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May 2, 2016
What is Medicare, and do you need more than basic coverage? Original Medicare can leave you with hefty, uncovered expenses, but the best Medicare supplement plans — either Medigap or Medicare Advantage — can lower your costs and improve your care.
Getting your Medicare plan right means peace of mind against unpredictable expenses.
There are so many questions that accompany signing up for America’s retirement healthcare plan. Everyone who eventually reaches Medicare age qualifies for it. And considering the volume of people who use the program in one form or another every day, you might think that it’s a standard process. But unlike signing up for Social Security benefits, finding the best Medicare supplement plans is complicated.
Some parts of Medicare are optional, and some aren’t. And if you have other coverage, such as from a spouse or employer, you aren’t required to enroll in Medicare at all, at least for a while. For everyone else, the 7-month period that begins three months before you turn 65 and continues for three months beyond your birthday is open enrollment. Wait too long, and AARP says you’ll pay a 10 percent penalty for every month that you wait.
You will need to sign up for Medicare Part A and B. All other parts of Medicare are supplements — they are optional, but highly recommended. Different Medicare supplement plans cover different segments of medical expenses for retirees. This differs a bit from the medical coverage that you have or have had in the past. Instead of one plan that provides coverage for different types of care and expenses, Medicare lets you put together a plan that works for you, to some degree.
Basic Medicare (parts A and B) leave some important gaps. That’s where Medigap insurance comes in. It helps offset some of the costs, many of which can be sizable, that Medicare doesn’t pay for.
Medigap, also known as Medicare Supplemental Insurance, is completely optional. And while it’s regulated by Medicare rules, coverage is provided by private insurers the way that you’re accustomed to with your pre-retirement healthcare coverage. You’ll pay for Medigap, and premiums can vary greatly from one insurer to another. But because coverage is regulated, Investopedia says it’s smart to shop for the most affordable premium.
Medigap also uses alphabetical designations for gap plans. They range from A to N, but F is the most expensive. It’s also the most comprehensive, and can help you avoid most, if not all, out-of-pocket expenses that Medicare doesn’t cover.
It’s convenient to use Medigap because any physician or facility that accepts Medicare also accepts Medigap plans. But that also means any facility that doesn’t accept Medicare won’t accept Medigap. Thankfully those situations are few and far between.
Although original Medicare has served Americans well for many years, another option became available in the 1970s. It’s gone through a few transitions, but it’s commonly called Medicare Advantage. It’s also known as Medicare Part C, but it’s really an alternative to the Original Medicare bundle choices.
Medicare Advantage is offered through private insurers. It simplifies Medicare by offering a wider range of coverage at a lower overall cost than the segmented Original Medicare plan, even though Investopedia explains that enrollees pay for the Advantage plan plus Part B premiums together. You’ll get coverage for in-office medical care, tests, lab work, surgery, many other types of care plus prescription drug coverage.
If you’ve had an HMO or PPO before, you’ve got a good working knowledge of how Medicare Advantage works. There’s usually a copay, and most people need a referral to see a specialist. And if you have a Medicare Advantage PPO and see a doctor that’s outside your plan’s network, expect to pay more.
Because Medicare Advantage offers a broad range of coverage, you can’t have both Part C and Medigap. They’re two different solutions for similar problems. Consumer Reports says that 3 in 10 people who are eligible for Medicare opt for Part C. But if you aren’t satisfied with the coverage, you can change to Original Medicare during the open enrollment period of October 15 through December 7.
How does Medicare work? There’s no single answer. The government has established parameters with lots of choices in-between, which means that to a certain degree you can design your own coverage. It also means that you’ve got some studying to do.
Just as no pre-retirement medical insurance is perfect, no Medicare option is perfect. For some people, it comes down to cost. The plan that’s most affordable wins. For others, paying more for better protection is the way to go. Some prefer the convenience of using a plan that’s similar to what they’ve used in the past. That’s Medicare Advantage. And some want Original Medicare for the piece-by-piece control of putting together the best overall plan.
Here are some tips for making sure you have the best Medicare supplement plans:
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