Medicare
Medicare Advantage or Original Medicare With a Supplement
This is the single biggest decision in Medicare, and one direction is much easier to reverse than the other.
When you become eligible for Medicare you are choosing between two structures. Understanding what each one is, rather than which one has the better television commercial, makes the decision much clearer.
What Original Medicare is
Original Medicare is Part A, which covers hospital care, and Part B, which covers outpatient and physician services. It is accepted by any provider in the country who accepts Medicare, which is most of them. It has no annual out-of-pocket maximum, and it does not cover prescription drugs.
Because of those last two facts, people on Original Medicare usually add two things: a Part D prescription drug plan, and a Medicare Supplement policy, commonly called Medigap, which pays the deductibles and coinsurance Original Medicare leaves to you. Medigap plans are standardized by letter, so a Plan G from one insurer covers exactly what a Plan G from another covers. Only the price and the service differ.
What Medicare Advantage is
Medicare Advantage, also called Part C, is a private plan that replaces Original Medicare as your coverage. It must cover everything Original Medicare covers, and most plans bundle in drug coverage plus extras such as dental, vision, hearing, and fitness benefits. Premiums are often low and sometimes zero beyond your Part B premium.
In exchange, it works like the employer coverage you are used to. There is a provider network. There are referral and prior authorization rules. There is an annual out-of-pocket maximum, which Original Medicare lacks and which is a genuine advantage. And the plan's network, formulary, and extras can change every year.
The five questions that usually decide it
- Do you travel or split the year between two states? Original Medicare with a supplement travels anywhere Medicare is accepted. Advantage networks are usually regional, with emergency care covered elsewhere but routine care not.
- Are you attached to specific doctors? Check whether they are in the Advantage plan's network for next year, and remember networks change annually.
- Do you want predictable costs or lower premiums? Medigap costs more every month and leaves you with very little to pay at the point of care. Advantage costs less monthly and more when you use it.
- How is your health likely to be in ten years? This is the question people skip, and it is the important one.
- Do you qualify for both Medicare and Medicaid, or for a Special Needs Plan? If so, specialized Advantage plans may fit your situation well.
The part that is not symmetrical
Here is the detail that deserves the most attention. When you first enroll in Part B, you get a Medigap open enrollment period of six months during which an insurer must sell you any Medigap policy it offers, at its standard rate, regardless of your health. That is the one window in which medical underwriting cannot be used against you.
After that window closes, in most states an insurer can require medical underwriting if you later want to switch from Medicare Advantage to Original Medicare with a supplement, and it can decline you or charge more based on your health. A few states have rules that are friendlier to switching, and there are limited trial-right and guaranteed-issue situations, but as a general matter the move from Advantage to Medigap gets harder the longer you wait and the sicker you get.
Moving the other direction, from Original Medicare to Advantage, is straightforward during the annual enrollment period.
So the two options are not equally reversible, and that asymmetry belongs in the decision even if the monthly premium comparison points the other way.
Dates to hold on to
Your Initial Enrollment Period runs seven months around your sixty-fifth birthday. Medicare Open Enrollment runs October 15 to December 7 each year for changing plans. Medicare Advantage Open Enrollment runs January 1 to March 31 for people already in an Advantage plan. Late enrollment in Part B or Part D without qualifying coverage can trigger a permanent premium penalty, so do not let the first window pass by accident.
Get unbiased help
Every state runs a State Health Insurance Assistance Program that provides free, unbiased Medicare counseling. Counselors there are not paid commission on what you choose. For a decision this consequential, an hour with one is worth more than any advertisement.