardized plans: Medigap has standardized types of policies that each pay for the same things, which makes comparing costs relatively simple. These policy types are used all over the country (except Massachusetts, Minnesota, and Wisconsin, who have their own standardization), making decisions easier when moving to another state.
  
  Medicare Advantage plan options differ by where you live, can change every year, and often go by different names depending on the state.

3. What are some of the disadvantages of choosing original Medicare combined with a Medigap policy (versus Medicare Advantage)?

The main drawback is that original Medicare plus a Medigap policy may be more expensive depending on your personal health care situation. Medigap plans can be two to three times the cost of a Medicare Advantage plan. With original Medicare, a Part D drug plan, and Medigap there are three different cards to keep track of and two monthly bills to manage. 

Medicare Advantage plans are designed to navigate the system, contain costs, and increase collaboration among providers. Some people value having a primary care physician (common with many of these plans) to take charge of some of their health care decisions and find the right specialists.

4. What if I sign up for a Medigap policy and then change my mind? Can I drop it and just use original Medicare, or switch to a Medicare Advantage plan?

Both of these options are possible, but timing matters. Some things to consider if you’re wondering “When can I switch Medicare plans?”:

• When purchasing a Medigap policy, there is a 30-day trial period. You are allowed to switch within 30 days of enrollment from one type of Medigap policy to another.
• You may also cancel your Medigap plan and get a refund during the first 30 days. After the first 30 days, the Medigap policy can still be cancelled but not refunded. However, if you cancel your Medigap policy, you may not be able to purchase a new one if you have health issues—or it may cost you much more than when you first enrolled.
• If Medicare Advantage is preferred, it is possible to switch from a Medigap policy to Medicare Advantage during the annual Medicare Open Enrollment period from Oct. 15 through Dec. 7. During this time, anyone with original Medicare can switch to a Medicare Advantage plan. It is important to also cancel your Medigap policy, as it will not work with the Medicare Advantage plan.

Who can help me choose a Medicare plan?

For more information on plans, consider talking to a licensed Medicare benefits adviser. NCOA has partnered with experienced brokers who are committed to helping older adults make smart decisions about their Medicare coverage. These partners all meet our strict Standards of Excellence, which means you can be sure their advice will be unbiased, practical, straightforward, and focused on your needs. Learn more.

You can also call your local State Health Insurance Assistance Program (SHIP) for federally funded Medicare counseling. Visit the SHIP website for details.