 Personal Finance PowerPoint Presentation Medicare Advantage versus Medigap. Prepare to get financially fit by practicing personal finance. Insurance is part of our long-term risk mitigation strategy where we follow the adage of measure twice, cut once, put in a formal process in place, looking something like set the goals, develop a plan to reach them, put the plan in action, review the results, repeat the process periodically. Most of this information can be found at Investopedia, Medicare Advantage versus Medigap, which you can find online. Take a look at the references, resources. Continue your research from there. This is by Ronnie Sandroff, updated December 20, 2021. In prior presentations, we've been talking about insurance in general, then going to the health insurance, which can be a little bit confusing, given the nature of the medical services industry in and of itself being complex, as well as the rules and regulations around it and the related insurance. Then we started talking about the Medicare, and now we're looking at the Medicare Advantage versus Medigap in alignment and conjunction with those topics. So Medicare versus Medigap or Medicare Advantage versus Medigap. Anyone who's ready to sign up for Medicare has a lot of decisions to make. So there's a lot of stuff to be considering over and the whole medical arena for multiple reasons. Obviously we're getting older. We're probably going to be needing more Medicare at that point in time. And we're going to be moving from possibly an insurance that we may have had for quite some time, possibly from the work and therefore haven't had to think about it too much to need it to do some other kind of thing, which is quite different in some ways. And that could be, let's say, the Medicare and then all the options that are the plethora of choices with regards to Medicare, such as Medicare Advantage and Medigap and the differences between them. So but one decision that's especially important, should you choose Medicare Advantage or use Medigap to supplement your original Medicare plan. That's the choice we're looking at these days. If you qualify for Medicare and don't know where to start, we got eHealth Medicare and Independent Insurance Broker. And notice I'm not promoting these personally. Investopedia might have some connection with them, but that's just one option you could take a look at. You could also, of course, go to the Investopedia website and take a look at the references and resources there to basically continue your research, obviously do your own research there. So it's an Independent Insurance Broker and partner of Investopedia. So obviously they're affiliated and related with Investopedia, has licensed insurance agents, so you could take a look at that. That could be one option. Again, I'm not affiliated with them at all, but might be an option for you. We've got the Medicare Advantage. Budgeting for health care costs in retirement is tough since there's often no way of knowing whether your expenses each year will be minimal or huge. Obviously, as we get older, we would expect our health to deteriorate in some ways. How is that going to happen? We don't know. What's it going to look like? Well, traditional Medicare, Part A and B, that's the traditional Medicare we've talked about in prior presentations, provides good basic coverage. It pays only 80% of the costs it approves for hospitals, doctors, and medical procedures. The other 20% of the bill is the individual's responsibility and unlike coverage under the Affordable Care Act, otherwise known as the ACA, there is no cap on the amount a person might have to pay in one year. So, and that is kind of a disadvantage with regards to the normal kind of insurance or idea, which would be that it would be nice if you look at insurance that's like liability insurance or property insurance, for example. You're usually insuring against some big event that's going to happen and that kind of insurance, you're usually thinking it might not be likely to happen, but if it did happen, like my house burning down, it would be financially devastating. You might have a deductible and over the deductible, maybe the insurance kind of kicks in. With the medical insurance, it's a little bit more confusing because the deductible could be there in some cases, but you go over it and you still might have a copay and so on. So it would be nice if you had that out-of-pocket cap situation, which could act like the amount that you can kind of try to self-insure against at least in terms of one year of medical costs. But in any case, unlike coverage under the Affordable Care Act, there's no cap on the amount a person might have to pay in one year. Let's say, for example, to drive the point home that you need heart bypass surgery. The cost would average $151,271, which is a very precise number for an average kind of rounding estimate here, but there we have it, and you would be responsible for a copay or much more if there are complications or something else goes wrong. In addition, some health needs such as prescription drugs, hearing aids, eyeglasses, and dental care are not covered at all by the regular Medicare Parts A and B. What about those things? But obviously, most of this stuff, like the eyeglasses and the dental, might not be those kind of things that are going to have that big catastrophic event that would drain you, per se, whereas obviously if you had a heart bypass surgery or something like that, those kind of procedures you would think would. Those are the things you would like to get some more safeguarding against if you're going to try to self-insure to some degree. So there are two basic ways for recipients to fill most of these coverage gaps and reduce the risk of tremendous bills in a bad health year. Number one, Medicare Plus Medigap Supplemental Insurance Policies, and number two, Medicare Advantage Plan. So