Why choose a Medicare Advantage Plan?
If you are over 65 and not covered by employer or union group coverage you generally have three choices when it comes to your health coverage.
- Enroll in Medicare parts A and B and self insure for the hospital deductibles and the 20% of outpatient medical costs not covered by Medicare.
- Enroll in Medicare parts A and B and purchase Medigap coverage, also known as Medicare Supplement insurance.
- Enroll in Medicare parts A and B and become a member of a Medicare Advantage plan.
I would not recommend the first option. You are exposing yourself to too much risk financially. You didn’t work hard and save for your retirement just to have it vanish because of unforseen medical expenses. I would personally recommend the second option if it is financially feasible and if you qualify medically. The best time to enroll in a Medicare Supplement policy is when you have an open enrollment period. Your open enrollment period starts on the first of the month that you turn 65 and lasts for six months. You are not subject to underwriting during this time. You can also enroll in a Medicare Supplement policy without being subject to underwriting during certain guaranteed enrollment periods.
When should you enroll in a Medicare Advantage plan?
You should consider a Medicare Advantage plan when you cannot afford the premiums for a Medicare Supplement policy. An Advantage plan can offer some valuable benefits and protections beyond original Medicare parts A and B.
- Advantage plans often offer co-pays for certain services, i.e. emergency room and outpatient testing that will result in less expense than original Medicare.
- Advantage plans may have the part D prescription drug plans included, allowing you to potentially save some money on part D premiums.
- You will generally have a maximum annual out-of-pocket expense with an Advantage plan, which can potentially save you a financial hardship. This feature is a “stop loss” so you can limit your annual expenses.
- These plans usually offer coverage for services not covered by original Medicare, such as, dental, vision, hearing and often gym memberships.
You should also consider an Advantage plan when you are not in an open or guaranteed enrollment period for a Medicare supplement policy and cannot pass the medical underwriting.
Which is better – Advantage plan or supplement?
The question is, which option is better for you? Whether you choose one over the other depends on your individual circumstances. For someone who is able to purchase a Medicare supplement and maintain the premiums, I would say that an Advantage plan would be a sucker’s bet. Why subject yourself to a network of providers, or worse yet, a private fee-for-service plan where the provider can choose to accept your coverage on a visit by visit basis? Another drawback of an Advantage plan is that insurance companies can change the plan design and costs on a year by year basis.
If you can’t purchase a Medicare supplement, then an Advantage plan is your better choice over original Medicare. You still have some protections and cost savings that you wouldn’t otherwise have. In the end, your choice is still a choice about insurance. You have to weigh the costs, and in the case of Medicare supplements, be aware of the underwriting qualifications.
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