Medigap or Medicare Advantage?

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Between now and Dec. 31 is open enrollment for Medicare. It’s a time for Medicare recipients to make changes in their plans. I’m also using this as an opportunity to talk about Medicare enrollment for new recipients, because many of the concerns are the same.

I covered most of the important stuff yesterday, but I ran out of room. So here’s the rest of the story — boring but essential information if you’re planning for retirement.

Unless you have an insurance plan at work that supplements Medicare, you’ll almost certainly want to buy a policy that covers the deductibles and copays that that Medicare doesn’t. Traditionally, these have been known as Medigap plans. More recently, Medicare also has offered an HMO option that replaces traditional Medicare with a totally private insurance plan, called Medicare Advantage.

The best place to understand either option is to go to, where there is an easy-to-read chart. Another good resource is, which in November 2010 focused on Medicare issues and rated Medicare Advantage plans. You can find much of the best information online free of charge, but in order to read Consumer Reports’ rankings, you’ll have to subscribe (or find the issue at the library). The place where you’ll make the final selection is It’s a good idea to just ignore the big pile of sales literature that will fill up your mailbox.

Before you go off to research this, here are the basics:

Medigap plans. There are 10 different bundles of Medigap benefits, each with a letter designations. Look over the possibilities and find one that seems to best fit your situation. One notable issue that is only covered in a few of them is international travel. Once you’ve selected a plan, you’ll have to select an insurance company within your state to provide the coverage. Prices vary, but coverage doesn’t. If Medicare says it’s covered, the insurance company has to cover it. So if you choose a more expensive plan, what you’re paying for is strictly customer service.

Medicare Advantage. About 25 percent of people opt for these plans. Generally, they combine all the coverage including a Part D drug plan into one. In general these policies are cheaper than traditional Medigap plans, plus Part D. If you go to Florida in the winter, you probably don’t want a Medicare Advantage plan because almost all of them restrict participants to a specific geographical area. You should also check to see that your doctor is a participant.

If you sign up for a Medicare Advantage plan and you don’t like it, you can opt out, but you have to do it by Feb. 14, Valentine’s Day. If you don’t, you very likely won’t be able to find a traditional Medigap plan that will take you.

Understanding Medicare is a retirement planning challenge. I asked Joe Matthews, a consultant at — where there is a lot of good Medicare advice — and author of  “Social Security, Medicare & Government Pensions: Get the Most Out of Your Retirement & Medical Benefits,” why this has to be so complicated.

“It’s the nature of the game,” he says. “It involves the government and insurance companies. What do you expect?”