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The choices can be confusing, and the fine print is important. But it’s crucial to choose wisely, because it may be hard to change your mind.


When most Americans turn 65, they have three basic options for health coverage: traditional Medicare; Medicare plus supplemental insurance to cover costs that Medicare doesn’t; or Medicare Advantage, a range of managed-care plans.

Making the decision isn’t easy. There’s a lot of fine print when it comes to expenses and coverage. But choosing the wrong plan for your individual circumstances can be a costly mistake—and one that may be hard to undo, depending on where you live. Most states make it difficult to switch plans, so it’s often crucial to pick wisely.

With that in mind, here are eight things that every person should know when selecting the Medicare plan that makes the most sense for them. Keep these in mind, and you’re less likely to make a choice that you’ll later regret.

1. Supplemental insurance is usually the best option for people who can afford it or who have health issues.
Ken Schumm of Olympia, Wash., who turns 65 later this year, had planned on buying a Medicare Advantage plan. It seemed the sensible and most-affordable option. Still, he wanted to be sure, since he has rheumatoid arthritis and takes expensive drugs to combat it.

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To help him decide which coverage to choose, Mr. Schumm hired Medicare consultant Melinda Caughill, co-founder of 65 Inc., who calculated that with traditional Medicare with supplemental medical and drug insurance, he would face a total of $11,324 a year for premiums and his deductible. By contrast, if he chose an Advantage plan, the consultant calculated, his costs—including out-of-pocket spending for medical care and drug purchases—could run as high as $18,325 a year. Mr. Schumm’s medical costs are high in part because his out-of-pocket prescription costs will top $6,000 annually with either an Advantage plan or with traditional Medicare plus a drug supplemental plan, 65 Inc. calculated.

Advantage plans are financially risky for patients with health issues, Ms. Caughill says. With an Advantage plan, “Ken could potentially save $3,000 if he had no health needs,” she says. “But his worst-case scenario is thousands of dollars worse.” Based on his current health needs, she calculates that his annual costs with an Advantage plan would range from $8,325, if he uses only his drugs and doesn’t require doctor visits, to $18,325 if he uses doctors a lot and hits his plan’s spending caps.

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By choosing Medicare and supplemental insurance, Mr. Schumm also will be able to go to any doctor or hospital that accepts Medicare without referrals. The most popular Medicare supplemental plans, such as the F or G plans, have no copays, though the G plan does have a $203 annual deductible.

In fact, people who are affluent are almost always better off with a Medicare supplemental plan, says David Armes, a California Medicare consultant. That is because, as noted later, eventually most people will have significant medical needs. Supplemental plans, while more expensive upfront, offers better coverage than the alternatives.

2. Having Medicare alone is risky.
Some 5.6 million Americans enroll in traditional Medicare but don’t buy supplemental insurance, according to the Kaiser Family Foundation. They all pay a monthly Medicare premium—people buying supplemental coverage or enrolling in Medicare Advantage must also pay this premium—but face no other costs except for drugs, if they don’t seek medical care.

The problem is if they get sick or injured and require a long-term stay in a hospital or skilled nursing facility. In that case, they are less protected from costs than patients who have supplemental coverage or who are in Medicare Advantage. Suppose you are in a bad car accident, and have to spend months in a skilled nursing facility. Medicare covers all of the costs for the first 20 days. For the next 80 days, you have a copay of $185.50 a day.

“It is like not getting home insurance,” says Mary Jeanne Cullen, a Medicare consultant in New Jersey. “There is financial risk.”

Signing Up
Enrollment in Medicare Advantage has more than doubled over the past decade

3. Medicare Advantage plans are cheaper for seniors in good health.
If you’re not going to the doctor a lot and usually stay in-network, Medicare Advantage is a less-expensive option than Medicare with a supplement. Not only do many Advantage plans have no monthly premiums, but they often include a drug plan and extra benefits like dental, vision or hearing care not covered by Medicare. Some offer gym memberships.

The catch, and it’s a big one: Medicare Advantage patients must use in-network providers or face copays that are substantially higher than what people with Medicare supplemental insurance customarily pay. So if you need to go to the top cancer hospital, and it isn’t in your plan, you might incur thousands of dollars in additional costs.

