Provided by Francie Stavish, Francie Stavish Associates. Senior Move Manager
From the Society of Certified Senior Advisors
One of the most confusing choices retirees must make is picking between supplemental Medigap and a Medicare Advantage health plan that covers Part A and B benefits.
Medigap (Medicare Supplement)
With a Medigap policy, seniors have more physicians to choose from. All Medicare providers participate in Medigap. Out-of-pocket costs are low to none, but average premiums run about $150 to $200 a month and vary by age and health history.
Medigap policies come in 10 variations, no matter where you live. But they don't include any coverage for Part D, so additional coverage for prescriptions is necessary. And while you'll have to tote three cards in your purse or wallet (one for Medicare, one for Medigap and one for Part D coverage), payment is a snap. Medigap almost always cuts a check directly to providers after Medicare pays its share.
Medicare Advantage programs require the use of plan providers only (HMO) or charge you extra for out-of-network services (PPO). Plans charge copays and carry deductibles of several thousand dollars per year. Premiums run from negligible to more than $100 per month, but all enrollees pay the same regardless of health history or age.
Most Medicare Advantage plans cover prescription drugs, and they are rated with a five-star system. Seniors only have to carry around their Medicare Advantage card for services, but there's the additional hassle of paying copays and deductibles to providers.
The result: Medigap usually costs less for someone with major health problems. Despite higher premiums, out-of-pocket costs are typically much lower. However, if your prescription costs are high, you should factor in the additional cost of Part D coverage before making a decision. Healthier individuals can save money with Medicare Advantage's lower premiums.
Hint: It's important to review your choice every year at open enrollment, October 15 to December 7. At this time, Medicare Advantage and Part D plans can change or drop coverage for certain drugs or alter pricing on the same drug. Your Medicare Advantage plan can also change their network of doctors and facilities, adjust the way they cover a medical service, and/or drop additional benefits such as hearing, vision and dental.