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retirement

Ditch These Medicare-Supplement Plans

Plans H, I and J aren't such good deals any more. You'll get better coverage at a better price from Medicare Advantage of Medicare Part D.

I have heard that Medicare Advantage plans will be phased out in the next few years. If that's the case, is it prudent to switch from the Medicare-supplement Plan J that I now have to a Medicare Advantage plan?

Actually, the discussion has not been about phasing out Medicare Advantage. Congress has been talking about lowering the generous subsidies the government pays to private insurers that provide Medicare Advantage plans, but so far nothing has changed. If Congress does end up lowering the subsidies, the prices for Medicare Advantage plans could rise. If that happens, though, you could always switch back to traditional Medicare and get supplemental coverage through a medigap policy.

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One thing is for sure: You'll want to bail out of your particular Medicare-supplement (medigap) plan as soon as you're allowed to switch. When the Medicare prescription-drug benefit was introduced in 2006, Medicare-supplement companies stopped selling new policies that provided coverage for prescription drugs (Plans H, I and J). People who already had these plans could keep them. However, the premiums are higher than for government-subsidized Medicare Part D or Medicare Advantage, and the coverage isn't as good.

You can switch into another medigap policy and get your drug coverage through Part D, or you can get all of your medical and drug coverage through a private Medicare Advantage plan. The premiums for medigap plus Part D tend to be higher than they are for Medicare Advantage, but you'll usually have fewer out-of-pocket costs and more flexibility to use whatever doctors you choose.

For help deciding which plan is right for you, see What Does That Medicare Plan Really Offer? for more information about Medicare Advantage plans and Medicare Drug Plan Premiums to Rise for information about Part D prescription-drug plans. Also see our Financial Toolkit for tips on buying a medigap policy.

For more information about the specific Medicare Part D plans available in your area -- including premiums as well as an out-of-pocket cost calculator -- see the Medicare Prescription Drug Plan Finder; for details on Medicare Advantage plans, see the Medicare Options Compare Tool.

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