How to Choose
Choosing between a Medicare Supplement and a Medicare Advantage plan, put simply, comes down to personal preference. However, when deciding on which option is best for you, there are some important considerations you should keep in mind. By clicking on Helpful Hints you will find information as well as the pros and cons of each type of plan that will help you decide between a Medicare Supplement and a Medicare Advantage plan.
Once you have decided on which option, how do you know which compay offers the best coverage? Below is specific infomraiton that is relevant to the option you are considering.
Medicare Supplement
In a joint publication by the Centers of Medicare & Medicaid Services (CMS) and the National Association of Insurance Commissioners (NAIC) titled 2022 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare states on page 9, “Each standardized Medigap policies must offer the same basic benefits no matter which insurance company sells it. Cost is usually the only difference …”
What this tells the Medicare Beneficiary is that all Medicare Supplements must have the same basic benefits no matter which insurance company sells it and that cost is usually the only difference. What is meant by the word “usually” is that some companies include a few ancillary benefits over and above the basic health benefits such as Silver Sneakers (health club membership) and a 24 hour nurse line. Other than ancillary benefits, all companies must cover the exact same medical benefits.
One should also consider the financial rating(s) of the company. A corporate credit rating is an opinion of an independent agency regarding the likelihood that a corporation will fully meet its’ financial obligation as they come due. It indicates its’ relative ability to pay its creditiors, how able the company is to withstand a struggling economny, increased claims, or other financial hardship. With that being said, it is always in your best interest to choose a company with a solid financial rating.
One should also consider the financial rating(s) of the company. A corporate credit rating is an opinion of an independent agency regarding the likelihood that a corporation will fully meet its’ financial obligation as they come due. It indicates its’ relative ability to pay its creditiors, how able the company is to withstand a struggling economny, increased claims, or other financial hardship. With that being said, it is always in your best interest to choose a company with a solid financial rating.
The number of years a company has been in business typically conveys the number of policyholders it has. The more policyholders a company has, the more money it has to pay claims. This generally translates into a lower premium increase as the company is able to remain profitable. On the other hand, if a company has been in business for only a few years, it generally will have less policyholders and, if there are some large claims, you may experience a large premium increase to offset any company losses.
What does this all mean to you? Knowing that all plans have to cover the same benefits no matter which company sells it, you should select a plan based upon premium, financial rating and years in business.
The number of years a company has been in business typically conveys the number of policyholders it has. The more policyholders a company has, the more money it has to pay claims. This generally translates into a lower premium increase as the company is able to remain profitable. On the other hand, if a company has been in business for only a few years, it generally will have less policyholders and, if there are some large claims, you may experience a large premium increase to offset any company losses.
What does this all mean to you? Knowing that all plans have to cover the same benefits no matter which company sells it, you should select a plan based upon premium, financial rating and years in business.
Part D
When it comes to Part D plans, you will find that not all plans are created equal. Drugs, deductibles, copays and cost sharing can vary widely from plan to plan.
While all Medicare Part D plans must include a formulary (list of drugs), rarely do all the plans have the exact same formulary. What drugs are on one plan’s formulary may not be included in another plan’s formulary.
When it comes to classifying drugs, all plans use a tier system. Even though both plans may include the same drug in their formulary, the drug may be classified as tier 1 with one plan and tier 2 with another plan. This is important to know as the higher the tier the drug is in the more costly the drug usually is.
Then there is the deductible and premium. Some plans have a deductible and others don’t. When it comes to premium, some are very reasonable while others are not.
Keep in mind that the lowest premium does not equal the best and lowest cost plan. So, how do you choose a plan and which one is best for you? There are four criteria that you will need to be aware of.
One: All Medicare Part D plans have a service area in which they provide services. So, you must view only plans that are in the area in which you reside.
Two: You must make sure that all your drugs are included in the plan’s formulary. If they are not, you will have to pay 100% of the cost for that drug. You must also make sure that the pharmacies you use are included as well.
Three: When selecting a plan you should typically choose a plan that has the lowest overall cost, not premium or lowest deductible, assuming it has a satisfactory star rating. Lowest overall cost includes premium, deductible, copays and any amounts you may have to pay in the coverage gap.
