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How to Choose a Medicare Plan

Updated on August 8, 2016

The Basics of Medicare

Medicare Part A is hospital insurance. Medicare Part B is medical insurance. Some people only have this coverage and they are UNDERINSURED! The reason for this is, if you only have Medicare Parts A and B, then you are responsible for about 20% of your medical bills. And there is no maximum! If you have a million dollar medical bill, you could be responsible for $200,000. To remove this risk, you can purchase a Medicare Supplement or enroll in a Medicare Advantage plan.

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Sun setting on the Gulf of Mexico
Sun setting on the Gulf of Mexico | Source

Take Advantage of Medicare Advantage

Medicare Advantage plans reduce your risk of owing 20% of your medical bills. They have no or low premiums and deductibles. There are copays and coinsurance for medical care received. They often come with a Part D prescription drug plan as well as other benefits such as fitness memberships, vision and dental coverage and many preventive services.

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Sunset in Kansas
Sunset in Kansas

Medicare Supplements

The other option to remove your 20% responsibility for your medical bills is purchasing a Medicare Supplement. Plan G pays for all of your medical bills that Medicare does not pay except for the part B deductible which is $166 in 2016. You will also want to purchase a separate part D prescription drug plan. The premiums and deductibles for your Medicare Supplement and Part D prescription drug plan will probably cost you over $2,000 a year.

Which Would You Prefer?

Would you rather have a Medicare Supplement that costs you $200 a month and then pays any medical bills you have or a Medicare Advantage plan that has $0 premium but has copays and coinsurance?

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Medicare Advantage vs. Medicare Supplement Plan G

Medicare Advantage
Medicare Supplement Plan G
Premium and Deductibles
Can be $0 in some areas
Approximately $2,400/year for a 65 year old
Part D Drug Coverage
Can be included in plan
Need a standalone Part D plan
Fitness Membership
Can be included in plan
Not included
Would rather have no or low premium and deductibles and then pay copays and coinsurance for medical care you receive or approximately $200/month in premium and deductibles and no copays or coinsurance?

The Decision is Yours

It is entirely up to you whether you decide to use a Medicare Supplement or a Medicare Advantage Plan. The main thing is that you are UNDERINSURED if you only have Parts A and B of Medicare because you are responsible for 20% of your medical bills. You also want to make sure that you don't OVERPAY for a Medicare Supplement when a Medicare Advantage plan would be a better option for your health and financial situation.

Concerns About Medicare Advantage

• One concern of Medicare Advantage plans is the potential for a large expense after a hospital stay. To remove this risk, we recommend a hospital indemnity plan. The premium on a hospital indemnity plan for a 65 year old is around $30/month. The combination of a Medicare Advantage plan and a hospital indemnity plan provides solid coverage at an affordable price.

• Another concern regarding Medicare Advantage plans is the provider network. If you choose a Medicare Advantage plan, you will want to make sure that your hospitals, doctors and other providers are in the network of the Medicare Advantage plan.

At the Beach

Shopping for a Medicare Supplement

There are also a few things you need to be aware of when shopping for a Medicare Supplement. For starters, every plan F is the same, every plan G is the same, and every plan N is the same. The only difference between plan G's from different insurance companies is the premium. But make sure that the premiums you are comparing are for the same plan! Plan N and High Deductible Plan F’s have lower premiums than Plan F and Plan G but the Coverage is also less.

Oftentimes people compare a plan F premium with a plan G premium. Here is how to make a fair comparison: if your plan G premium is at least $14 a month less than the plan F premium, then you are better off with the plan G.

Another tip for you in shopping for a Medicare Supplement...make sure you get a part D prescription drug plan or else you probably will have to pay a penalty if you get one later on.

So shopping for a Medicare Supplement is as simple as choosing the plan that you want, finding the lowest premium possible from an insurance company that you trust, and making sure that the premium being quoted is for the plan you think it is!


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