No topic dominates conversation among people near and in retirement than Medicare. If you’re just entering Medicare or if you’ve had coverage for many years, it seems there is a never ending stream of news and opinions about the program. Many questions and opinions congregate around common themes, so in this article we’ll review the top 3 Medicare FAQs that are relevant to helping you get the most out of your coverage.
Top Medicare FAQ #1 – Is Medicare Supplement Better Than Medicare Advantage?
This is an especially important question for those who are entering Medicare for the first time. This is the initial choice most people have to make when they enter Medicare. Unfortunately, it’s not a decision that is equally weighted, for one simple reason: it’s easy to switch from Medicare Supplement Insurance to Medicare Advantage, but it can be very difficult or even impossible to switch from Medicare Advantage to Medicare Supplement. This means your decision to choose Medicare Advantage may be irreversible under certain circumstances.
So, which one is a better option? As you might guess, there’s not one simple answer that applies to everyone. We’ll look at some of the strengths and weaknesses of both types of coverage and then give you some guidelines to help you choose.
Benefits Of Medicare Supplement Insurance
Medicare Supplement Insurance tends to be very comprehensive, especially if you choose a standardized plan like Plan G or N. Either of these options will limit your out of pocket spending.
Medicare Supplement coverage also allows for maximum flexibility when it comes to seeing physicians you care about. With this kind of coverage, there are no networks, and you generally won’t need referrals. You can see just about any provider that accepts Medicare, anywhere in the country. This may be the benefit most appreciated by those who choose this coverage.
Benefits Of Medicare Advantage
The biggest of benefit of Medicare Advantage, especially when compared to Medicare Supplement Insurance is cost – Medicare Advantage is usually much more affordable, especially given the number of $0 premium plans available.
Another huge benefit to Medicare Advantage is the availability of Extra Benefits. These are benefits that aren’t generally available from Medicare Supplement insurance. Some common Extra Benefits include:
These kinds of benefits are often included at no extra cost, which makes Medicare Advantage even more attractive.
Negatives Of Medicare Supplement Insurance
There are only two potential negatives with this coverage. The first is cost. The monthly premiums are generally much more expensive for Medicare Supplement Insurance in comparison to Medicare Advantage. Also, the premiums usually go up each year.
The second negative only applies if you want to switch to Medicare Supplement coverage later in life. You will probably have to go through medical underwriting, and you can potentially be declined if you have poor health.
Negatives Of Medicare Advantage Plans
There are two main criticisms of Medicare Advantage plans. In the first place, they almost all rely on networks of providers. Because of this, you may not be able to see the doctors you care most about if you choose Medicare Advantage.
The second negative is related: you often need referrals from your primary doctor to see specialists. For many people, this makes Medicare Advantage plans too restrictive.
The Bottom Line
If you aren’t concerned about the premium cost for Medicare Supplement, you should probably favor this coverage. On the other hand, if you’re on a budget, or can’t afford to pay for supplemental coverage like dental and vision, Medicare Advantage may be the right call for you.
Top Medicare FAQ #2 – How Can Medicare Advantage Plans Have $0 Premiums?
This is a very common question, especially as advertising for Medicare Advantage has exploded over the past several years. It is true that many Medicare Advantage plans have $0 monthly premiums. And no, it’s not a scam. How can this be? It’s (mostly) simple. Medicare Advantage plans are paid a flat payment for every member that’s enrolled in the plan. This is called a “capitation fee” and it’s paid from Medicare to the insurance company. The insurance company takes this money and is now responsible for paying your medical claims. The capitation amount varies, but you can generally think of it as the average amount that Medicare has to pay in medical claims per-person per month.
This is a good deal for Medicare because it caps their losses; they make a fixed payment to the insurance company. The insurance company is on the hook for any claims beyond the payments received from Medicare. It’s also a good deal for insurance companies because if they attract enough healthy members, they will probably pay less money in claims than they’ll receive from Medicare. This leads to almost guaranteed profits for them. Amazingly, it can also be very good for consumers. For those who choose Medicare Advantage, they get affordable health care with some substantial benefits over Original Medicare.
Please don’t confuse $0 with “free.” Medicare Advantage is definitely not free. For one thing, you probably paid taxes into Medicare all of your working life. Plus, most people have to pay a monthly premium for Part B coverage when they enter the program. It is because of these taxes and premiums that Medicare Advantage plans can offer $0 premiums.
Top Medicare FAQ #3 – Do I Have To Take Part B At Age 65?
The timing of enrolling in Part B can cause a lot of stress, and understandably so: you have to pay a monthly premium when you enroll in Part B. Who wants to pay for something they don’t need yet? This is a common occurrence these days; many people are working past their 65th birthday, and they often have employer coverage. Can you choose to simply keep your employer coverage? The answer is “maybe – it depends.” At a minimum, you’re likely to need to enroll in Part A, your hospital coverage. This shouldn’t be a problem for most people; if you’re projected to be eligible for Social Security, you’ll get Part A without paying a premium, so this won’t come out of your pocket.
It’s more complicated with Part B. If you work for a small employer (20 or fewer employees), or if your spouse does and you get coverage through their employer plan, you probably do need to enroll in Part B when you become eligible at age 65. If your employer has more than 20 employees, though, you have more options.
You can safely choose to delay taking Part B in this case. You would probably choose to do that if your employer coverage was cheaper than the Part B premiums plus whatever supplemental Medicare coverage you were interested in. You can stay on your employer (or spouse’s employer) plan until you or they retire. Whenever this happens, even if it’s a decade or more past your 65th birthday, you’ll be able to enroll in Part B without paying a late enrollment penalty. You’ll also be able to choose a Medicare Supplement Insurance plan or Medicare Advantage plan at that time.
How can you decide what to do? Run a thorough comparison to see which scenario will cost you the least amount of money for the best coverage available. It may be that your employer coverage is more affordable, and if that’s the case, you can stick with it without worry. You’ll have a chance to get Medicare when you retire.
Get Your FAQs Answered
We set out to answer the question, What are the top 3 Medicare FAQs. If you have other questions about Medicare, or want help getting the best coverage possible, reach out to us today. Request a free consultation to discuss the specifics of your situation. You’ll speak with a licensed insurance agent, and they can help you compare quotes for the plans available in your area. Get started today and schedule your free consultation.