"People think they're playing it safe by choosing traditional Medicare. But those with a disability need to understand how limited traditional Medicare coverage can be for them and how difficult it is to get supplemental coverage," said Paul Gada, personal financial planning director and product manager for Allsup Medicare AdvisorSM service, which helps people with disabilities choose the best, most affordable Medicare plan to meet their specific needs.
Individuals with disabilities who can no longer work become eligible for Medicare 24 months after their date of entitlement to Social Security Disability Insurance (SSDI) benefits. At that point, they can choose to enroll in a traditional Medicare program or a Medicare Advantage program. However, choosing the right plan that takes into account preexisting conditions and ongoing healthcare needs can be a daunting and confusing process.
Comparing Benefits of Traditional Medicare and Medicare Advantage Plans Two key factors in evaluating different Medicare options are coverage and cost, according to Gada.
Medicare Coverage
Traditional Medicare includes Part A (hospital) and Part B (medical). Yet, because traditional Medicare coverage is limited, many people also pay more to get supplement insurance (Medigap) and prescription drug coverage (Part D) to help offset high out-of-pocket expenses.However, people with disabilities who choose traditional Medicare coverage often are unpleasantly surprised to learn they cannot take advantage of Medigap because pre-existing conditions frequently are excluded or have limited coverage.
In fact, 24 states also now severely limit Medicare supplement insurance options. In Texas, for example, people who are not yet 65 are limited as a group to getting only one Medicare supplement plan. This is the most limited standardized Medicare supplement plan of the 12 offered in Texas and provides only basic benefits. Meanwhile in 2008, Texans have 387 potential Medicare Advantage plans to choose from, 20 of which enroll only people with chronic or disabling conditions.
"An unfortunate irony is that medical issues related to the very disability that made them eligible for Medicare may also make them ineligible for supplemental insurance," said Gada. "They find themselves with just basic coverage under Medicare and mounting, unplanned-for out-of-pocket expenses they can't afford on SSDI income."
Medicare Advantage plans , on the other hand, at a minimum cover everything offered by traditional Medicare (Parts A and B). Also, these plans are required to accept most Medicare beneficiaries since medical history cannot be a barrier to enrollment. Many Medicare Advantage plans also offer additional benefits not covered by traditional Medicare, such as dental care, hearing and vision screening.
Most Medicare Advantage plans also provide prescription drug coverage options. Having adequate drug coverage is very important, especially if you are facing thousands of dollars in non-covered prescription drug costs while in the Medicare coverage gap known as the donut hole. In 2008, the donut hole begins when an individual's total drug costs reach $2,510, including the portion paid by Medicare and the individual's own out-of-pocket deductibles and co-payments. The individual then must pay 100 percent of the next $3,216 in out-of-pocket costs for prescriptions until total drug costs reach $5,726, after which Medicare prescription drug coverage resumes.
Cost Of Medicare Plans
Despite the added coverage, out-of-pocket costs are generally less costly with a Medicare Advantage plan than if an individual has traditional Medicare and Medigap supplemental insurance. Traditional Medicare Part A is free and Part B premiums are based on the individual's income. For 2008, the monthly cost is $96.40 for single taxpayers with an income of $82,000 or less (or couples with $164,000 or less in income).Everyone in a Medicare Advantage plan must pay the same monthly premium as those enrolled in traditional Medicare Part B. Additional costs depend on the benefits provided by the plan, with some charging an additional premium or having higher deductible and co-payment requirements. However, there are many Medicare Advantage plans that offer more coverage protection than Medicare Parts A and B, but have zero extra monthly premiums (above the Part B amount that normally is paid).
Also, Medicare Advantage plans still are generally less expensive than traditional Medicare because they cap the amount of out-of-pocket costs. For example, traditional Medicare plans typically require an individual to personally pay 20 percent of the Medicare-approved amount out of their own pocket. For someone with high medical costs this can quickly add up. Medicare Advantage plans, however, limit annual out-of-pocket expenses, typically between $2,000 and $5,000.
"One of the worst surprises for someone on a fixed income is unexpected costs," said Gada. "Rising living costs already are taking their toll; so to be hit with unplanned medical costs can be truly devastating."