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Medigap and Medicare Advantage Plans - How They Differ

The Medicare Open Enrollment period is rapidly coming to a close. In less than two weeks -- Tuesday, December 7, 2021 -- the enrollment period will end and if you have not made a decision, now is the time to do so. If you are still trying to figure out if a Medicare Part C plan (Medicare Advantage) or a Medigap plan (Medicare Supplemental Insurance) is right for you, we are doing this final blog to help you understand the differences and hopefully make the choice that fits your needs.

Researching plans is important

"We have discussions about Medicare with our older clients who are doing Estate Plans to make sure that they are in the right Medicare plan for them and their healthcare needs," said certified elder law attorney Attorney RJ Connelly III. "The right Medicare plan is just as important as other parts of their estate planning requirements. For instance, are they paying too much for their plans given the health conditions present? Maybe the plan they are thinking of choosing could cost them more in the long run given rehabilitation or prescription needs and the high deductibles. These are all questions that arise and need to be discussed - and not just once - but every time the enrollment period rolls around. With age, needs and circumstances often change, sometimes dramatically."

"The right Medicare plan is just as important as other parts of estate planning requirements...questions that arise need to be discussed -- and not just once, but every time the enrollment period rolls around. With age, needs and circumstances often change, sometimes dramatically." ---- Attorney RJ Connelly III

During this enrollment period, those who are unhappy with the Medicare Advantage Plan they bought last year can explore other plans and for those who want to opt-out altogether from these plans and just return to their original Medicare, they can do that as well, but make sure it is an informed choice.

One area of confusion that usually arises with the enrollment season is an understanding of the difference between Medicare Advantage Plans and Medigap Plans (Medicare Supplemental Insurance). Let's take a look at these.


Medigap Plans (Medicare Supplemental Insurance)

This has been confused by many seniors with Medicare Advantage Plans that are being heavily advertised on television. Medigap, usually known as Supplemental Medicare Insurance, can be purchased usually when the person begins Medicare coverage and covers the "gaps" that Original Medicare does not cover. These plans consist of A, B, C, D, F, HD-F, G, HD-G, K, L, M, and N plans. If a Medigap plan is not purchased at that time (and for some they may not be eligible at that time anyway), trying to buy it after you have been on an Advantage Plan may be next to impossible.

Medigap covers some or all out-of-pocket costs that are associated with original Medicare. This may include deductibles, co-payments, and even coinsurance. This minimizes seniors' financial liabilities and under original Medicare, there is no limit to the out-of-pocket costs as compared to Medicare Advantage Plans which limit these costs to an annual amount. Private insurers are required to offer Medigap policies only when people first enroll in Medicare (there are a few special situations that allow this to happen at other times). If this is not done at that point, insurers can refuse to write such a policy for those with pre-existing conditions like heart disease and diabetes.

"For 2022, there are twelve types of Medigap plans (Medicare Supplemental Insurance), each with standard benefits to the senior and most covering coinsurance and copayments for Part A, Part B and hospice care." --- Attorney RJ Connelly III

"For 2022, there are twelve types of Medigap plans, each with standard benefits to the senior and most covering coinsurance and copayments for Part A, Part B, and hospice care," stated Attorney Connelly. "Some plans pick up coinsurance costs for skilled nursing homes while some do not." Drug costs, however, are not included in these plans. Premiums for Medigap depends on the senior's age, gender, where they live (yes, some areas of the country are riskier than others), and smoking history. Costs for these policies run from around $100 a month to as high as $250 or more.


If you originally just had Part A of Medicare and now want to enroll in Part B, insurers are required to offer you a Medigap policy, no matter what your health status is, for the next six months. However, insurers can exclude you from coverage or even charge higher premiums if you have been recommended for a surgical procedure or have pre-existing conditions like asthma, chronic bronchitis, or rheumatoid arthritis.


What to Remember About Medigap (Supplemental Insurance)

As a quick review, here are some things to remember about Medigap (Supplemental Medicare Plans):

  • In order to qualify for a Medigap plan, you must have original Medicare Parts A and B.

  • Medigap Plans have a separate charge over and above the cost of your original Medicare premiums.

  • Medigap plans cover only the plan holder. Spouses must sign on for their own plan, if eligible.

  • Dropping your Medigap policy could be a mistake as you may not be able to get it back.