One other important point: You can’t just consider your current health in the decision. Starting in an Advantage plan, and figuring you can switch to a supplemental plan down the road if your health worsens could be a risky strategy, depending on where you live. In most states, the companies that sell supplemental insurance have the right to charge you more or deny you coverage altogether after that initial sign-up period.

4. Not all Advantage plans are created equal.
Some Advantage plans are set up as health-maintenance organizations, where you must stay within network to get coverage; others are set up as preferred provider organizations, which generally will pay a portion of costs when you go out of network. PPOs give patients a lot more freedom than HMOs, health experts say.

Stephen O’Brien, an insurance agent in Maine, says most of his clients can’t afford the $200-plus monthly premiums charged by popular Medicare supplemental insurance plans. He steers his clients to a no-premium PPO with annual out-of-pocket maximums of $5,900 for in-network care and $10,000 for both in- and out-of-network care. It allows patients to go to top hospitals and doctors in Boston, many of which are in network.

“If something really happens,” Mr. O’Brien says, “you want to go where you need to go.”

5. Supplemental plans are the better option for people who travel.
Medicare Advantage plans usually have a network of doctors in a certain state or portion of a state. If you’re traveling, they generally will cover treatment for medical emergencies, but not for routine or chronic problems.

There are exceptions. Some Advantage plans do have national networks in which you have access to certain hospitals and doctors outside your service plan.

Insurance Options

Other 1%

No supplemental coverage

Medicare Advantage

Medigap

No supplemental coverage

10%

Medicaid

17%

34%

12%

Sources of coverage among Medicare beneficiaries

Supplemental coverage for traditional Medicare beneficiaries

39%

20%

18%

21%

Employer- sponsored insurance

29%

Medicaid

Employer-sponsored retiree health coverage

Medigap

Source: Kaiser Family Foundation analysis of CMS Medicare Current Beneficiary Survey, 2018 File
Supplemental coverage, by contrast, can be used with any doctor or hospital that accepts Medicare in the U.S.

6. Supplemental plans usually get more expensive as you get older.
Most supplemental plans use attained-age pricing, meaning the premium automatically goes up for each year you hold it. The plans often have additional increases to cover rising medical costs.

7. It can be difficult switching to Medicare with supplemental insurance.
During the first six months after you enroll in Medicare Part B, which covers doctors and other outpatient services, you are guaranteed the right to buy supplemental insurance. You won’t have to answer health questions from the insurance company selling it, and you can’t be rejected for pre-existing conditions. If you try to buy supplemental insurance after that six months runs out, however, the insurer can charge more because of health issues or deny coverage altogether. A supplemental plan at that point might be impossible or unaffordable.

It is a slightly different story for patients in Advantage plans. In most states, whether you started out in an Advantage plan or switched to one later, you have 12 months from when the plan began to switch instead to Medicare and buy supplemental insurance without having to answer questions from an insurer, says Ms. Caughill of 65 Inc. Any point during that time, she adds, “you can change to original Medicare plus a supplement.”

Some states have even more liberal policies for switching. A few—including New York, Connecticut, Massachusetts and to a degree, Maine—use a health-insurance system known as community ratings, which legally requires insurers to offer all consumers in that state the same rate regardless of age or health. In those states, people can move from an Advantage plan to traditional Medicare plus supplemental coverage after their initial enrollment period, without having to answer health questions from the insurance company selling it, and you can’t be rejected for pre-existing conditions.

8. Don’t forget the “nuclear option.”
For people who don’t live in one of these states and are in desperate need of affordable health coverage, Ms. Caughill of 65 Inc. will sometimes recommend what she calls the “nuclear option.” Such patients can get a redo by moving outside their Advantage plan’s service area. Any time you move out of an Advantage plan’s service area, which could be a county, several counties, or an entire state, you have the right to get supplemental insurance in the new service area as if you were just entering the market. The insurer can adjust the price based on age, gender or smoking status, but it can’t charge more because of existing conditions.

“You get a Medicare enrollment do-over,” she says.

