In his latest answer to a reader question, columnist Phil Moeller takes on what might be the most fundamental question about Medicare: How do you weight your Medicare plan choices?

Moeller is the author of Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs and the co-author of the updated edition of The New York Times bestseller How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.

Got a question of your own about Medicare or Social Security? Send it to  askphil@considerable.com.

The biggest decision

Question: Which is more advantageous for economic reasons: a Medicare Advantage plan or original Medicare with supplemental plans?

Phil Moeller: This short question gets to the heart of how you should choose the best Medicare coverage.

I hate answers that provide six reasons in favor of Medicare Advantage and six reasons in favor of Original Medicare. I will give you reasons on both sides. But I think the answer to this question increasingly favors Medicare Advantage, and its edge is growing. 

Here’s how my thinking breaks down. 

Staying original

Original Medicare, along with a Part D prescription drug plan and a Medicare supplement plan (also known as Medigap), can expose you to the smallest risk that you will have to dig deeply into your own pocket to pay for your medical expenses.

The primary reason is that the Medigap plans that you can buy will pay all of the covered expenses that original Medicare does not pay (With Part B medical coverage, you’re generally responsible for 20% of the costs.)

The up-front cost of all this coverage—Original Medicare (Parts A and B), a Part D drug plan, and Medigap—is much more expensive than a Medicare Advantage plan. 

My wife and I, for example, each pay more than $1,500 a year for our letter G Medigap plans. This is on top of what we pay for Part B, whose standard premium in 2019 is $135.50 a month, or about $1,625 a year. 

We also pay for a Part D drug plan. Those premiums vary a lot from plan to plan, but the national average Part D premium is $33.19 a month, or nearly $400 a year. 

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Add it all up, and I’m laying out more than $3,500 a year before I even file a claim. 

If I do need medical care, however, I will face little additional in the way of out-of-pocket costs for covered care.

The most important word in that last sentence is “covered.” Original Medicare does not cover most dental, vision, or hearing needs. It also does not cover non-medical long-term care expenses in your home or in a nursing home. 

So even complete coverage through Original Medicare plans does not pay for all of your health needs. 

The price advantage

Compared with my $3,500 in premiums for my package of original Medicare policies, the typical Medicare Advantage plan has a monthly premium of about $40 this year and includes Part D coverage.

Add it all up, and I’m laying out more than $3,500 a year before I even file a claim.

Further, nearly half of all Medicare Advantage enrollees are in plans that charge no premium whatsoever. 

Many of these plans also provide limited dental, vision, and hearing coverage, which original Medicare is not allowed to cover. (I have a separate dental plan that charges me about $750 a year in premiums.)

Plus Advantage plans limit your out-of-pocket medical expenses to $6,700 in 2019 (Original Medicare has no such cap.)

Why drugs don’t break the tie

With Original Medicare, if I take expensive drugs I could be on the hook for a lot of money, even with a Part D plan. 

People with Part D coverage through a Medicare Advantage plan are in the same boat, so potential drug costs really don’t come into play in comparing original Medicare and Medicare Advantage.

What makes all the difference

The giant difference between original Medicare and Medicare Advantage is that people with original Medicare can get care from any doctor or hospital in the country that accepts Medicare. 

Medicare Advantage plans have provider networks and may deny coverage by providers outside the network, or charge more for it. They also usually cover only care provided in or near your home market. 

With few medical claims, you will come out ahead with Medicare Advantage plans. This may not be the case for people with multiple chronic medical conditions who require lots of care. 

But even there, someone who likes the doctors and hospitals in their Medicare Advantage plan’s provider network might still come out ahead. For others with heavy health care needs, the package of original Medicare will work better for them. 

Why the balance is shifting

If you are still reading, you might recall that I said at the outset that the edge for Medicare Advantage plans was growing. That’s because of new laws and rules that permitted these plans to begin this year to cover non-medical expenses. 

With heavy health care needs, the package of original Medicare will work better.

Examples include transportation to medical appointments, a couple of weeks of meals delivered to your home when you’ve recently been released from hospitals, and home safety devices such as bathroom grab bars. 

Few Medicare Advantage plans are covering such non-medical items this year, but more will do so in 2020 and beyond. Original Medicare is not allowed to cover these items now, but of course this could change. Until it does, Medicare Advantage has, well, an advantage.

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