In Focus – SCCCU Blog

There’s a myth that once you become Medicare-eligible, you can flip a switch, and your health care coverage magically falls into place. If only! In reality, choosing your health plan in retirement is one of the most consequential financial and health decisions you’ll make as you get older.

Get it wrong (or slip into a plan by default) and you may wind up paying more, losing access to your favorite doctors, or getting caught in an endless loop of “prior authorizations” necessary to get the care you need. But if you get it right, you can rest easy knowing your coverage is aligned with your budget and your life.

Here’s your guide to cutting through the alphabet soup:

First choice: Original Medicare or Medicare Advantage?
Think of this as choosing a road, not just a plan. Original Medicare is the classic route, including Part A (hospital) and Part B (medical). Most people add a separate drug plan (Part D). Because Original Medicare doesn’t cap your maximum out-of-pocket costs, many people also pair it with a supplemental policy called Medigap that covers these additional costs that quite literally fall into the “gap” between what Medicare covers and what it does not.

Medicare Advantage (Part C) is the bundled route. This is a private plan that includes Medicare A and B and often part D, with possibly some extras like limited dental, vision, or hearing. In exchange for signing on for this bundle, you agree to the plan’s network and rules. The big headline for Medicare Advantage plans is that they have an annual out-of-pocket maximum for plans A and B; Original Medicare doesn’t (that’s why so many people add Medigap). A private insurer runs each Medicare Advantage plan, so costs like premiums, co-pays, and out-of-pocket limits can vary widely from plan to plan. Also, remember that in-network care vs. out-of-network care matters here: stay in network, and your costs are usually predictable; go out of network, and your plan may pay little to nothing.

Still confused? Essentially, if you want the broadest choice of doctors nationwide and don’t mind assembling your coverage (Original + Part D + Medigap), you’ll probably feel more at home on the classic route. But if you like one card and one plan, and you’re comfortable staying in-network, then Advantage may suit you best. Just keep in mind that Medicare Advantage can look cheaper up front, but should you need care outside the network, the costs and restrictions can quickly outweigh the savings.

What the letters actually mean (and why it’s crazy confusing).
Here’s the tricky component: “Parts” and “Plans” are different things. Parts A, B, C, and D describe the components of Medicare. The lettered Medigap Plans — A, B, C, D, F, G, K, L, M, N — are optional add-ons that only pair with Original Medicare.

As you start shopping, there are two Medigap letters you’ll probably hear over and over: Plan G and Plan N. G is the workhorse plan for many new enrollees because it covers almost everything Original Medicare doesn’t, so your costs are predictable. Meanwhile, N usually comes with a lower premium, but you’ll pay small copays for certain visits. You’ll also hear about Plan F; it’s considered the “Cadillac” of Medigap plans, but it’s not available if you became eligible for Medicare after January 1, 2020. (We recently priced plans N, G and F in a few states, and they ranged between $240 per month to $380.) And remember: you won’t use Medigap at all if you choose a Medicare Advantage plan.

The costs that actually matter.
With Original Medicare, the big risk is uncapped spending in a year where you have a lot of healthcare incidents. Medigap is so popular precisely because it puts a lid on these surprises.

• Prescription coverage can be standalone (Original Medicare) or baked in (Medicare Advantage), but either way, your exact prescriptions will drive your costs — you’ll always want to talk to your doctor about prescribing generic drugs or cheaper prescriptions that may work just as well as the pricy stuff.
• Routine dental exams, most vision care, hearing aids, and long-term care are NOT covered by Original Medicare, and the options you’ll find with Medicare Advantage plans vary a lot.

The best rule of thumb here is only pay for what you think you’ll actually use.

Timing is everything
There are two clocks to watch with Medicare.

• Medigap Open Enrollment Period is a one-time six-month window that starts when you’re 65+ and enrolled in Part B. This is when buying Medigap is easiest (no medical underwriting in most states).
• Medicare’s Fall Open Enrollment (Oct. 15 – Dec. 7) is your annual chance to join or switch Medicare Advantage and Part D plans for January 1. If you’re already in Medicare Advantage, there’s also a January–March window to make certain changes.

How to make your decision without overthinking it.
Start with your doctors and your travel pattern. If you split time between states (hello, grandkids!) or love the freedom to see specialists anywhere, then Original Medicare + Medigap will probably be best for you. On the other hand, if your favorite doctors and hospital are all in one Medicare Advantage network, then one of these plans can be very cost-effective.

If you’re going with Original + Medigap, then try to match the Medigap letter to your risk tolerance… If you want maximum predictability, Plan G is an easy choice. But if you want to save a little money on your premium and you don’t mind small copays, then Plan N is worth a look. On the Advantage side, as you’re comparing plans, take a look at the out-of-pocket max, check to make sure your exact medications are covered, and then confirm your doctors are in-network.

One last sanity saver: be very careful about chasing “free.” A $0 premium Advantage plan can still be pricey if your drugs are in a high tier or your specialist is out-of-network. Similarly, the lowest Medigap premium is NOT a win if the insurer has a history of steep rate hikes. Always look at your total cost of being in the plan over time — not just the brochure price.

Bottom line.
Yes, choosing a Medicare plan can feel like a lot, but it’s simpler than you think when you dive in: Parts A and B are your foundation; D handles drugs; C is Advantage (the bundle); Medigap letters like G and N are the cushions you add to Original Medicare. Choose your road first — Original or Advantage — then fine-tune all your moving pieces. Once you see it that way, the “alphabet soup” turns into a recipe you can actually follow!