Avoiding costly mistakes with Medicare

Medicare open enrollment began in mid-October and continues until Dec. 7. It's very important to understand all the potential pitfalls when enrolling in Medicare. As I have pointed out in the past, advertisements appear everywhere at this time of year promoting the advantages of Medicare Advantage plans, but none seem to mention the potential disadvantages. I receive multiple telemarketing calls daily from individuals promoting Medicare Advantage plans. Insurance agents currently receive a higher commission for Medicare Advantage plans, so some agents do not accurately point out potential pitfalls.

There can be cost savings associated with Medicare Advantage for healthy people. However, when individuals face significant health problems and want to use Original Medicare with Medigap coverage, they run into unanticipated problems.

If you enroll in a Medicare Advantage plan and later attempt to revert to Original Medicare with Medigap coverage, you may discover you may not be able to purchase a Medigap plan, or that the cost of the plan is much higher than it would have been if you had purchased the plan when you were 65.

Medigap covers the 20% of the cost of medical insurance not covered by Original Medicare (Parts A and B). For many other types of insurance coverage, insurers may refuse to provide you with coverage or charge you a premium because of your health condition. Medigap plans cannot deny you or charge you more if you enroll during the six-month Medigap open enrollment period that starts the first month you have Medicare Part B and you're 65 or older.

If you sign up for Original Medicare without a Medigap plan, the 20% of costs not covered can be very expensive. There is no cap on the size of these expenses. Medigap plans vary, and some Medigap options will pay the whole of the 20% of costs, no matter how large the amount. Some Medigap options can be quite expensive, but if you face high medical costs, having a comprehensive Medigap plan is well worth the expense. I can tell you that in my own family, having enrolled in a Medigap plan saved us considerable medical expenses.

Again, when you enroll during Medigap open enrollment, you cannot be turned down or charged more. The premium you pay is not based on your health condition. However, if you opted for a Medicare Advantage plan at 65, and your health deteriorated, and you find that your health expenses are prohibitive, while you will be able to switch to Original Medicare, you will likely be unable to find a Medigap plan. Unfortunately, many agents who sell Advantage plans do not adequately explain this potential problem to their clients.

Some states require that Medigap plans be available to all. Contact your state insurance department to find out the law in your state. (Find a link to your state insurance department at www.naic.org.) Here are other factors to be aware of during Medicare open enrollment: „ Health maintenance organization (HMO) limitations: When you select an HMO associated with your Advantage plan, make sure that the doctors and hospitals you prefer are covered under your plan. Unfortunately, even if your preferred physician is part of your HMO when you signed up for your plan, there is no guarantee that your doctor will remain in that network. If you do select a Medigap plan, as long as the doctor accepts Medicare patients, all of your medical expenses not covered by Part B will be paid by the plan. „ Medication costs: If you decide to use Medigap rather than an Advantage plan, you will have to purchase a separate Part D option for medication. To determine if your medication is covered, go to medicare.gov and search for Medicare health and drug plans. Insert your zip code to compare plans. Many Advantage plans provide medication coverage. Naturally, you should verify that your medications are covered in the plan you select. Plans can change each year. If your medication costs are very high, you can contact the manufacturer to determine if there are more cost-effective options. „ Unbiased advice: There are good resources for unbiased advice. Some of the ads for Medicare Advantage plans will only refer you to a specific plan. Naturally, you should not restrict yourself to only the plan that is being advertised. By using Medicare's website, medicare.gov, you will have access to multiple options. An excellent unbiased source of information is the State Insurance Acceptance Program (shiphelp.org) available in every state. Another unbiased resource is the Medicare Rights Center (medicarerights.org) which maintains a national helpline.

Bottom line: Recognize that if you select a Medicare Advantage plan, you may not be able to change your mind and acquire a Medigap plan later.

Elliot Raphaelson welcomes your questions and comments at [email protected].