then now we're thinking we might need some added insurance on top of the Medicare to help us out with these kind of things. The two choices, Medicare Plus, Medicare Supplemental Insurance, Medicare Advantage Plans. So we got the Medicare Plus Medigap Supplemental Insurance Policies, about 58% of the 62 million older adults, 65 and older, and people with disabilities who receive Medicare benefits choose Original Medicare Parts A and B, which cover hospitals, doctors, and medical procedures. About 81% of these beneficiaries supplement their insurance with Medigap, Medicare Supplemental Insurance, Medicare or Employer Sponsored Insurance, and 48 million also pay for a standalone Medicare Part D prescription drug policy, which we talked about in prior presentations. While this may be the more expensive option, it has a few advantages. Both Medicare and Medigap Insurance Plans cover you for any hospital or doctor in the U.S., United States, that accepts Medicare and the great majority do. There is no need for prior authorization or a referral from a primary care doctor. Coverage includes the entire United States, which may be important for anyone who travels frequently or spends part of their year in a different location, which that's what I'm going to do. I'm going to place a truck or something. I don't know. This option is also attractive to those who have particular physicians and hospitals they want to use. Medicare Advantage Plans. Available from private Medicare approved insurance companies, Medicare Advantage policies, called Part C, are marketed to consumers under such names as Aetna, Humana, and Kaiser Foundation Medicare Plans. They may have a premium or a low one compared to the significant premiums for Medigap and prescription drug insurance policies. Medicare Advantage Plans cover hospitals and doctors and often include prescription drug coverage and some services not covered by Medicare too. In 2021, 42% of Medicare beneficiaries choose one of these plans. Most Medicare Advantage Plans operate as a Health Maintenance Organization. That's the good old HMO that we've talked about in prior presentations or Preferred Provider Organization. That's the good old PPO insurance. The HMOs limit members to using the doctors and hospitals in their network. So we saw before the HMOs often cheaper, but they require more restriction in terms of the network that you're going to be using. PPOs generally let members get care outside the plan's network, but members may have to pay more for such care, generally would, you would think. Some plans require prior authorizations for special care or procedures or a referral for my primary care doctor. Plans might not cover care given outside of the network's geographical area. So that's going to be a concern for me when I'm traveling around and my truck and my truck just cruising because I got nothing, you know, I'm just hanging out. Extra benefits not covered by regular Medicare such as eyeglasses, routine dental care, or gum membership may be offered. Additionally, as there are more than 3,830 Medicare Advantage plans offered for 2022, it's important to take the time to find the best plan for your unique circumstances. I've got the time. I'm retired. I'm not actually retired, but in any case, when to sign up for the Medicare. As you approach age 65, it's important to know which enrollment deadlines apply to your circumstances. Begin by checking on your eligibility to avoid costly penalties and gaps in coverage. So you don't want those because we don't want some big problem happening when we don't have coverage and then everything that's not good. Most people should sign up for the Medicare Part A hospitals and Part B doctors in the seven month window that starts three months after the month. You turn 65 and runs for another three months following your 65th birthday. So you don't want to miss the window generally because then you're going to complicate things. So make sure that the window is there. It's open. There's no glass pane in it. You can jump right through it. You're going to jump through the open window while it's open. Otherwise they close it and you hit it. It's like a bird hitting a window pane and it's just, it's not, it's kind of funny to other people, but it's not good. So if you currently get Social Security, you will be automatically enrolled. If not, you need to sign up either online or at your Social Security office. Medicare Part B, if you were working at age 65, however, and you have employer insurance through a company with more than 20 employees, you have the right to stay on your employer insurance and delay signing up for Medicare Part B until your employer coverage ends. So it gets kind of confusing when you're still working, which is quite possible because 65 isn't as old as it used to be when we started setting up this stuff and, you know, you may need the money that inflation's hitting these days, if you work for an employer with fewer than 20 employees, it is very important to ask the employer whether you are required to sign up for Medicare and get that decision in writing. Then we've got Medicare Part D. Once you've enrolled in Medicare, a key decision point is choosing coverage for Part D prescription drug insurance. If you don't enroll in Part D insurance when you start Medicare and want to buy drug coverage later on, you may be permanently penalized for signing up late. So obviously, if you try to buy the insurance after you need the insurance, the insurance is usually more expensive to buy. So you can avoid the penalty, however, if you have what's known as the credible prescription drug coverage which is prescription drug coverage from an employer or union, for example, that is expected to pay on average at least as much as Medicare standard prescription drug coverage. That way, you're kind of still covered, but you're covered under the other plan under a similar kind of situation. So maybe that kind of works to then switch over possibly to the Medicare Part D for the prescription drug stuff, which is what Part D does. It's like knowing your chords on your guitar. You've got to know what a D is. What does that mean in the Medicare terminology? So if you have this kind of drug coverage, when you become eligible for Medicare, you are generally allowed to keep it. You generally won't have to pay a penalty if you later decide to enroll in Medicare prescription drug plan, and you haven't gone for longer than 63 continuous days without credible coverage. 