If I initially enroll in a Medicare Advantage plan, am I able to later enroll in original Medicare and obtain a Medigap policy and prescription drug plan without paying a fine?
If you initially enroll in a Medicare Advantage plan, you will not be subject to any fines for switching over to original Medicare. If you switch, however, you will be subject to medical underwriting when applying for a supplemental Medigap policy. This means that the private insurance companies that offer Medigap plans can deny coverage or charge more for preexisting conditions. This is known as the “Medicare Advantage trap.” Here is what you should know.
Understanding Medicare Advantage Plans
Medicare Advantage plans (also known as Medicare Part C) are government-approved health plans sold by private insurance companies, which you can choose in place of original Medicare. Most Advantage plans are managed-care policies, such as HMOs or PPOs, that require you to receive care within a network of doctors.
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If you join an Advantage plan, the plan will provide all your Part A (hospital insurance) and Part B (medical insurance) coverage just like original Medicare does. Many Advantage plans also offer extra health perks, like prescription drug, dental, hearing and vision coverage as well as gym memberships.
Medicare Advantage plans are usually less expensive than if you have original Medicare plus a separate Part D drug plan and a Medigap policy. This can be very attractive to new enrollees who are relatively healthy and do not require extensive medical care.
A drawback of Advantage plans, however, is that the benefits and networks can change from year to year. Furthermore, if you receive care outside the networks, you will usually incur higher out-of-pocket costs. Advantage plans are also criticized for pre-authorization requirements, which can delay or deny patient access to medical care. While Medicare Advantage works well for those in good health, it may not be as beneficial if your healthcare needs increase over time.
Understanding Original Medicare Plans
With original Medicare, benefits remain the same each year and you can use any provider that accepts Medicare, which most doctors do accept. But original Medicare has coverage gaps such as deductibles, coinsurance and copayments that can be expensive. For this reason, many enrollees purchase a supplemental Medigap plan offered by a private insurer.
If you opt for original Medicare when you are first eligible, insurers are required to issue you a Medigap policy and cannot charge you more based on your health conditions. In most states, Medigap plans are automatically available only in the first six months after an enrollee becomes eligible for Medicare.
If you enroll in a Medicare Advantage plan when you are first eligible, you will miss the Medigap enrollment window, which means an insurer can refuse to write you a Medigap policy or charge you more for signing up later. In addition, you generally cannot buy a Medigap policy while you are enrolled in a Medicare Advantage plan. There are, however, four states — Connecticut, Massachusetts, Maine and New York — that prohibit insurers from denying a Medigap policy to eligible applicants, including people with pre-existing conditions.
For more information on how Medigap works visit Medicare.gov/health-drug-plans/medigap.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of “The Savvy Senior” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
