Looking for options to change your Medicare plan?
Hopefully it’s not too late.
Most seniors don’t realize that once beyond the initial 6 month Medigap Open Enrollment, you must qualify based on health.
Let me repeat that: Your guaranteed issue window is only 6 months, once you become eligible.
If you’re still fairly healthy, or can qualify based on a few special circumstances (which we’ll cover later), read on!
Medicare Advantage (Or disadvantage?)
The Medicare Advantage Program was created in 2003 by Congress to help stabilize health care for the elderly, (PublicIntegrity.org).
Medicare Advantage Plans are another way to receive your Medicare through private insurance companies, also called Medicare Part C.
The plans are usually HMOs and come with many limitations, and restrictions.
The Center for Public Integrity exposed weaknesses to the program and potential over-billing by plans, potentially costing taxpayers billions more than it should.
But when cuts to the program became imminent, many seniors rallied in support of these plans.
The Medicare Advantage controversy continues to rage on, and opinions are divided.
As an agent, I put my mom on a Medicare Advantage Plan.
She has been (mostly) happy with it. At the time, and given the location (San Diego), it seemed like a good fit.
But now living in Florida, with different plans and a different healthcare landscape, she is feeling the pinch of network limitations and unexpected costs.
At the writing of this article, we are in the Annual Election Period, so my mom and I decided it’s time to make the switch to Medigap. We went over the health questions of the carrier of her choice and she is healthy enough to qualify.
I still have mixed feelings about Medicare Advantage plans. I admit they are a fit for certain demographics, in certain areas of the U.S.
But the plans come with a long list of conditions and limitations, and these are often left out of TV ads and print ads.
Do your homework, and know the limitations of your plan!
Enrollment Restrictions
Keep in mind that leaving Medicare Advantage is restricted to certain enrollment and dis-enrollment periods during the year.
If one of these enrollment periods applies to you now, it is possible to switch to Medigap after dropping Medicare Advantage and returning to Original Medicare.
Typically, major health events like heart attack, stroke, COPD, cancer, diabetes, recent hospitalization or a pending surgery, can disqualify you from acceptance by a Medigap carrier.
But the health questions vary by carrier. It costs nothing to talk to an agent and find out if you’d qualify. I’ll talk more about the HOW and WHEN you can switch, at the end of this article.
If you’re still on the fence about Medicare Advantage, here are 7 points to ponder.
7 reasons to drop Medicare Advantage and Switch to Medigap
- Freedom
- Securing your future
- Predictable monthly costs (no surprises)
- Your plan can be cancelled. (Medigap can’t)
- Ability to travel and use any doctor or hospital
- No pre-authorization required
- No more referrals on Medigap!
1.) Freedom
When you enroll in a Medicare Advantage plan, you must follow the rules of managed care.
Although the plans are overseen by CMS (Centers for Medicare and Medicaid Services), and must offer certain minimum benefits, the private insurance companies makes rules around how they manage your care.
The plan has the right to refuse care if you are out of network (unless it’s an emergency).
In most cases, on a Medicare Advantage Plan, you don’t have the freedom to go directly to a specialist when you desire to go.
When you are enrolled in a Medicare Advantage HMO, your primary care doctor decides whether or not you need to see a specialist.
If you want to have supplemental coverage, AND total healthcare freedom, the only way to go is a Medigap policy.
Can you really put a price tag on freedom?
2.) Securing your future
Enrolling in Medigap now, secures your future.
How?
It takes away the uncertainty of whether you will qualify later.
Many seniors choose Medicare Advantage to start, because they are healthy.
The thinking often goes like this: “Why bother paying the higher monthly premiums when I won’t even use the plan?”
But many don’t realize that once you go beyond your initial eligibility, when Medigap plans are guaranteed issue (no health questions), later you can be denied.
If the qualities of a medigap plan are very important to you, you must enroll while you are healthy to secure the plan for your future.
Look at the case of life insurance (in particular, term life).
All the while you’re paying your term life policy premiums, you don’t “need” it yet.
You aren’t “using” it, as is the case with health insurance. It only becomes useful when you die. It’s protecting your family against something that “might” happen before the term runs out.
This seems ridiculously obvious. But why don’t we look at Medicare Supplements (Medigap) that way?
Most insurance is to protect against a risk that may never happen. What you are paying for is peace of mind, and protection, if it DOES happen.
Much of the value of premiums paid, go way beyond how much the insurance is actually used.
Medigap provides:
- Full coverage
- Little to no out of pocket cost
- The ability to get the care you need, from the provider of your choice, when you need it!
- You must enroll when you are healthy to get these benefits later.
You don’t wait until you’re terminally ill to buy life insurance.
You must buy a life insurance policy before you have major health issues. It’s the same way with Medigap.
3.) Predictable Monthly costs (no surprises)
Imagine the following scenario.
You’ve been healthy your whole life, and have never been in the hospital or had surgery.
You’re cruising along on your zero premium Medicare Advantage plan, and all of a sudden you have a symptom out of the blue.
Your doctor order a series of tests. Lab work, then an ultrasound, maybe a scope (outpatient), and an MRI or CT scan.
Once there are symptoms, these tests are no longer “routine,” zero cost, preventative tests.
Many Advantage Plans plans charge a 20% copay on radiology tests such as MRIs.
An outpatient surgery requiring sedation (often required for an internal scope, or biopsy) could cost hundreds.
With the steady, predictable monthly premium of a Medigap policy, you never have to worry about an unexpected large bill. You know you will always be completely covered no matter what happens. And, you can go to the provider of your choice.
4.) Your Plan Can Be Cancelled (Medigap Can’t)
Your Medigap policy will offer the same coverage year after year.