63 days, it's a funny number. I don't know where they came up with 63 days, but that's what it is, 63 days. So choosing traditional Medicare plus a Medigap plan. So now you've got the traditional Medicare plus the Medigap to kind of supplemental it. So as noted above, original Medicare comprehensive, Part A, hospital insurance, and Part B, medical insurance. So A and B are usually those two items that are going to be kind of somewhat automatic. It's the main kind of original Medicare that we generally think of, and then we might want to be supplementing it, possibly with some Medigap plan. So you can supplement this coverage with a standalone Medicare Part D. So then we can tack on Part D, being able to pick up that D chord with the prescription drug plan, and the Medigap supplemental insurance plan. So now we've got the Medigap that we can put into the whole mix of this thing. While signing up for Medicare gets you into Parts A and B, you have to take action on your own to buy these supplemental policies. So it's not just an automatic thing. Just because you've been paying into this thing for the last 40 years or so, it's not all automatic, okay? What do you want from us for being paid for the last 40 years for crying out loud? In any case, finding Part D, drug insurance. To get started, find the plans available in your zip code. Once you have created an account at Medicare.gov, Medicare.gov, you can enter the names of your drugs and use a convenient tool that allows you to compare plan premiums, deductibles, and Medicare star ratings. We talked a little bit about some of those components in prior presentations, including that star rating system and how the Medigap is kind of broken out so that you can think about the different letters of the alphabet, the different notes and scales and that. So if you don't take many or any prescription drugs, you look for a plan with a low monthly premium. All plans must still cover most drugs used by people with Medicare. If, on the other hand, you have high prescription drug costs, check into plans that cover your drugs in the donut hole, so that we talked about the donut hole before, which is this point where, for some reason, at that space that drugs can become more expensive as you go through that price range. So the coverage gap period that kicks in after you and the plan have spent $4,430 on covered drugs in 2022. So selecting a Medigap supplemental plan, recent changes limit choices. Medicap policies are private plans available from insurance companies or through brokers, but not on the Medicare.gov. So they are labeled plans. So now you've got your alphabet again, so you've got to know the alphabet here. It's kind of like your musical alphabet kind of thing, but for the Medigap, you've got A, B, C, D, F, G, K, L, M, N. So it's kind of like a whole, whole half, whole, you know, that kind of thing that you've got to know the progressions here. So each with a different standardized coverage set, plans F and G also offer high deductible versions in some states. Some plans include emergency medical benefits during foreign travel. Since coverage is standard, there are no ratings of Medigap policies. Consumers can confidently compare insurers' prices for each letter plan and simply choose the better deal because the letters are trying to standardize these things. That's kind of the point. So it will hopefully be easier to do some comparing and some contrasting between the different letters. Before 2020, most people, 66%, who bought Medigap policies, chose plan F, which gave the most comprehensive coverage, including paying for the Medicare Part B deductible, $233 in 2022. However, in an effort to trim Medicare expenses, Congress suspended plans C, F, and high deductible F. That's like F sharp, high deductible F, so high deductible F for people who became Medicare eligible in 2020 and beyond. Plan D and Plan G have similar benefits to Plan C and Plan F, except for not covering Part B deductible. So people who signed up or became eligible for Medicare before 2020 can purchase or continue plans C or F, though prices may rise and it may be a better deal to switch to a plan that doesn't cover the deductible. Choosing a Medicare Advantage Plan. Medicare Advantage Health Plans are similar to private health insurance. Most services such as office visits, lab work, surgery, and many others are covered after a small copay. So notice we're on here the Medicare Advantage Plan at this point doing our comparing and contrasting with the Medigap and the Medicare Advantage Plans. So plans might offer an HMO or PPO network and all plans place a yearly limit on total out-of-pocket expenses. And that's kind of nice because that helps you to kind of determine your overall kind of threshold that you might want to try to self-insure against and be able to say, well, okay, even if I get a catastrophe kind of thing, I might be able to pay the out-of-pocket expenses with my own insurance and have some kind of number that you can kind of think about in a worst-case scenario, at least from a financial situation kind of perspective. So each plan has different benefits and rules. Most provide prescription drug coverage. Some require a referral to see a specialist, while others do not. Some may pay a portion of