People have choices when enrolling in Medicare on how they want to receive their health care services
The two main options are (1) Original Medicare, plus a Medigap plan or (2) a Medicare Advantage plan.
You need to carefully consider your personal health care, lifestyle and financial situations when making a choice.
Once eligible for Medicare, there are several ways to receive Medicare coverage to consider – Original Medicare only or with retiree health insurance from an employer, Medicare Advantage or Original Medicare combined with Medigap (also called a supplemental plan, or supplement). These last two options are similar in that they are two different ways of covering many of the same services.
There are four key criteria to consider when choosing a Medicare plan type:
1. Difference between Original Medicare and Medicare Advantage
- Original Medicare (Medicare Parts A + 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 the optional Part D plan to Original Medicare covers prescription drugs; adding a Medigap plan (supplement plan) covers the cost gaps in Original Medicare coverage.
- Medicare Advantage (MA) 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). This type of plan may offer additional services that Original Medicare does not cover (such as dental, hearing or vision coverage). It is important to check the "enhanced benefits" for the particular plan you are considering enrolling in.
2. Advantages of choosing Original Medicare combined with a Medigap policy (versus Medicare Advantage)
- The most significant advantage is that it allows beneficiaries to see any provider that accepts Medicare. Original Medicare and Medigap. Original Medicare and Medigap may be a better fit for individuals with ongoing medical issues. Purchasing a Medigap policy within 6 months of starting Part B when initially eligible has 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 health history when deciding enrollment and cost.
- Having 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, may indicate a Medigap policy is a better fit. The monthly payment will be the same every month, no matter how many doctor visits occur -- so a Medigap policy may reduce total costs. This can be especially helpful when trying to diagnose a new health condition and need to seek second opinions.
- Original Medicare generally offers more flexibility with treatment options. Choosing a Primary Care Physician (a requirement of some Medicare Advantage plans) is not a requirement under Original Medicare. You may see any physician who accepts Medicare.
Conversely, Medicare Advantage plans are more restrictive in terms of the provider networks they work with and many Medicare Advantage plans require members to choose a Primary Care Physician (PCP) from within their provider network. The PCP coordinates the member’s care including in some cases referrals to specialists
- Medicare Advantage plans are more restricted in terms of the provider networks they work with. Individuals in rural and isolated areas may have difficulty finding MA plans that work with their local healthcare services
- 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 (with the exception of Massachusetts, Minnesota and Wisconsin 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 disadvantage is that Original Medicare + a Medigap plan 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 communication. Many people value having a Primary Care Physician (common with many these plans) to take charge of some of the decisions and find the appropriate 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 options are available. 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. After the first 30 days, the Medigap policy can still be cancelled but not refunded. To cancel the Medigap policy, contact the insurance company. However, if you terminate your Medigap policy, you may not be able to purchase a new one if you have health issues or it may cost you significantly 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 the Medigap policy as it does not work with the Medicare Advantage plan.
For more information on plans, consider discussing these options with a licensed Medicare benefits adviser. They can be accessed for free by taking our Questionnaire, created by the nonprofit National Council on Aging or call your local State Health Insurance Assistance Program (SHIP) for federally-funded Medicare counseling. Seeking professional advice (and doing research upfront) can make a huge difference to both health and finances for years to come.