Most of the agents I talk with disagree with me.
At least about the plan types we should recommend to our clients.
I recommend Medicare Advantage plans much more often than my good friend, Chris in California, does.
Most agents prefer to recommend Medicare Supplement Plans.
I’ve struggled to understand why.
It took me a long time to figure it out.
(For a brief period, I thought that maybe they were right and I was wrong. Could that be possible?!! Could I be wrong about Medigap insurance plans?)
I rechecked the facts as I knew them. I took out my calculator and punched in the numbers again.
I couldn’t find an error in my logic or my math.
They really seemed to be sincere. But…
I thought they had convinced themselves because of the difference in commissions, the number of hours it takes to study and recertify each year to offer Advantage plans or because Advantage plan clients need more attention during the Annual Enrollment Period.
After a long talk with Chris, I no longer believe any of those factors are the main reason.
Here’s the deal…
They were right…
(Just not for our state.)
Connecticut has two regulations you won’t find in most of the country.
Connecticut is a “Community Rated” State for Medicare Insurance
“Community Rated” means everybody pays the same rate. This means a 65-year-old pays the same rate as a 90-year-old. Either could be a chain smoker. Either could run marathons.
Because of this, there is no price advantage to enrolling in a Medicare Supplement at 65. You’ll pay the same if you wait.
In other states a 65-year-old would pay less for a Medicare Supplement Plan. This makes Medicare Supplements more attractive for those who live outside of Connecticut.
(Also, many states do not have $0 premium plans.)
Connecticut is a “Guaranteed Issue” State for Medicare insurance
This is a great protection.
Even if your neighbor has cancer or a heart condition, he can enroll in a Medicare Supplement Plan. He just needs to be enrolled in Medicare Part A and Part B.
Pre-existing conditions don’t limit your Medicare Supplement Plan choices. Unless…
If you have had a gap in coverage, your new insurance may not cover certain conditions for a few months. (Your previous coverage can be a Medicare Advantage Plan or a Medicare Supplement Plan.)
Pre-existing conditions could limit your choices if you move out of Connecticut. You won’t be able to keep your Advantage plan.
You may not find an Advantage plan in your new home that meets your needs. You may not be eligible for a Supplement plan in your new state.
However, if you switch to a Supplement plan while in Connecticut, you will be able to keep it when you move. You can switch during the Annual Enrollment Period or the Medicare Advantage Disenrollment Period. The AEP starts October 15th and ends December 7th. The MADP starts January 1st and ends February 14th.
Our above average prices for Medicare Supplement Plans make them less attractive for younger Medicare enrollees. Delaying enrollment in the better coverage a Supplement provides is safer because of the “guaranteed issue” regs.
A Little Arithmetic
Medicare Supplement Plan F is the most recommended plan. If you shop around, you’ll still pay much more than you would for an Advantage plan. The best medicare supplement insurance companies in Connecticut will charge you about $300 month for a Plan F and a Prescription Drug Plan.
This is great (actually the best) protection, but…
A Medicare Advantage plan that includes built-in drug coverage can have a premium as low as $0 per month.
This is a price difference of about $3,600 a year.
If you’re very healthy, you’ll save the full $3,600.
Maybe a little less. You might have a few doctor copays during the year.
(I’m ignoring the cost of drugs, because your drug copays will be about the same with either option.)
Even if you have a hospital stay, you’re likely to pay only about half the $3,600 you’ll save in premium.
You’ll probably have more expenses before and after the hospital stay. You’ll probably also have doctor visits, plus maybe physical therapy and some other expenses.
However, my guess is that the cost of one hospital stay, plus the copays for other medical expenses will be less than the $3,600 you’ll save in premiums.
However, it’s just a guess.
So, let’s talk about…
The Worst-Case Scenario
Most Medicare Advantage Plans have an annual out-of-pocket maximum of $6,700 for medical expenses.
(The few that are different have lower out-of-pocket maximums.)
About $3,000 is what you’ll put at risk. Since you’ll save about $3,600 by purchasing a $0 premium plan we should take that into consideration.
$6,700 – $3,600 = $3,100.
(You could pay much more than $6,700 in drug copays. However, neither option limits what you can pay prescription copays.)
Here’s Where the “Guaranteed Issue” Medicare Regulations Really Help
A few years from now if you may not be as healthy as you are now. You can change to a Supplement to get more coverage at that time.
You can do so during the next open Annual Enrollment Period or Medicare Advantage Disenrollment Period. (AEP starts October 15th and ends December 7th. The MADP starts January 1st and ends February 14th.)
This limits your risk to about $3,000 during any calendar year. You can “upgrade” during the next AEP or MAPD.
Other Considerations – Medicare Advantage vs Medigap Plans
A Medicare Advantage Plan, may not be the best product for you if:
- Your doctors aren’t in the network for any plan
- Your will need routine care in another state. (Emergency and urgent care are covered when you’re out of network.)
- You want to be able to go to any doctor in the US that takes Medicare
(Just in case you need the best of the best one day.)
I have my biases but…
I offer both types of plans. I recommend both types of plans.
When you ask for my advice, I’ll look at your unique situation. I’ll listen to your story and show you the plans I think will cover you best. Then help you weigh the pros and cons.
Let me know when you are ready to take the next step.
You can request Medicare insurance recommendations through this website.