9/28/2018 By Agent Ken CobbBy Agent Ken Cobb
If you are one of the many Bemidji-area residents losing your Medicare Cost plan with Blue Cross, Medica or Health Partners at the end of the year, you may feel somewhat overwhelmed as you try to sort through all the confusing terms and complicated options, trying to find the best choice for your coverage next year.
In working with my Medicare clients, I try to explain their options and make things as simple as possible so it is easier to choose. When it comes to replacing your Medicare Cost plan at the end of the year, you have three basic options:
Option 1: Return to Basic Medicare Only
If you choose this option, you will not replace your Blue Cross, Medica or Health Partners plan at all. Instead, you will rely on Basic Medicare A&B to cover your medical needs. Since you aren’t buying an additional medical plan, you will save on monthly premium. It would probably be wise to buy a separate drug plan to cover your prescriptions and/or to avoid a future penalty, but that will probably be less expensive than buying a new medical plan as well.
But bear in mind that while you may save in monthly premium, you may have to pay more for medical care. For example, you’ll have a $1340 deductible for hospital stays and a $183 deductible followed by 20 percent coinsurance for doctor services.* And because Basic Medicare does not include the peace of mind of an out of pocket maximum for doctor services, you will have to continue paying twenty percent regardless of how high the bills pile up.
Option 2: Enroll in a Medicare Advantage plan
A Medicare Advantage plan can be a cost-effective way to lower your potential out of pocket costs under Medicare. These plans often replace Medicare’s deductibles and co-insurance with predictable co-pays for many medical services. In addition, many plans add the safety net of an out of pocket maximum. Some plans may also cover things not included under Basic Medicare. Most people buy an Advantage plan that includes prescription drug coverage. In most cases, you will have to pay an additional monthly premium for Medical Advantage in addition to your Basic Medicare premium.
If you enroll in a Medicare Advantage plan, you are replacing your Basic Medicare benefits with the benefits provided by the plan; so you must look to the plan for all your medical coverage. Depending on the plan, you may be limited in what doctors or hospitals you can use, or you may pay more if you go out of network. Plans serve a limited geographical area; so if you move to a different region, you will be required to choose a new Advantage plan. Medicare Advantage plan benefits are set for the calendar year, after which they can change or possibly be discontinued; so you will need to review your choices at the end of every year.
Because you can qualify for a Medicare Advantage plan regardless of your health status (unless you have end-stage renal disease), plans offered in your area will be available to you every year during open enrollment period(s).
Option 3: Purchase a Medigap policy
Instead of replacing your Basic Medicare benefits with an Advantage plan, you can simply supplement them by purchasing a Medigap policy to help cover costs that Basic Medicare doesn’t. Also called “Medicare Supplement Insurance”, these plans typically pick up much or all of Basic Medicare’s deductibles and co-insurance, often leaving you with little or any out of pocket costs for many services. They may also add additional coverages not included under Basic Medicare. Most Medigap policies have higher premiums than most Medicare Advantage plans, but most Medigap policies give you broader coverage than most Advantage plans.^
With many Medigap policies, you are free to choose any medical provider who accepts Medicare. You can travel or move to anywhere in the US and keep your coverage. Your benefits will typically continue the same from year to year unless you choose to cancel or change your plan. You will need to continuing paying your Basic Medicare premium. In addition, because Medigap plans do not include prescription coverage, you will also need to buy a separate drug plan.
Unlike Medical Advantage plans, there is no guarantee you will qualify for a Medigap policy in the future. If you are losing your current Cost plan, you have a special opportunity to enroll in a Medigap policy now, regardless of health status. However, if you wait to buy Medigap until a later date, you will have to qualify based on your health at that point. So if the rich benefits of a Medigap plan appeal to you, you may wish to consider locking them in now while you can.
While I know this post won’t answer all your questions, I hope this brief summary helps you understand your options going forward. If you would like further help in choosing or enrolling in a plan for the coming year, please contact me, as I am here to help.
*Basic Medicare cost sharing is for 2018, as per currently published on Medicare.gov at the time of this writing. Cost sharing may change for 2019 and beyond.
^Based on our review of a number of Medicare Advantage and Medigap plans offered in the Bemidji area, your out of pocket medical costs with most offered Medigap policies will likely be less than it would be with most available Advantage plans. This is a general statement and not a comparison of any two specific plans.
The information presented in this post is a generalized summary provided for educational purposes only and is not intended to depict any specific plan or option. You will want to read your plan’s summary of benefits carefully.
About the Author
Agent Ken Cobb
Ken is the owner and principal agent at Pine Country Insurance in Bemidji. Active in the insurance industry since 2000,Ken uses his years of personal insurance knowledge and experience to assist clients in customizing insurance coverage to fit their needs. Ken considers himself a "farmer" rather than a "hunter"; rather than focusing on writing a lot of new policies as quickly as possible, he works on cultivating long term relationships based on trust with his clients. When writing new policies and meeting for annual reviews, Ken spends time with his clients explaining and helping them understand their insurance, and he is also pleased to share his knowledge with his blogging audience as well.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.