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The goal I have above all in retirement is flexibility and resilience. We should have a strong enough balance sheet when I stop working to afford traditional Medicare + medigap with a high-deductible gap plan. For many of the reasons Rick Moberg mentioned, this should be optimal for us.
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.
I’ve been happy with my Medicare Supplement: no referrals, choice of any Dr. who accepts Medicare rather than being locked into a network, no pre-approvals, etc. The hassles are really minimal. I just signed up my wife for a similar plan. And if we have more medical problems down the road, I think we’ll be even more glad we went with the Supplements.