My clients often ask me what plans I would choose if I were turning 65 today.
I stress that my health and budget, my risk tolerance, and how much I travel out of state is unique to me. I’m not opposed to private Medicare Advantage plans, but I don’t want one. People then take that to mean that Medicare Advantage is a poor option. Not true; I believe these types of plans have tremendous benefits for many people. I’m not you.
Our company, The Medicare Family, sells thousands of Medicare plans in all 50 states. What do our clients prefer? That has changed a lot over the past few years. The vast majority of people used to purchase a Medicare Supplement (usually a Plan G). But last year we sold about 50/50 Medicare Supplements to Medicare Advantage plans. This isn’t driven by our preference; it’s driven by the consumer. More and more people are choosing private Medicare Advantage plans each year. Inflation is one factor driving this, but the biggest factor is the number of TV commercials touting the benefits of plans most people had never heard of.
Medicare Supplement or Medicare Advantage, everyone must make this choice. One plan isn’t better than the other – they are very different.
Back to me. Why would I choose a Medicare Supplement plan when there are $0 premium PPO plans I could purchase?
Why would I choose a Medicare Supplement when there is an HMO plan with $3,000 of dental benefits and hundreds of dollars available in flexible benefits?
I don’t like the idea of being limited to a set network of doctors. I want the freedom to go to any doctor or hospital in the country. I like certainty. I like knowing that I’ll pay the same amount every year, regardless of my health. I like the fact the benefits will never change. The most important factor is that I can financially weather the annual rate increases that price a Medicare Supplement plan out of the hands of many people. Plans will go up 5 to 10 percent a year, every year, for the rest of your life. This is the factor that ends up driving most people to Medicare Advantage plans.
But what about the rich extra benefits available in Medicare Advantage plans? Yes, they are attractive, but if I have the money, I can purchase my own dental, vision, and hearing insurance plans. If cancer runs in my family (luckily it doesn’t) I can purchase additional cancer coverage.
I travel out of state often for both business and pleasure. With a private Medicare plan – even the new plans with great out-of-network benefits – there is more work involved in getting care and understanding how private Medicare works.
A Medicare Supplement is easy. A Medicare Supplement can never change its benefits, while a Medicare Advantage plan can and will change annually (even though the changes might be beneficial, some people don’t like that uncertainty.) With a Medicare Supplement, I can take my insurance across the nation and my benefits will remain the same. Year in and year out, not matter where I move. I will never need a referral to see a specialist. I won’t have to wait to get a prior authorization to get my knee replaced. The hurdles in Private Medicare are not huge, but if you can afford a traditional Medicare Supplement, you have more flexibility and less red tape.
Before you quickly make up your mind that you want a Medicare Supplement Plan G, too, think about this again:
For a female turning age 65, a plan will be about $100 to $120 per month, and for a male turning age 65 about $130 to $150 per month (depending on the company you choose). An HMO or PPO plan premium could be as little as $0 per month.
Before people understand how these plans work, they often make their mind up too quickly. It’s a big decision. It’s a personal decision based on your health, budget, medications, risk tolerance, and ZIP code. Take the time, do the research, and don’t choose a plan based on what your friend or neighbor chose. Choose the plan that best fits your unique needs.
Often you may be able to change plans later. Some people change plans annually. But many people are unable to change to a Medicare Supplement based on their health, so this decision must be made when they are first enrolling into Medicare Part B – when they can choose any plan, from any company regardless of their health.
Sylvia Gordon is co-founder of The Medicare Family, headquartered in Noblesville, where she educates thousands on Medicare and Social Security in all 50 states. You can learn more at TheMedicareFamily.com.