Assume your client has decided they want more coverage than Original Medicare alone. You now need to determine the best option for them. Here's a guide to break it down:
**Reminder about original Medicare**
Original Medicare covers 80%, leaving you responsible for the remaining 20%. That 20% is NOT capped at a specified dollar amount. Medicare Advantage plans (also known as MA/MAPD) and Medicare Supplements (also known as Medigap), will help cover part of that 20%.
Medicare Supplements (Medigap)
- A Medigap policy is different from a Medicare Advantage Plan, and policies don’t cover prescription drugs. A Medigap policy helps lower your share of costs for approved Part A and Part B services when you have Original Medicare.
- If you want drug coverage, you can join a Drug Plan (Part D / PDP) in addition to buying a Medigap policy. Medicare supplements pay as a secondary insurance to Medicare itself. This means they pay after Medicare first pays its portion of the bill. You stay enrolled in Original Medicare, and Medicare sends the remainder of your bills to your Medicare supplement company. Then the supplement company pays its share according to which plan you are enrolled in.
- There are 10 standardized plans. Each plan offers different levels for how much of your costs they’ll pay for. They’re named by letter, like Plan A, and Plan G.
Medicare Advantage & Medicare Advantage Prescription Drug Plans
- Medicare Advantage Plans bundle your Hospital (Part A), Medical (Part B), and usually drug coverage (Part D) into one plan.
- Most Medicare Advantage Plans also offer extra benefits that Medicare doesn’t cover, like vision, hearing, dental, and more.
- These plans set a limit on what you’ll have to pay out-of-pocket each year for covered services, to help protect you from unexpected costs. Some plans offer out-of-network coverage, but sometimes at a higher cost.
Questions you should ask to determine what will work best for your clients, and why:
1. Do you prefer to pay a deductible, steady monthly payments, and not have unexpected costs or copayments for medical care? Or would you prefer to pay a low or $0 monthly premium and only pay copayments/coinsurance when you actively seek medical care?
If a client prefers monthly payments to avoid copayments at office visits, Medigap may be the best option. If they prefer to have a low or $0 monthly payment and only pay copayments, MA/MAPD may be the best option. You can phrase this as "Pay-as-go" or "Set-and-forget"
2. Do you prefer to research and find your own doctors and specialists or do you prefer to heed your primary care provider’s recommendations?
If a client likes to find their own doctors, Medigap may be the best option. If they prefer to listen to their primary care physicina (PCP), MA/MAPD may be the best option.
3. Do you travel often or stay for extended periods in different locations and prefer to see doctors in different states? Or do you mainly see your PCP and local providers? (except for emergencies)
If a client is a ‘snowbird’ or often seeks medical care while traveling, Medigap may be the best option. If they stay local and only seek care in their home territory, MA/MAPD may be their best option.
4. Are you currently eligible for Low Income Subsidy (LIS), Medicaid or other state assistance programs?
If a client receives LIS or Medicaid, they may be eligible for a Dual Eligible plan, affording them more benefits while still keeping costs low or at $0.
5. Do you care about extra benefits like dental, vision, hearing aids, and gym memberships?
These are often covered on Medicare Advantage plans, but not Medigap.
6. How important is out of pocket exposure to you and your family?
With most Medicare Advantage plans, you’ll pay coinsurance and copays, and the out-of-pocket maximum can be as high as $6,700 in 2020. With Medigap, there are plans available that pay first-dollar coverage for all Medicare-covered services, leaving you with little to no out-of-pocket exposure. These tend to be the most expensive Medigap plans; less expensive options do not cover all of Original Medicare’s out-of-pocket costs.
There is no right or wrong answer! Ultimately, the choice between Medicare Advantage and Original Medicare with supplements is a personal one that reflects each applicant’s health, risk tolerance, and approach to personal finances.