I have a medigap policy, but my premiums have been rising over the past few years. My health so far has been good. Should I change to a cheaper medigap policy or consider switching to an all-inclusive Medicare Advantage plan? I am a widow and must watch my budget.
You have several new options to help lower your health-care expenses. You could switch to a Medicare Advantage plan during open-enrollment season (November 15 to December 31) for coverage to begin in 2011. Medicare Advantage plans provide both medical and drug coverage, and the premiums tend to be lower than if you buy a medigap policy, to cover doctor visits and outpatient services, plus a separate Part D prescription-drug policy. But though your premiums may be lower with a Medicare Advantage plan, your out-of-pocket costs could be higher.
A new type of medigap policy, which was introduced in June 2010, may be a good alternative. Until recently, insurers sold 12 standardized medigap plans, labeled A through L. Some of those original options -- Plans E, H, I and J -- are no longer available to new enrollees. But you now have two new choices: Plans M and N. Plan N balances coverage and costs. It could be a good alternative for you.
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Coverage for Plan N is similar to medigap Plan F, the most popular medigap plan, except that in addition to the premium you must pay the $155 annual deductible for Medicare Part B, plus $20 for each office visit and $50 for emergency services. But the premiums for Plan N are generally so much lower than for other medigap policies that you may still come out ahead, even if you have several visits to the doctor or hospital during the year.
For example, the least-expensive Plan F for a 70-year-old man in Miami costs $211.50 per month, according to PlanPrescriber.com. But Plan N costs only $169.20 per month, so even if you visited a doctor 12 times and went to the emergency room twice during the year, you’d still come out ahead with Plan N.
Although you can use any doctor who accepts Medicare, beware of “excess charges.” Doctors can charge a patient up to 15% of the Medicare-covered charge. Plan F covers such excess charges, but Plan N does not. If your doctors charge extra, your out-of-pocket costs could really add up.
Several insurance companies are offering the new Plan N regardless of your health. That’s a big plus, as most other plans can reject you or charge you extra based on your health or age, unless you are within six months of your initial enrollment in Medicare Part B.
Medigap options and prices vary by state -- see PlanPrescriber.com or the Medicare Plan Finder to search for plans in your area. Most state insurance departments also have lists of medigap plans and prices.
Although there is no open-enrollment season for medigap plans -- you can apply to enroll or switch plans at any time during the year -- you can only enroll in Medicare Advantage plans and Part D prescription-drug coverage through December 31. So it’s important to examine your options now.
If you buy a medigap policy, you’ll also have to purchase a separate Part D policy to cover your prescription drugs. For help shopping for Part D and Medicare Advantage coverage, see A Step-By-Step Guide to Comparing Your Medicare Options. Also see 4 Key Changes to Medicare Drug Coverage and Changes to the Medicare Advantage Plan for more information about the way the plans are changing in 2011.