Ms. Caughill had one client with lung cancer who moved from Wisconsin to Colorado to get into a supplemental plan. But she cautions people they must actually move. “Otherwise,” she says, “you’re committing insurance fraud.”

Mr. Templin is a former Wall Street Journal reporter and editor. He can be reached at reports@wsj.com.

After decades of working, saving, and planning, the transition to retirement doesn't always go as expected. What are the biggest surprises—positive or negative–you've discovered in retirement?

LINK: https://www.wsj.com/articles/c...are-plan-11634049214
 
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A few years away....but thanks for the read.
 
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Thanks!!

There seems to be a table in the middle of the article but the formatting didn't carry from the article. I don't have access to the original article. Is it possible to post the table w/ the correct formatting here?




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^^^^^^^^^^
I wish I could.
 
Posts: 17177 | Location: Stuck at home | Registered: January 02, 2015Reply With QuoteReport This Post
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quote:
Originally posted by konata88:
Thanks!!

There seems to be a table in the middle of the article but the formatting didn't carry from the article. I don't have access to the original article. Is it possible to post the table w/ the correct formatting here?


I was able to access and read the whole article on the WSJ website through my local library system website, but I didn’t see a table. I even went through Pro Quest, no table seen.

Most libraries of decent size have a way to remote read Publications , no charge to you, and as well have paper copies to read. The article is dated today, you might phone your local library and inquire if they have paper copies.
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Posts: 425 | Registered: June 12, 2005Reply With QuoteReport This Post
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Thanks springnr and OKCGene!

The information with corrupted formatting seems to be the pie charts rather than a table like I was thinking.

Although the charts raise some additional questions for me.

Good timely article - I've been trying to figure this stuff out. Could we have made this system any more complex? As I age, I want taxes, insurance, investments, income to all get simpler, not more complex.




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quote:
Originally posted by konata88:
Good timely article - I've been trying to figure this stuff out. Could we have made this system any more complex? As I age, I want taxes, insurance, investments, income to all get simpler, not more complex.


They all got more complex for me and I suspect they will for you too, assuming you did well in life.
 
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I’m in the process now. This year I stayed on my wife’s employment policy for my supplemental. It worked out ok but I usually max out so 5-6k out of pocket. They are getting new insurance at the beginning of the year and I’m not sure how soon I’ll have the new numbers to compare with my other options. Kinda frustrating and stressful at the same time.


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quote:
Originally posted by konata88:
Thanks!!

There seems to be a table in the middle of the article but the formatting didn't carry from the article. I don't have access to the original article. Is it possible to post the table w/ the correct formatting here?

They did something odd with the diagram. Tried to link the image file here but it didn't take.

Oh, well. Instead, here's a non-firewalled link to the whole article. Non-firewalled link: WSJ "8 Things to Know When Choosing a Medicare Plan"
I believe the data you were looking to see graphically is the donut-shaped graphs about halfway down.
 
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I experienced this decision making process a couple of years ago and it seemed pretty confusing.
Now, with a little more experience, it’s a little less confusing.


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Posts: 9456 | Location: NE GA | Registered: August 22, 2002Reply With QuoteReport This Post
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I just retired on April 19th of this year and had to get signed up for Medicare, its a pain thats for sure. My wife is 13 years younger than me and I am carrying her on a Cobra from my work which will cease this time next year.

This article was quite informative.
 
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My wife and I retired together 6 years ago. Prior to the big day, we visited with a person from our local Council on Aging who was well versed in the alphabet soup of Medicare. We ended up with Part A, B and G. The G is the supplement. We are very happy with this combination. After we pay our annual Part B deductible of $203 ($217 for 2022), the combination of coverage has paid everything else.

I know the Advantage plan is cheaper per month but coverage isn't near as good. Friends with this plan alway complain about their out of pocket costs for doctor and hospital visits.



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quote:
Originally posted by mcrimm:
My wife and I retired together 6 years ago. Prior to the big day, we visited with a person from our local Council on Aging who was well versed in the alphabet soup of Medicare. We ended up with Part A, B and G. The G is the supplement. We are very happy with this combination. After we pay our annual Part B deductible of $203 ($217 for 2022), the combination of coverage has paid everything else.

