The first real fork in the road when you enroll in Medicare is deciding whether you want “Original Medicare” and a Medigap plan or you want to enroll in a Medicare Advantage plan. Here are a few things you need to consider.
“Original Medicare” is the name commonly given to Medicare Part A and Part B. When you take Original Medicare, you’re probably going to want a Medicare Supplement plan, sometimes called a Medigap plan, to round out your coverage.
A Medicare Advantage plan replaces Original Medicare with coverage from a private insurance company, who probably provides a lot of the same benefits as Original Medicare + a Medigap plan.
Primary Advantages of Medicare Advantage
The main advantage of a Medicare Advantage plan is usually the monthly price. The insurance company is paid a lump sum by the government to manage your Medicare, and they set their own prices. Sometimes they’re even free.
A secondary advantage of an MA plan is that they may offer additional benefits as part of their plan, like dental care or discounts on services like vision care or a health club membership.
Primary Disadvantages of Medicare Advantage
A lot of people choose Medicare Advantage plans, but they aren’t for everyone.
The main disadvantage to choosing an MA plan is that you’re limited to that insurance company’s network of providers. And that network can change year to year. Just because a particular hospital system or doctor is participating in an MA plan this year does not guarantee they will participate in future years.
In Greenville SC, for example, the Greenville Health System (GHS) recently left the network of a popular Humana Medicare Advantage plan. Anyone enrolled in that plan who relied on that medical system for care (and it is the dominant system in the area), was forced to look elsewhere for care.
If that happens to you, you’ll be forced to find new doctors, or try to find a new plan. (You could opt back in to Original Medicare, but you may or may not be able to get a Medigap plan because of medical underwriting. More on that here.)
A secondary disadvantage is that you’ll likely have other out-of-pocket expenses to manage along the way – things like deductibles, co-insurance, and copays for various services. So while you’d save money on the monthly bill, don’t let anyone convince you that an MA plan is free!
Primary Advantage of Medicare Supplement Plans
In our opinion, the primary advantage of taking Original Medicare and a Medigap plan is stability. This is especially true if you enroll in a plan offered by a large, reputable carrier like we recommend. You won’t have to worry about networks and changing doctors because you’ll be able to see any provider who participates in Medicare at all.
You also won’t have to worry about medical underwriting if you choose a Medigap plan when you first enroll in Medicare at age 65. And at the risk of driving home this point too hard, that can be a big deal as you get older.
Lastly, when you choose Plan F or G (as nearly everyone does) you’ll have little to no out-of-pocket expenses at all to worry about.
Primary Disadvantage of Medicare Supplement Plans
By now you’ve probably figured this out. The main disadvantage of Medigap plans, when compared with Medicare Advantage plans, is that the monthly premium is higher.
To sum up, the decision point will likely come down to your preference for low prices (Medicare Advantage) vs stability in networks, etc. (Original Medicare and Medigap plans).
Unless the monthly cost is a major issue, it’s our opinion that you’d be best served by choosing a Medicare Supplement plan with a stable company you can stick with for the long haul. That’s the most conservative approach, but since you basically only get one shot at doing this without medical underwriting, we believe that’s the best way to go.
We’d be happy to help you explore your options in greater detail and help you consider real numbers.