Talk with a licensed Insurance Agent at 941-567-6000 (TTY 711)

Talk with a licensed Medicare Advisor
941-567-6000 TTY 711

Medicare Advantage or Supplement: What’s Right for You?

by | Jan 2, 2022 | ActivAge Nation, Choosing a plan, Lifestyle, Medicare Advantage, Medicare Premiums, Medicare Supplement, Medigap, Plan types

Mature man driving red sports car with woman passenger feeling free about Medicare retirement coverage

Feel Confident in Your Decision

If you or your spouse/partner are among the two million 64 year-olds in the US, you’ll be eligible for Medicare soon. Congrats! You’re probably just beginning to wade into the alphabet soup of Medicare plan options and rules, and are more than a little anxious about choosing the best healthcare options for the rest of your life.

The right Medicare plan can protect your retirement savings and investments from erosion due to healthcare expenses. It can provide peace of mind that allows you to more completely enjoy your retirement. Choosing the wrong one can be very costly. For “ActivAgers”—active retirees who like to get out and enjoy life—it’s especially important to choose the right type of Medicare plan.

The problem is, Medicare is notoriously difficult to understand and navigate. This can cause a lot of stress because, let’s face it, most people under 64 years old are in denial about “the Medicare thing” because it’s traditionally been a social demarcation between young and old. But due to advances in medical and social sciences, 65 is fast becoming the new 45, and retirees are more active than ever before. So Medicare is now becoming more of an icon of freedom from healthcare expenses so you can enjoy an extended retirement…if you make the right choices.

So, what are those “right” choices? The answer to that question is as individual as you are, but there are some good rules of thumb that might help you feel more confident about this big decision. Do you want the lowest monthly premiums and hope you don’t need to use the insurance for a major healthcare event? Or can you afford higher premiums to ensure you don’t ever have to raid your retirement fund? In theory it’s not much different than insurance plans you’re used to, but probably a bit more complex.

Medicare At-A-Glance

The chart below links to an interactive infographic that can help you understand the basics of Medicare in a few short minutes. It will help you grasp the relationships and differences between the various parts of Medicare. And it will give more personal meaning to the rest of this article.

Eligibility Time Frame

You’re first eligible to apply for Medicare 3 months before the month you turn age 65, during the month you turn age 65, and up to 3 months after your 65th birthday. This gives you a total of 7 months to enroll. So you have time to do some homework to decide which type of Medicare plan is right for you. If you have healthcare coverage through your employer, spouse or other partner, you can delay enrollment in Part B, but should enroll in Part A during your enrollment period.

Here’s Where It Gets Tricky

Original Medicare and Medicare Advantage can potentially expose you to substantial out of pocket costs (OOP). For example, Medicare Part A (covering hospital stays) is low or no-cost for most people and covers most hospital costs up to a 60-day stay, with a deductible of $1,600 and $0 coinsurance (2023 costs). However, if you’re in the hospital longer than 60 days, coinsurance is $400/day until day 91, when it increases to $800/day. This means within 90 days, you could be personally responsible for more than $12,000 in hospital bills. After that, the daily cost doubles and could accumulate to more than $100,000.

The standard premium for Medicare Part B (doctor visits and other medical costs) in 2023 is $164.90/month or more, depending on your income the last two years. On top of that, you’ll pay a $226.00 deductible plus 20% of all medical services charges. Depending on how much healthcare you need, this can add up to a substantial amount.

Low Cost/High Risk Solution

Medicare Advantage plans (Part C), basically just bundle together parts A and B and add Part D (prescription coverage). Medicare Advantage monthly premiums are fairly low cost, starting under $70/mo. in 2023. These plans limit your out-of-pocket exposure, but that limit can be very high.

These plans can include dental, vision, and hearing coverage as well. They often limit you to specific doctors and services (“in-network”) and require special permission to cover out-of-network claims. So if you want to see a specific specialist, odds are, it won’t be covered completely, and often not at all.

But there’s a catch. Out of pocket costs, such as those described above, for some plans can be as high as $8,300 for in-network providers and $11,300 for out-of-network (in 2022). However, if you’re confident that you’re healthy and believe you won’t need much care, it could be a great bargain…until you need healthcare.

Higher Cost/Low Risk Solution

Many people find that predictability in healthcare costs offers the greatest peace of mind. Knowing exactly how much you’ll spend on healthcare every year—no matter what may come—can make the road ahead a lot smoother and allow you to more thoroughly enjoy your retirement.

Medicare Supplement plans (aka Medigap plans) provide coverage for some or all of the out-of-pocket expenses left by Original Medicare and not covered by Medicare Advantage plans (the most popular is plan G). While their monthly premiums are higher, some Medigap plans pay for all medical expenses except the modest Part B annual deductible ($233 in 2022). With a Medicare Supplement plan, you’ll be able to accurately budget for your healthcare expenses no matter what your future holds. Even in the event of a serious medical episode, your costs don’t budge.

Medicare Supplement (Medigap) plans fill in the gaps left by original Medicare. This means you aren’t restricted to a plan’s specific healthcare network. You can go anywhere Medicare is accepted. Keep in mind, you first have to enroll in Medicare Parts A and B (through https://www.ssa.gov), then purchase a Medicare Supplement plan to cover all the gaps. These plans are offered by many private insurance carriers, so choices can be confusing and monthly premiums can vary. ActivAge Medicare Advisors can help you find the Medicare plan that best fits your individual situation.

The Bottom Line

  • Low premiums/higher risk = Medicare Advantage plan
  • Low risk/higher premium = Medicare Supplement plan
  • Enrolling in a Medicare Supplement plan directly through insurance carrier = less choice and less personalized consultation
  • Enrolling in a Medicare Supplement plan with ActivAge Medicare Advisors = more choice and more personalized consultation at no additional cost.

For specific questions regarding the best Medicare options for your unique situation, contact Lynn Morang at ActivAge Medicare Advisors at 941-567-6000 TTY 711. Or email
lynn.morang@activagemedicare.com