I think the lower upfront premium costs and expanded benefits of Medicare Advantage plans are great as long as you never get seriously sick or injured. Inasmuch as that's unlikely as we age, I like traditional Medicare with a Medicare Supplement plan for the following reasons:
First, your out-of-pocket expenses with an Advantage plan could be significant if you get sick or injured. Your exposure to out-of-pocket expenses is much lower with a Supplement plan.
Second, there are no networks or referrals with a Supplement plan. You can go to any hospital or doctor that accepts Medicare. You are covered if you wish to seek treatment in other states that have hospitals and specialists you might need.
Third, Medicare Supplement claims are processed by the Centers for Medicare Services and not your insurance company. Once CMS covers a claim, your supplement insurance company must pay the unpaid balance regardless of whether they would have approved the claim for their Advantage plan holders.
Fourth, Medicare Advantage plans expose you to underwriting risk. If you start with an Advantage plan and then get very sick and want to switch to a Medicare Supplement plan, your insurance company may require medical underwriting. If so, the insurer will look at your medical history and current health status. If it determines the risk of covering you is too great, it can refuse to sell you a plan or it may charge you much higher premiums. In fairness, this is less of a problem if you live in MA, CT, NY or ME.
Lastly, Medicare Supplement plans are portable. You can take them to another state if you move and like your plan.
Whether someone should favor Roths or traditional retirement accounts depends a lot in where they are in life, their taxable income, and their current tax rate. There's no one size fits all. Once you retire and have an opportunity to make Roth conversions, matters get considerably more complicated. It is difficult to know if the tax arbitrage opportunity presented by conversions will work out as expected. That said, doing conversions in the name of tax diversification makes sense. Spreading assets across taxable, Roth, and traditional retirement accounts will not result in the lowest tax outcome, but it won't result in the highest either.
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I can't think of a better way for me to check out of the HumbleDollar than to let it sink into the cesspool of politics.
Post: Myths That Won’t Die
Link to comment from February 18, 2023
I think the lower upfront premium costs and expanded benefits of Medicare Advantage plans are great as long as you never get seriously sick or injured. Inasmuch as that's unlikely as we age, I like traditional Medicare with a Medicare Supplement plan for the following reasons:
First, your out-of-pocket expenses with an Advantage plan could be significant if you get sick or injured. Your exposure to out-of-pocket expenses is much lower with a Supplement plan.
Second, there are no networks or referrals with a Supplement plan. You can go to any hospital or doctor that accepts Medicare. You are covered if you wish to seek treatment in other states that have hospitals and specialists you might need.
Third, Medicare Supplement claims are processed by the Centers for Medicare Services and not your insurance company. Once CMS covers a claim, your supplement insurance company must pay the unpaid balance regardless of whether they would have approved the claim for their Advantage plan holders.
Fourth, Medicare Advantage plans expose you to underwriting risk. If you start with an Advantage plan and then get very sick and want to switch to a Medicare Supplement plan, your insurance company may require medical underwriting. If so, the insurer will look at your medical history and current health status. If it determines the risk of covering you is too great, it can refuse to sell you a plan or it may charge you much higher premiums. In fairness, this is less of a problem if you live in MA, CT, NY or ME.
Lastly, Medicare Supplement plans are portable. You can take them to another state if you move and like your plan.
Post: Which is better, traditional Medicare or Medicare Advantage?
Link to comment from November 4, 2021
Whether someone should favor Roths or traditional retirement accounts depends a lot in where they are in life, their taxable income, and their current tax rate. There's no one size fits all. Once you retire and have an opportunity to make Roth conversions, matters get considerably more complicated. It is difficult to know if the tax arbitrage opportunity presented by conversions will work out as expected. That said, doing conversions in the name of tax diversification makes sense. Spreading assets across taxable, Roth, and traditional retirement accounts will not result in the lowest tax outcome, but it won't result in the highest either.
Post: Do you favor Roth or traditional retirement accounts, and why?
Link to comment from November 4, 2021