out-of-network care, while others will cover only doctors and facilities that are in the HMO or PPO network. So we got a lot of variation here in terms of the types of plans you could see here. You got the HMO and the PPO. You got to deal with the whole network kind of thing. And you would think that the premiums and the restrictiveness of the network would be reflective. In other words, a more restrictive network possibly might have lower premiums and the ability to go to more doctors, a less restrictive network and so on might have higher premiums would be the general, which you would just think would be the case. There are also other types of Medicare Advantage plans. Selecting a plan with a low or no annual premium can be important, but it's also essential to check on copay and coinsurance costs, especially for expensive hospital stays and procedures to estimate your possible annual expenses. So we talked about these with the general insurance, just in general, so I won't go into them in a lot of detail, but you've got a little bit more complexity than other types of insurance because you not only got the deductible, but you got that deductible and then the copay and then the coinsurance that you got to deal with when you're making these kind of decisions. Since care is often limited to in-network physicians and hospitals, the quality and size of a particular plant's network should be an important factor in your choice. So obviously, you know, if you're restricted to the network, where does the network cover? So you're going to cover all the places that I'm driving my truck to when I'm cruising around in my retirement with my guitar. That's what I need to know. Head to find a Medicare Plan page at Medicare.gov where the Compare feature allows you to look at plans side by side, which can be beneficial. The National Committee for Quality Assurance, that's the NCQA and Insurance Rating Organization, also compares what consumers think of Medicare Advantage Plans services and physicians and whether the plans meet certain quality standards. Top 4.5 and 5-star ratings in 2021 were garnered by an impressive 106 plans. Companies with high-rated Medicare Advantage Plans included Aetna, Blue Cross, Blue Shield, Kaiser Foundation, Health Plans, and United Healthcare. So I think we went over some of the companies that had some higher ratings, but they have a rating system, which that can be useful. We talked about that rating system in a prior presentation in more detail as well. Be sure to check the rating for the plans available in your state, so more stars, more better on the rating system as usual. What is considered and making your choice? Your lifestyle, health condition, finances, may all influence what you determine is best for you, traditional Medicare Plus, Medigap, or Medicare Advantage. Here are some things to consider. The costs, that's always important. Medicare Advantage Plans might save you money, but be sure to check whether prescription drug benefits are included. If not, you'll need to buy a separate Part D plan if you want that coverage, which might be important. Also check the cost of any premiums, co-pays, and other out-of-pocket expenses, and whether there are any limits in their coverage. If extra benefits are included, such as help with hearing aids and dental barrels, be sure to find out how much of these expenses will actually be covered. Compare these costs to those of purchasing Medigap and standalone Medicare Part D prescription drug policies. So these are the two options here. So we've got to calculate the premiums, as well as the amount of any out-of-pocket expenses, deductibles, co-pays, co-insurance, the policies may require. Yes, these can be complex calculations, but an insurance broker can help by doing the math for you and making cost-saving recommendations. Choice of doctors. Original Medicare allows you to use any U.S. doctor or hospital that accepts Medicare and most do. Most Medicare Advantage Plans restrict you to using physicians in their network and may cover less or none of the expenses of using out-of-network and out-of-town providers. A plus of Medicare Advantage Managed Care Plans is that their care is coordinated and your primary care doctor will be in the loop about the findings of specialists. So there is kind of a benefit to the networks. Most of the time we think of the networks as not a benefit because we would like to see whatever doctor we would want, but the fact that they do have a point person in the network as your primary care physician might be beneficial because they might be better equipped to kind of guide you through the maze of things. So the traditional Medicare, you don't need a referral to see a specialist or a prior authorization for procedures, but you'll need to make sure care is coordinated and your doctors are in communication with one another. Often this is best done by developing a relationship with a primary care physician and letting them refer you to specialists. So even if you're going to a specialist, I mean, if you're not required to go to your primary care physician and you could go directly to the specialist, you probably still want the specialist talking to your primary care physician so you would like to be managing yourself and keeping your primary care physician in the loop. You're going to be more of the point person as opposed to the forcing of the primary care physician to be the point person, but you want to make sure that you got a good primary care person that you're keeping in the loop so they can help manage your overall health as you are visiting the specialists. So local conditions and convenience. In some areas where physicians in hospitals are scarce, it's important to check out both the networks of available Medicare Advantage plans and the locations of providers who accept regular Medicare and for doctors accepting new