How to Choose a Medicare Plan

Welcome to “How to Choose a Medicare Plan.” This article is part of the Retirement Strategies Course that will keep you from losing thousands of dollars in retirement.

How to Choose A Medicare Plan

Introduction: The Smartest Medicare Strategies – How to Choose a Medicare Plan

How to Choose A Medicare Plan.

First of all, Medicare is a pretty good deal these days. Most people below the age of 65, are jealous of seniors’ access to our national health care system. In addition, your options for supplementing and using Medicare are good too.

Now, when it comes to the Smartest Medicare Strategies, we are talking about what you need to do to use our national health care system to the fullest. Moreover, we want to pay the least amount of money for the best available care for your situation.

NOTE: **Not everyone’s Medicare path will be the same.**

It all comes down to two things:

  1. What kind of spender/saver are you?
  2. What expectations you have for your health insurance?

Your answers to these questions will help you decide the answer to…

Medicare’s biggest question: Do I sign-up for Medicare Advantage or for a Medicare Supplement?  

Strategically deciding this answer will be your best way to save money on your healthcare. Both are good choices. However, only one might be right for you, while the other could end up costing you way more.  Let’s find your answer.

First, let’s start with your spending habits.

  • Are you the kind of person that can save money?
  • Do you stick well to a budget?
  • Do you consider yourself disciplined?
  • Do you always keep a cash emergency fund on hand?

Second, answer these questions to determine what you need from your health care:

  • Do you want extra benefits from your insurance? (For example: vision, dental, vision.)
  • Do you use and pay for a gym membership?
  • Do you travel internationally?
  • Do you have a chronic or terminal illness?
  • Do you live in more than one state in a year?

Your answers to these questions will help you to make the most strategic decision about your Medicare Insurance.

Remember, YOU need to decide for yourself. Moreover, your answer depends on your needs and what is available to you in your market. Use these explanations as a helpful tool.

Medicare Advantage

As I mentioned, Medicare Advantage can save some people a lot of money. However, it can also cost other people more money.

Spending Habit Analysis:

If you answered “yes” to being the kind of person that can save money, is self-disciplined, and has (or can save up for) a emergency cash fund in the bank, then you should consider a Medicare Advantage Plan.

Needs Analysis:

Additionally, if you answered that you would like to have extra health benefits and like using (or would like to try using) a gym, then Medicare Advantage will be appealing. Finally, if you travel domestically or internationally for vacation stays (think being gone less than a month at a time), but do not live in another state for more than a month or two at a time, Medicare Advantage can work for you.

Network Considerations:

Recently, I had one of our wonderful readers email me to mention that she appreciated this article, but wanted me to add a section on Medicare Advantage Network considerations – especially for people who live in rural areas. She is right! This is also a big consideration of joining a Medicare Advantage Plan.

Medicare Advantage Plans save money by contracting with local doctors, hospitals and clinics to provide better pricing to beneficiaries that use these professionals and services. This is called their network. Most often, MA plans use a HMO or a PPO set-up. (Learn more about HMO vs PPO here.)

In more populous areas, these networks can be robust and expansive, providing many options for beneficiaries to consider from primary physicians to specialists. However, if you end up in a rural area that has less medical care options, please review the MA plan’s network carefully before you sign-up. This will make sure that you have access to care when you need it.

As a side note, remember that all emergency visits that are considered emergency under Original Medicare, must be covered no matter where the service.

How to Strategically Use Medicare Advantage

What is Medicare Advantage?

Medicare Advantage (MA) Plans can save the right person a good amount of money. The way MA plans work, is a “pay-as-you-use” it service. Many MA plans have very low premiums (or $0 premiums) you pay per month. Then they have co-pays and coinsurances you pay when you use health care services. For example, you may pay as low as $0 to see your primary care doctor and $40 to see a specialist.

All the plans are different, and they break down co-pays differently. However, you only pay when you need care, and preventative care and screenings often do not have costs on your end.

As a result of the pay-when-you-need-it style of MA, if you have a good healthy year, you may not pay much at all.

For example, if you are a generally healthy 70-year-old, that just sees her doctor twice a year and has a few preventative screenings, then you may pay nothing for your MA plan. (Assuming you have a $0 premium.)

Remember, everyone automatically pays their Part B Premium to the government, so your care is not free. There is just nothing in addition.

Included services can also save you money.

Additionally, Medicare Advantage plans are known for having extra benefits.

  • Silver Sneakers and Renew Active as two fitness programs that often come with MA plans that offer free gym memberships for plan members.
  • Many MA plans have vision, dental and hearing plans.
  • Also, MA plans can come with an allowance for over-the-counter drugs and health care items.
  • Finally, some plans have reward and incentive programs from participating in health activities and preventative care.

Extra Savings

All of this can add up to thousands of dollars of savings over the years. Premium savings, extra benefit savings on dental work, hearing aids and glasses, and even hundreds of dollars saved on gym memberships.

Medicare Advantage programs can work for just about everyone if you really use the extra benefits. Even if you meet your max-out-of-pocket level each year, depending on what supplements cost for your age in your area, you could come out on top with a Medicare Advantage Plan.

So, it sounds like a pretty good deal, but who is a Medicare Advantage program not good for?

Medicare Advantage plans may not save you money if:

  • First, you don’t use the extra services at all
  • Second, you need a lot of medical care (for example, for a chronic disease or large surgery) and the premium costs of supplements in your area add up to less than the lowest max-out-of-pocket MA plan offered in your area.
  • Third, you have a difficult time saving up a thousand dollars or more in a savings account.
  • Finally, if you live in two or more different states or towns during the year and there is not a Medicare Advantage Plan that will cover all the service areas where you live. (For example, if you live in the Midwest during typically, but “snowbird” in Arizona for 3 months a year.)

Medigap Plans (Medicare Supplements)

Spending Habit Analysis:

If you are the kind of person that likes know exactly how much your health care will cost each month, or if you know you cannot save up cash in the bank to pay for as needed health care costs, then a Supplement might be more your style.  

Needs Analysis:


What are Medicare Supplements_

In regards, to our last two needs questions; first, if you live in more than one state during the year and need access to routine (not just emergency) provider care, you might want a Medigap (supplement) plan.  Although Medicare Advantage Plans cover emergency care, they may not have an In-Network provider for routine visits in multiple states.

However, there are a few plans that have extensive networks, so do your research first to see what is available to you and where. Medigap plans will give you the flexibility to see any health care provider as long as they accept Medicare.

Chronic Conditions

Finally, for those that have a chronic illness or routinely have large medical expenses each year, a Medigap plan might cost you less money in the long run. Just add up your premium costs for your Medigap plan PLUS your separate Part D drug plan for the year. If that is less than the lowest max-out-of-pocket for an MA plan in your area, then you might want to consider the Medigap Plan. If you want the whole picture, make sure you add in the cost of vision, dental, hearing, gym membership, etc. for the year, and then make your comparisons.

Conclusions on How to Choose a Medicare Plan

Now, deciding between Medigap and Medicare Advantage will be your number one strategic Medicare decision that will save you thousands down the road. They are both good paths, so your can be confident that your choice will be good for you.

Also, remember that if you are trying out a Medicare Advantage Plan for the first time, you will have 12 months to decide if you want to stay on the plan or revert to your previous arrangement. (Most likely, this means you have 12 months to change back to your supplement without going through underwriting.) That should help give you courage to try something new if you are considering a change.

If you would like more information on Medicare, we suggest reading:

Our next lesson in this email course is: Strategic Retirement Tax Strategies to make sure you pay as little as possible on taxes when you are not working full-time anymore.