  • If you qualify for a Medicare Advantage Plan (Medicare Part C), it is illegal for anyone to sell you a Medigap Plan unless you switch back to Original Medicare.

Medicare Advantage Programs

The ads you are currently seeing on television, for the most part, are for Medicare Part C (although there are a limited few about Medigap enrollment). These programs, known as Medicare Advantage Plans, can provide you with more help at a lower cost than the traditional Medicare with Medigap (Medicare Supplemental Insurance) plans.


Instead of paying for Parts A, B, and D, you enroll through a private insurance company that may cover everything that is provided by Parts A, B, and D as well as some additional services. In most cases, you pay your Medicare Part B (the standard monthly premium for Medicare Part B will be $170.10 for 2022, an increase of $21.60 from $148.50 in 2021) along with your Medicaid Advantage premium.

Medicare Advantage commercials are dominating the airwaves.

These programs work like private health insurance plans with services such as office visits, lab work, surgery, and other medical procedures covered after a small co-pay. These programs range in cost from area to area and could offer HMO or PPO network plans that place a limit on your total out-of-pocket costs.


Just like private plans, each has its own rules and benefits and most provide prescription coverage. Some plans may require a referral from your PCP to see a specialist while others have no such provision. However, most Medicare Advantage plans limit you to doctors within the HMO or PPO and have limitations on out-of-network providers. Also, like private plans, each has different benefits and rules.

"Medicare Advantage ads are pervasive during the enrollment period because Medicare pays the insurance companies for each client they enroll. Although they are not scams, they do paint rosy pictures of coverage and highlight giveaways to encourage enrollment. High out of pocket costs to providers under Medicare Advantage plans could add up to more than the cost of a Medigap plan." --- Attorney RJ Connelly III

As stated earlier, each Medicaid Advantage plan may have rules and benefits. Some may require a referral to see a specialist while others won’t. Some may pay a portion of out-of-network care, while others will only cover you for doctors and facilities that are in the HMO or PPO network. Traditional Medicare and Medigap policies cover you if you go to any doctor or facility that accepts Medicare.

Know the pro's and con's of Medicare Advantage

The other drawback to most Medicare Advantage plans is that they only operate within a certain region. So if you are a resident of Rhode Island with a house in Florida, you may not be covered. In cases like that Medigap is a better option, however, there are some Medicare Advantage plans that do cover seniors almost anywhere, even when traveling out of the country.


Medigap programs usually cost more than Medicare Advantage plans but on the plus side, they may have lower out-of-pocket costs. Medicare Advantage plans can cost less while covering more services however may have higher co-pays or deductibles. The bottom line is that doing your homework is the best bet. When you are on a limited income, every dollar saved is important. So doing your research on what works best given your situation is important.


Scams During Open Enrollment

As the end of the open enrollment period approaches, there will be a rush for eligible individuals to sign up. Here at Connelly Law, we have received a number of calls from seniors who are beginning to become concerned about enrollment because that deadline is coming. "We know that when the enrollment period begins to wind down, scam artists are more likely to be successful in duping seniors who have waited until the last minute and do not have the time to research the available options," said Attorney Connelly. "Not only do they attempt to sell fraudulent policies, but they also gather unsuspecting seniors' sensitive personal, health, and financial information."

"We know that when the enrollment period begins to wind down, scam artists are more likely to be successful in duping seniors who have waited until the last minute...not only do they attempt to sell fraudulent policies, but they also gather unsuspecting seniors' sensitive personal, health, and financial information." ---Attorney RJ Connelly III

AgingCare.com has researched this and put together the top five scams that unscrupulous individuals have used on seniors during this time period. Below, we have listed them as published by AgingCare.com.

  1. Bogus Medicare Representatives - This tactic involves an “official Medicare agent” either cold calling a senior or knocking on their door. The phony agent says they’re selling Medicare insurance that can save the senior thousands of dollars in health care costs next year, but the offer is only good during the open enrollment period. Ignore cold calls and be wary of anyone who shows up unannounced at your home offering products or services of any kind. If you haven’t asked for an agent to contact you, federal law prohibits legitimate insurance agents from trying to sell to you, whether it’s via a phone call, an e-mail, or a knock on your front door. If an “agent” or “representative” tries to sell you something on behalf of Medicare unsolicited, you should report that person to the authorities immediately.

