Would You Recommend Medicare Advantage Or Medigap?


OpinionI frequently offer my recommendations on this blog.  I talk like an expert.  I guess I am, to a degree.  After 25 years of working with insurance, I know a great deal.

However, there is a huge difference between an expert and a politician.  The expert knows that other people can also have good ideas.  He gladly listens to others in order to find the best solution.

Politicians, at least the ones we have in D.C. now, are not willing to listen to anyone else’s ideas.  They believe that the only solution to a problem is the one their party leadership tells them.

In this post I want to share a question that I was asked last week, what my answer was and ask for your opinion.

QUESTION

I am 64.6 and so confused.  Which plan should I elect:  Medicare Advantage or Medigap?

1. I am healthy. My only hospital visit in the last 30+ years was for a kidney stone (and, I will never make that trip again).
2. I have never taken any drugs for longer than a day or three.
3. I don’t care what doc I see.”

Use the form to ask your insurance question.
Use the form to ask your insurance question.

The first question I would have you ask yourself is, “How much do I travel?”

Many Medicare Advantage plans are limited to geographic areas.  If you spend months out of the area visiting relatives, escaping the cold, etc., your will not have any health care coverage while you are away from home.

However, if the only traveling you do is limited to an occasional week-end get-away, the Medicare Advantage plan may be ideal for you.

The second question I would have you ask yourself is, “Am I willing to make my decisions based on short-term or long-term information?”

I know that sounds like a strange question to ask but anytime you are dealing with a government program, you must ask it.  The political winds change directions in D.C. constantly.  As the political parties change power, they tend to make changes to entitlement programs like Medicare.

Right now, those in power in D.C. have shown that they prefer Original Medicare over Medicare Advantage.  Whether their actions are right or wrong is for someone else to say.

What I do know is that recent laws, rules and regulations have added requirements and cut payments to private insurance companies who administer Medicare Advantage.

Insurance companies who offer Medicare Advantage plans must renew their contracts with Medicare each year.  If they are not willing to adjust their benefits or premiums to the will of CMS, they can elect not to renew their Medicare Advantage plans.

Most Medicare Advantage plans that I saw are pretty good for 2013.  However, there is no guarantee that they will be as acceptable in 2014 or years after that.

The predictions that I read concerning Medicare Advantage is that insurance companies will raise premium rates, eliminate benefits or both in the coming years.  Their other option is to non-renew their contract with Medicare.

If either of these things happen, you may find yourself in the same position you are in now in a couple of years.

The difference is that now, Medigap is guaranteed for you during your initial enrollment.  If you elect Medicare Advantage, in the future if you elect to change to Medigap, you will need to be able to pass medical underwriting unless you qualify for one of Medicare’s Special Election Periods.

The bottom line is that, in my opinion, Medicare Advantage is a fine option for you if you stay within the plan’s network and are only concerned with things in the short-run.

If you want the freedom to travel throughout the U.S. and know that you will be able to use any doctor who accepts Medicare if you get sick, Medigap would be my recommendation.

Keep in mind that if you elect Medigap, you will also need to get a Medicare D plan to help with any prescription costs in the future or be willing to pay Medicare’s penalty of 1% of the premium for each month that you were eligible for Medicare D but elected not to buy it.

HOW WOULD YOU ADVISE THIS PERSON?

There, you have my answer.  How would you advise this person?  Share your thought is the comment area below.

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