In contrast, Medicare Advantage plans are a year-to-year contract.
The risk when you enroll is not knowing how your benefits will change in the future.
Your plan can change your doctor network, or your annual out-of-pocket maximum.
According to the Kaiser Family Foundation, in 2011, 48% of Medicare Advantage Plans offered an out of pocket maximum between $2500 and $3400. In 2015, only 8% of plans offer an out of pocket maximum in that range. In 2015, 48% of plans have an out of pocket maximum between 5000-$6700.
The out-of- pocket max limit of Medicare Advantage is often one of the benefits people use to base their decision whether to join a plan.
Medigap is more consistent, with far less changes.
According to Page 36 of the 2015 “Choosing A Medigap Policy,” if you purchased a Medigap plan after 1992 your plan is guaranteed renewable.
Source – Choosing a Medigap Policy, 2015
5.) Ability to travel and use any doctor or hospital
If you have a Medicare Advantage Plan, you are covered for emergency and urgent care while traveling.
BUT, if you decide to stay out of your service area for many months at a time, and you develop a nagging health issue that isn’t considered emergency or urgent care, you will NOT be able to receive routine care for that problem through your plan.
What’s an example of routine care?
This is ongoing therapeutic care you receive for an existing condition. For example, allergy shots.
Or, an injection into a painful joint. Or a skin condition, like eczema.
6.) No pre-authorization required
Before I explain the pre-authorization stuff, I want to briefly explain how Medigap coverage works.
Medigap plans are accepted by ANY doctor, hospital, or facility that accepts medicare, regardless of the Medigap plan company.
The Medicare Advantage program has introduced so much confusion into the system, that really clouds this simple fact.
Many news clips and articles that talk about limitations of this carrier, or that carrier network – ALL have to do with Medicare HMO networks.
Medigap plans are standardized, and offer identical benefits according to the letter plan, not according to company.
Each Medigap carrier must offer the exact same plan F as every other company.
Medicare decides what is a covered service. As long as the doctor you see accepts medicare, and you are seen for a medicare covered service or condition (for example, eye glasses and hearing aids aren’t covered), medicare will pay for the service.
Once medicare pays, the medigap (medicare supplement plan) pays their portion automatically, no questions asked.
With Medicare Advantage, the rules of each HMO are different, and each company can deny a service if the rules aren’t followed.
Why else would Medicare allow guaranteed issue into a Medigap plan within the first year of joining a Medicare Advantage plan?
Seniors are allowed a year to “test” Medicare Advantage, due to the restrictions and limitations.
7.) No more referrals on Medigap!
With an HMO, you’re under the rules of managed care. Original Medicare plus a Medigap policy is “fee for service,” where YOU are in control of your care.
Let’s revisit the “unexpected symptom scenario.”
That annoying symptom crops up again. The one you saw a specialist for last year. You know what it is, and you’d like to make an appt to see your specialist right away.
BUT, your Medicare Advantage plan requires you to get a referral from your primary care doctor.
Wouldn’t it be nice to be able to go directly to the specialist when you know you need it, without the middle man?
Enrollment Rules, and how to switch
With Medicare Advantage, you are locked into the rules of the enrollment periods set up by Medicare (unless certain exceptions apply).
Annual Election Period (AEP – sometimes called Annual Enrollment Period or just Open Enrollment)
This time runs from October 15th to December 7th. You are allowed to switch from one Medicare Advantage to another, drop a Medicare Advantage Plan, or add a Medicare Advantage Plan. This enrollment period also applies to stand-alone prescription drug plans.
Medicare Advantage Disenrollment Period (MADP)
During this time you may drop a Medicare Advantage Plan, go back to Original Medicare, and add a Medigap policy. It runs from January 1-February 14th.
During either of these enrollment periods, apply for the Medigap plan in advance – at least a month before you plan to drop your Medicare Advantage plan. You must find out first if you will qualify by going through the health questions, once you’ve picked a carrier.
If you can answer no to all health questions on the application, submit the application and wait for acceptance. Once you receive the policy and look it over, and decide it is right for you, then and only then should you cancel your Medicare Advantage Plan during the appropriate enrollment period! (If you attempt this outside an enrollment period you will not be allowed to drop your Medicare Advantage Plan).
IMPORTANT! – Chances are you had drug coverage under your Medicare Advantage Plan. When you drop your Medicare Advantage Plan you will lose this drug coverage, and will need to enroll in a stand-alone Part D drug plan. You are only allowed to do this during the same enrollment periods as Medicare Advantage. If you fail to add drug coverage, you may get a penalty later.
What to watch out for
Make sure your Medigap application is approved before cancelling your Medicare Advantage plan!
If you leave a Medicare Advantage plan that included Medicare Part D, you will need to enroll in a stand-alone drug plan.
In conclusion
Medicare Advantage is not right for everyone.
We discussed 7 reasons to drop Medicare Advantage and switch to Medigap.
- Freedom
- Securing your future
- Predictable monthly costs (no surprises)
- Your plan can be cancelled. (Medigap can’t)
- Ability to travel and use any doctor or hospital
- No pre-authorization required
- No more referrals on Medigap!
Know your limitations before enrolling in the program. The decisions you make when first eligible for Medicare can affect you in the long run.
If you are on a Medicare Advantage Plan and want out, it may not be too late to switch. If you are healthy enough to qualify, you could switch to Original Medicare plus a Medigap plan during one of the proper enrollment periods.
Any other good reasons to switch? Share your experiences in the comments below!
*Disclaimer – This article is not meant to provide legal, health, or financial advice. Please consult with a trusted insurance agent and financial advisor.