When choosing specific Medicare plans, individuals face the broad choice between traditional Medicare, traditional Medicare with a Medigap plan, or a Medicare Advantage plan.
Traditional Medicare covers hospital care, doctors visits, and prescription drugs through Medicare Parts A, B, and D, respectively. Enrollees in traditional Medicare can use any doctor, clinic, or hospital that accepts Medicare without needing a referral. However, base Medicare still has a number of gaps that can impose significant out of pocket expenses on individuals. Users of traditional Medicare still have to pay premiums, deductibles, and copayments. If an individual requires significant medical care, the copayments could easily amount to tens of thousands of dollars in out of pocket expenses. There is no cap on out of pocket expenses under base Medicare. Traditional Medicare also does not cover vision or dental care.
Medigap plans significantly cut down on the potential out of pocket costs incurred under base Medicare. Enrollees have to pay a premium in addition to the base Medicare premiums, but then pay zero to little in additional out of pocket expenses. Individuals also still maintain the flexibility of being able to use any doctor, clinic, or hospital that accepts Medicare. There are many types of Medigap plans that cover a different percentage of out of pocket expenses. Generally, the higher the monthly premiums, the fewer additional out of pocket expenses there will be. Medigap plans also do not cover vision or dental care.
Please see this previous article for more detail on Medigap plans: Medigap Options and Future Changes
Medicare Advantage plans, also known as Medicare Part C plans, are another option. Medicare Advantage plans operate as private health insurance plans that meet the requirements of Medicare. Medicare Advantage premiums replace both the base Medicare premiums and Medigap premiums with one monthly payment. Typically, Medicaid Advantage premiums are significantly less than the combined Medicare and Medigap premiums. Many Medicare Advantage plans also cover vision care, dental care, and other additional benefits not covered by either Medicare or Medigap plans.
While these plans generally have low out of pocket expenses, but there are drawbacks. The biggest drawback is that individuals must see doctors, clinics, and hospitals that are in network. Additionally, individuals may need referrals before they can see a specialist. The insurance company also may have to approve care before covered treatment can proceed. These networks may also only cover doctors and health care in an individual’s home region. Individuals who travel frequently, or maintain a second residence, may face higher out of pocket expenses compared to a Medigap plan. A further drawback is that once individuals enroll in Medicare Advantage, they are restricted in their ability to leave and buy a Medigap plan.
To discuss which Medicare option is best for you, please call Martha C. Brown & Associates at (314) 962-0186.