patients. Will you have to travel far to see provider or be treated in an emergency room? Advice from local professionals, neighbors and licensed insurance brokers can help you find Medicare Advantage plans that do business in your area. Compare plans to find one that may suit your needs. Lifestyle factors are going to be a big factor. Frequent travel, like me and mine, I'm cruising around dual residencies and currently having physicians whom you would like to keep are some of the factors that may make regular Medicare a good choice. Ask your current physicians if they participate in any Medicare Advantage plans or accept regular Medicare for frequent flyers. Choosing regular Medicare plus a Medigap insurance policy that covers emergency care in foreign countries may be a good idea. So if you're cruising out abroad-like, then you might have to think about that. Similarly, people who spend part of the year in different geographic area may find it difficult to stay in network for Medicare, for medical care, and might be better off with regular Medicare and a Medigap insurance. The Medigap possibly being the more flexible option possibly. So your health, people with chronic diseases and those who develop a serious health condition should look deeper into the choices available. A Medicare Advantage plan may be a better choice if it has an out-of-pocket maximum that protects you from huge bills. That out-of-pocket max does seem like a very nice thing to me, because that could help you plan against worst-case scenarios situations. So regular Medicare plus and Medigap insurance plan generally allows you more choice in where you receive your care. Check whether any expensive drugs or equipment such as supplies for people with diabetes will be covered by your Medicare prescription drug plan, whether it's a standalone one or part of a Medicare Advantage plan. Broader benefits. Medicare Advantage plans are in the throes of change as the government allows insurers to add coverage for items that are not included in regular Medicare. So many of these benefits are just being initiated, so it pays to reconsider your choice on regular Medicare versus Medicare Advantage each year during open enrollment to make sure you're getting the benefits you need most, whether it's home care or transportation to doctors. Can you switch? Yes, but there's a catch. It's always a catch. It's always something, isn't it? It's logical to consider enjoying the cost-saving of Medicare Advantage plan while you're relatively healthy and then switch back to regular Medicare if you develop a condition you want to be treated at an out-of-town facility. So in fact, switching between the two forms of Medicare or between Medicare Advantage plans is an option for everyone during the open enrollment period. This annual election period runs from October 15th to December 7th each year. Here's the catch, though. If you switch back to regular Medicare Part A and Part B, you may not be able to sign up for a Medigap insurance policy. When you first sign up for Medicare Part A and Part B, Medigap insurance policies are generally obligated to sell you a policy regardless of your medical condition. But in subsequent years, they may have the right to charge you extra due to your age, which you would think that that would be the normal thing insurance companies would kind of do. You're obviously older at that point in time, so it's more likely that you're going to have a condition which might be the reason you're trying to switch back. So you can imagine that the insurance calculation would typically be saying if they're trying to do an actuarial calculation that the insurance would cost more at that point in time unless the government forces them not to do that, which of course would increase the premiums to everyone generally, you would think. So the fact that they're kind of forcing people at that current age to sign up has an impact because that's going to impact whoever's paying for the whole program, someone's paying for it. So in any case, but in subsequent years, they may have the right to charge you extra due to your age and pre-existing conditions or not to sell you a policy at all if you have serious medical problems. Some states have enacted laws to address this. In New York and Connecticut, for example, Medigap insurance plans are guaranteed issue year-round while California, Massachusetts, Maine, Missouri, and Oregon have all set aside annual periods in which switching is allowed. If you live in a state that doesn't have this protection, planning to switch between the systems depending on your health condition is risky business. The CARES Act of 2020, on March 27th, 2020, President Trump signed a 2 trillion coronavirus emergency stimulus package called the CARES Coronavirus Aid Relief and Economic Securities Act into law. It expanded Medicare's ability to cover treatment and services for those affected by COVID-19. Why do I need Medigap if I already have Medicare? Since Medicare only covers about 80% of medical costs, signing up for Medigap can give you fuller coverage and peace of mind. Medigap is a private insurance option that is designed to work well with Medicare Part A and Part B plans. How do I choose between Medicare Advantage and Medigap? This is the recap. Consider your priorities, like budget, choice, travel, and health conditions, while Medicare Advantage can be more affordable for people with long-term health issues. Medigap gives you flexible choice by expanding your network. What are the benefits to Medicare Advantage? Medicare Advantage covers more than Medicare, Part A and Part B, allowing patients more options and flexibility. Patients can customize their Medicare Advantage to cover specific needs like wheelchair ramps, adult daycare, and respite care. Additionally, the 2020 CARES Act expanded Medicare's network to cover more telehealth services as well.