I know the Advantage plan is cheaper per month but coverage isn't near as good. Friends with this plan alway complain about their out of pocket costs for doctor and hospital visits.


Yep this whole ordeal is confusing. I'll be signing up in about 7 or 8 months or so.

I've been to a local seminar and walked out more confused than when I walked in.

I have a former co worker who I think is now an agent who does this, I guess I'll call her and see if she can clear up the mud.

So per your experience a Supplement is better than an Advantage plan? I'd heard they were different and one way much better than the other.

One thing I'm concerned about is that I'll spend 6 months over the Winter in Arizona (soon as I can buy a place out there, coming soon) and the other half of the year partly in Oklahoma and partly dragging my camper around Colorado Montana Idaho and such. I'm told I'll have to be careful with my Medicare selection so I don't get screwed financially an out of area or out of network, or something, when needing care that costs more than pocket money.
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Every supplement plan is vetted by the Government. Plan G from Blue Cross is the same coverage as Plan G from United health care. The price may differ slightly. Advantage plans are great for who are in wonderful health and do not vacation or move around. Two years ago the primary hospital in our area stopped taking ANY Advantage plans. Patients were without a physician and a hospital. They did reconcile many months later.
 
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A year before my wife turned 65 which was this year, I started reading up on Medicare. It definitely is quite complex and, up until then, I didn't bother understanding our medical insurance plans.

Bottom line, if you're truly poor and don't plan to move states, Medicare Advantage plans may be your best bet as they're like all-in-one HMO plans.

If you have retirement income and savings or if you plan to move states, the best strategy is to go with basic Medicare A and B and get a supplemental plan. I believe G is the most preferred but the decision point is whether to go with a low premium, high deductible plan or with a high premium, low deductible plan. If you're relatively healthy, you can go with a high deductible plan as it will save you money and, yet, still give you a safety net should you end up being sickly.

If you're in poor health, you can go with a high premium, low deductibility plan as you'll end up spending what you would spend on the premiums on the deductible anyway.

How do you decide between high deductible versus low deductible? Get the annual price of the high deductible plan and low deductible plan. Subtract the annual premium payments from each other to get the difference. Divide the difference by 20%. The 20% is your portion you are expected to kick in before the high deductible plan kicks in. The result of dividing the difference by 20% gives you a total. This total is the break even point of the total outpatient costs for the year. If you expect your total costs of seeing your doctor is less then you will save some money going with the high deductible plan. If you expect your costs to be above this number, then you'll have peace of mind going with the low deductible but higher premium plan.



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I'm two years away so keeping track of all this info. Thanks.




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Posts: 38601 | Location: SC Lowcountry/Cape Cod | Registered: November 22, 2002Reply With QuoteReport This Post
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My take on this, the Advantage plans offer some limited benefits for vision and dental and lower premiums. They have higher, sometimes much higher, deductibles and seem to be more limited as to the providers you can use, and it varies by your location. Changing plans can be difficult to impossible as you age and start having more health issues although moving and some other things can change that.

Medicare A (hospital, no premium) and B (doctors and other mid $200 mo. premium) has a deductible for part B and the supplement (Part G in my case) covers all that except for a $200+ something deductible. Drugs are a separate part D policy and the premium and coverage vary for those. This totals $450-500 a month premium for everything and a mid $200 a year deductible. Unless you're on such a limited income that the premiums are a problem, this is hard to beat in my opinion.

Make sure you ask, but most providers in my area take Medicare and the chosen supplement payment. Not always so with Advantage.
While I don't have any issues at present, we're getting older so I decided in anticipation my potential future situation, not just for a low premium right now.

Compared to the recent years with traditional medical insurance, the premiums and deductible are an incredible bargain.


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I was fortunate that Mrs. Flash took care of medical for Welfare and County Mental Health clients for many years, so she knew Medicare, Medicaid and County Medical Services completely.

Now, the financial part was another matter and I had to figure it all out on my own. Nobody can really tell you how much you'll need because everyone's situation is different.
 
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