Medicare Open Enrollment

Sandy Botkin
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Well, it’s that time of the year again. No, I don’t mean that time when political campaigns dominate the airwaves. I am talking about Medicare open enrollment.

Essentially, when you sign up for Medicare, you have two choices: Medicare (parts A and B), a supplement and drug coverage or Medicare Advantage. Thus, which do I recommend?

Let’s talk about Medicare first. Medicare essentially consists of Part A (hospitalization) which is free, Part B, which is not free and covers doctor bills and Part D which covers drugs.

Medicare also has a bunch of deductibles that can be covered by a Medicare supplement otherwise known as a Medigap policy. There are approximately 10 Medigap plan types in most states that are labeled with a letter. Each lettered plan is the same from state to state in terms of benefits for that lettered plan. Right now, Plan F is widely considered to be the most comprehensive of the Medigap plans, but it is also the most expensive.

Each year, you can switch from your current drug plan to another one, which you might want to do if the new one is cheaper or covers your new drugs.

Medicare advantage is akin to Medicare in that it takes Medicare and surrounds it with private insurance. It provides Part A, B, and D and even a Medigap plan into one plan. Thus, you only write one check to the Medicare Advantage company. With Medicare, you have several payments that need to be made each month: one to Medicare for part B coverage, one for the Medigap policy (if you have one) and one to the company that provides the drug coverage, which is a pain.

Medicare Advantage plans usually include things that are not included in the original Medicare such as vision and dental care coverage. In addition, some of the plans include a free gym membership too.

If this isn’t enough, Medicare advantage plan tends to be cheaper than the equivalent bought through Medicare including the Medigap plans and drug plans. Thus, on the face of it, Medicare Advantage plans would seem to be a much better deal. This is what all of the Medicare Advantage plan commercials seem to show. However, these same commercials leave out some VERY essential details that can mislead many people.

First, you are stuck with the drug plan included in the Medical Advantage plan. Thus, if you need a drug that isn’t in the plan, you could be stuck. At least with original Medicare, the drug plan is separate; thus, you have the option to switch drug plans each year.

Secondly and more importantly, Medicare Advantage plans have a more limited network of providers over that of Medicare. In fact, with some of the plans, the network is a LOT more limited. Thus, if you want to move to another city or want a famous doctor, you may not have that doctor covered by the Medicare Advantage plan. With Medicare, all doctors who accept Medicare must take you. This is NOT true for Medicare Advantage plans since they have their own network.

Finally, for the sake of comprehensiveness, I should note that there are two types of Medicare Advantage plans: A PPO and an HMO. The PPO allows you to go to any doctor or specialist without having to get a referral from a primary care physician. The HMO version requires a referral to a specialist by a primary care physician before you can be covered by a specialist. Personally, unless you can’t afford the PPO version, I strongly recommend staying away from the HMO version and going with the PPO version.

Bottom line: Medicare Advantage plans might be the better deal if:

  • incurring lower cost is crucial and/or
  • you live in an area where all of your doctors are covered by the plan and don’t expect to move.

However, due to the larger Medicare network, I personally prefer Medicare plus a supplement and a drug plan over that of almost any Medicare Advantage plan. I also don’t recommend the HMO plan which requires you to get a referral from a primary care physician before you seek a specialist. I would always choose the PPO version.

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