  2. Threatening Loss of Coverage - This scam usually begins with a senior receiving a call that says they must have a prescription drug coverage plan (also known as Medicare Part D) or they will lose their other Medicare benefits. If the senior doesn’t purchase a plan during enrollment time, then their Medicare benefits will be “terminated.” Of course, this caller claims to offer just the right Rx plan for the seniors to increase their coverage and safeguard their benefits. If someone says you must join a plan or buy some sort of coverage to avoid losing your other Medicare benefits, it’s a scam.

  3. Fake Rebate Notices - In this scenario, a scammer calls a Medicare beneficiary to notify them that they are owed a substantial refund because they’ve reached the prescription drug coverage gap known as the “donut hole.” Of course, the catch is that the senior must provide their birth date, Social Security number, bank account, and Medicare number so the refund can be automatically deposited into their checking account. The important takeaway here is that Medicare will NEVER call and ask for a beneficiary’s Medicare number or Social Security number.

  4. Counterfeit Sales Materials - Scammers sometimes create and circulate very official-looking brochures and sales materials for new Medicare products that are available at a “discounted price” during the open enrollment period. They then count on seniors to contact them about enrolling and collect their personal information, payment information, or both. If you’re not sure if the materials you’ve received are legitimate, you can access a full list of the kinds of notifications and information that CMS and your existing plan(s) may send out via mail on Medicare.gov.

  5. Predatory Medicare Insurance Sales Tactics - Unfortunately, even legitimate insurance agents may be tempted into using aggressive or deceptive sales practices to lure seniors into buying real Medicare Advantage Plans, Medigap policies, Part D plans, or other insurance products. Fred Riccardi, president of the Medicare Rights Center, a non-profit organization that helps people understand the Medicare system, says seniors and their families should be aware of what agents can and can’t do, so they’re able to spot dishonest practices right away. Additionally, it is illegal to market additional non-health-related products during personal marketing appointments with Medicare beneficiaries. For example, if a senior requests information on Medicare Advantage Plans, an insurance agent can’t recommend they buy an annuity.

Do I Really Need More Than Original Medicare?

This is a question we hear a lot in our offices when discussing long-term care planning with clients. They often point out that they have been “very healthy” their entire lives and see no reason that their health will change. They may also say that they have enough assets to cover any minor illnesses so paying extra money every month for Medigap or a Medicare Advantage plan is “just a waste of money”.


Understand that having just Original Medicare pays for 80% of medical needs at best, and nothing for some services. For example, the average cost of a heart bypass procedure, without complications, is $200,000. This means you may be left with a bill of $40,000. This cost does not include physical therapy after the surgery, follow-up appointment co-pays, additional medications, and other miscellaneous charges. Having a supplemental plan makes good sense.

Our health deteriorates as we age

"In such cases, we need to be brutally honest with them. No one gets out of life without dying and we all die of something. You could be healthy today and have a stroke tomorrow, and hospital care, rehab costs, and home health provider services add up very quickly," said Attorney Connelly. "It's no secret that as we age, our health will deteriorate – it's part of the life cycle. In some cases, seniors can self-insure but they need to remember that the rates will increase as they get older and become a higher risk. So this route could be taken but the drawbacks are huge and this must be taken into consideration."

"No one gets out of life without dying and we all die of something. You could be healthy today and have a stroke tomorrow, and hospital care, rehab costs, and home health provider services add up very quickly." ---Attorney RJ Connelly III

And there is one more thing that must be considered. If a senior decides at some point that they do need Medicare after passing on it, they will be hit with a lifetime enrollment penalty for Part B and Part D and may not be able to get a Medicare Advantage Plan. Even worse, the seniors could face a six-month waiting period before Medicare becomes effective. So even if a senior or couple have substantial assets, a serious illness could result in tremendous medical bills that could wipe out what someone has worked and saved for.


Remember, Medicare is about ensuring a future when you will not be as healthy. Even the fittest and those living the healthiest lifestyle will face increased medical bills as they age. Do not miss the opportunity to find the plan that fits your needs and enroll when you are eligible. If you need additional information or one-on-one counseling, please consult your state's State Health Insurance Programs (SHIP), which have trained counselors who can help you find the right plan. Click on the link (highlighted in blue) to find the SHIP program in your state. But again, do it as soon as possible because they will become busy as the open enrollment end date approaches.



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