Four: Each plan is assigned a star rating by CMS. Star ratings are based on the plan’s performance. A plan can get a rating between 1 and 5 stars. A 5 star rating is considered excellent, a 4 star rating is considered above average, a 3 star rating is considered average, a 2 star rating is considered below average and a 1 star rating is considered poor. These ratings help you compare plans based on quality, service and performance. The ratings are based on ongoing monitoring and analysis and are updated annually. Rarely does a plan have a 5 star rating. Most plans are in the 3 to 4 star rating.
One: All Medicare Part D plans have a service area in which they provide services. So, you must view only plans that are in the area in which you reside.
Two: You must make sure that all your drugs are included in the plan’s formulary. If they are not, you will have to pay 100% of the cost for that drug. You must also make sure that the pharmacies you use are included as well.
Three: When selecting a plan you should typically choose a plan that has the lowest overall cost, not premium or lowest deductible, assuming it has a satisfactory star rating. Lowest overall cost includes premium, deductible, copays and any amounts you may have to pay in the coverage gap.
Four: Each plan is assigned a star rating by CMS. Star ratings are based on the plan’s performance. A plan can get a rating between 1 and 5 stars. A 5 star rating is considered excellent, a 4 star rating is considered above average, a 3 star rating is considered average, a 2 star rating is considered below average and a 1 star rating is considered poor. These ratings help you compare plans based on quality, service and performance. The ratings are based on ongoing monitoring and analysis and are updated annually. Rarely does a plan have a 5 star rating. Most plans are in the 3 to 4 star rating.
Medicare Advantage
In order to determine which company offers the best coverage and the lowest cost there are six criteria that you will need to keep in mind when choosing a plan.
One: The Centers of Medicare & Medicaid Services (CMS) requires that all Medicare Advantage plans cover all Medicare Part A and Part B services, excluding hospice care. Hospice care is always covered by traditional Medicare. So, there really should be no worries about what is covered when selecting a plan. However, how the benefits are covered is what varies between these companies.
Most Medicare Advantage plans generally have copays for doctor visits whether it be for a primary care physician or a specialist. Typically, there will be copays for virtually every service. For instance, there may be a copay for lab, x-ray, rehabilitative services, ambulance, urgent care, out-patient services, in-patient services, behavior and substance abuse services, as well as diagnostic services. Instead of copays, some companies will have coinsurance for some or all of these services.
Two: All Medicare Advantage plans have a service area in which they provide services. This means you must view only plans that are in the area in which you reside.
Three: Be aware of the total out-of-pocket cost of each plan. This is the total amount that you would have to pay, including deductibes, coinsurance and copays over the course of a calendar year. From here you would evaluate the copays of each plan for each service. While some plans may have higher copays for some services, they may have lower copays for other services. When deciding which plan is best for you, don’t overlook the services you think you might ultimately use.
Four: Most plans are classified as either POS, PPO or HMO, which means they are network based. When selecting a plan one will need to confirm that their doctor(s) is in the network as well any facilities they may visit.
Five: Most Medicare Advantage plans include a prescription benefit. So, it is important to confirm that all of your drugs are covered as well as the pharmacies in which your prescriptions are dispensed. The copays you pay for prescriptions do not apply to the maximum out-of-pocket for any Medicare Advantage plan.
Six: Each plan is assigned a star rating by CMS. Star ratings are based on the plan’s performance in more than 50 specific areas across five general categories. A plan can get a rating between 1 and 5 stars. A 5 star rating is considered excellent, a 4 star rating is considered above average, a 3 star rating is considered average, a 2 star rating is considered below average and a 1 star rating is considered poor. These ratings help you compare plans based on quality, service and performance. The ratings are based on ongoing monitoring and analysis and are updated annually.
Four: Most plans are classified as either POS, PPO or HMO, which means they are network based. When selecting a plan one will need to confirm that their doctor(s) is in the network as well any facilities they may visit.
Five: Most Medicare Advantage plans include a prescription benefit. So, it is important to confirm that all of your drugs are covered as well as the pharmacies in which your prescriptions are dispensed. The copays you pay for prescriptions do not apply to the maximum out-of-pocket for any Medicare Advantage plan.
Six: Each plan is assigned a star rating by CMS. Star ratings are based on the plan’s performance in more than 50 specific areas across five general categories. A plan can get a rating between 1 and 5 stars. A 5 star rating is considered excellent, a 4 star rating is considered above average, a 3 star rating is considered average, a 2 star rating is considered below average and a 1 star rating is considered poor. These ratings help you compare plans based on quality, service and performance. The ratings are based on ongoing monitoring and analysis and are updated annually.