What to Know Before Making the Transition to Medicare If You Have Diabetes

If you’re turning 65 in the next year or so, now is a good time to start thinking about which Medicare plan is right for you. You’ve likely been on some type of commercial insurance for most of your adult life and now have to enroll in Medicare which seems like a foreign language (because it is!).  We’ll try to demystify the transition for you here. With all of the different plans and letters involved (Plan A, B, C, D, just to name a few) I strongly recommend making a hearty bowl of alphabet soup to get in the mood before reading further!

Cost and Access

Let’s remember the basics before we go deeper. Deciding the right plan for you is finding the right combination of cost and access. Cost is the total of the premiums you pay to be in the plan plus the out-of-pocket costs you incur for the medical services and drugs you need. Access means evaluating two questions – are my doctors included in the plan? And are my drugs and devices covered under the formulary? We’ll keep cost and access in mind as we talk about the options ahead.

Original Medicare, Medicare Supplements, and Medicare Advantage

For a person living with diabetes, there are only two general Medicare scenarios to consider:

1. Medicare Supplements (also called Medigap) + Part D (drug coverage)
2. Medicare Advantage

Both of these options build on the original Medicare Parts A & B coverages. Parts A & B are not good enough for a person living with diabetes unless you are independently wealthy with no heirs and don’t care who gets your estate.

A brief primer on original Medicare as these are the building blocks:

• Part A: Part A is in-patient hospital insurance. This is in-patient only and does not cover an ER visit unless you are admitted. In 2024 it has a deductible of $1,632 for each hospital stay and then a daily copay of $408 for days 61-90 and $816/day after 90 days up to 60 days and then you pay it all. There is no premium BUT there is no out-of-pocket maximum limit on your copays which makes this option too risky as a standalone.
• Part B: Part B is Medical insurance. This covers most medically necessary services and preventive services.  It does not cover dental, vision, hearing and long-term care (this is not a full list of what it doesn’t cover). In 2024 it has a deductible of $240 and then covers 80% of the allowed claims thereafter. Most people pay a premium of $174.70 unless they make more than $103,000 (single) or $206,000 (married) then it’s significantly more. There is no out-of-pocket maximum limit on the 20% you have to pay which makes this option too risky as a standalone.  In addition, if your doctor doesn’t accept the Medicare payment level then they can charge you up to an additional 15% of the bill – called an excess charge.
• Enrollment: You can’t enroll in a supplement or advantage plan without first enrolling in Parts A & B. You are automatically enrolled in Parts A & B when you turn 65 if you are receiving social security benefits. If you are deferring your social security benefits, you need to manually enroll in Part A & B (ssa.gov) or face a penalty unless you still have insurance through your employer. (Tip: double-check if your employer’s coverage is better than your Medicare options.)

Okay, now that we know the basics are too risky to leave as a standalone, we have to decide which path to take to minimize our cost exposure and ensure we can get the care we need.  As we consider these choices remember to consider cost and access.

Option 1:  Medicare Supplements + Part D

Medicare supplements are also known as Medigap. They are the same thing. This is private insurance that covers some or most of the out-of-pocket expenses in Parts A & B as well as adding a drug plan. You will have three different insurance cards (Original Medicare, Medicare Supplement and Prescription Drug Plan) and you’ll be paying three different premiums, but the cost + access equation may be better here, so read on.

Medicare supplements add more letters to the soup – Plans F, G, K, L, M and N – however, most insurance companies will only offer G or N. (Note Plan F is being phased out and is only available if you turned 65 before 2020.)

Parts G & N are the most popular options due to their coverage levels. Both G & N require you to pay the relatively small Part B deductible of $240.  Part N also charges a small ($20) copay for office and ($50) ER visits. In addition, Part N doesn’t protect you against the up to 15% excess doctors can charge you over the standard Part B allowed amount. However, about 95% of doctors accept the Medicare payment amounts, so you may not want to pay extra for this protection.

Note that these plans are standard coverage. All G’s are the same. All N’s are the same. The only difference is what the carrier wants to charge you.  The rates usually vary by zip code. In 2024, Part G plans are in the $100-$150/month range, and Part N plans are typically $20-$30/month less than Part G plans (but come with copays).

An important consideration for Medicare Supplement Plans is access. These are not restricted networks. You can go to any doctor who accepts Medicare, which is approximately 95% of the doctors out there. No gatekeepers. No out-of-network charges. If you travel or spend half the year in a different state, this can be a big advantage over an Advantage plan.

Part D – Drug Plans: Once you’ve picked G or N, you still need a drug plan. You enroll in these annually (Oct 15-Dec 7) and should pick them based on comparing your medications with their formulary (check their websites). The average monthly premium in 2024 for Part D is ~$55 and will be about the same carrier-to-carrier in your area, so the deciding factor here is likely formulary coverage. In 2025, your out-of-pocket costs are capped at $2,000 which is a HUGE win for patients as the previous cap was $8,000. You can also opt to spread your out-of-pocket costs evenly over the year instead of paying a concentrated amount in any given month (similar to utility bill payment plans).

Just like Parts A & B, you must enroll in this coverage when you turn 65 if you don’t have creditable coverage through your employer. There is a 1% penalty per month that you delay enrolling in Part D which can be really expensive if you decide to skip a year or so. You must already have your Parts A & B enrollment complete before signing up for Part D, so get that done early.

Option 2: Medicare Advantage Plans

Medicare Advantage plans may also be called Part C. This is private insurance that mimics the commercial coverage you’ve likely been receiving through your employer. However, they mimic both the good and bad traits of commercial coverage. Note you must be enrolled in Parts A & B to enroll in an Advantage plan even though it essentially replaces your A & B coverages. The insurance company is getting a supplement from the government for taking you, so you must be in the system.

On the positive side of the equation, these plans are simple (one card) and premium costs are really low. Most people pay nothing more than the Part B & D premiums. In addition, Advantage plans often include dental, hearing, and vision, and some may even throw in fitness memberships and over-the-counter spending credits.

The disadvantages of Medicare Advantage plans should definitely be considered:

• Network Restrictions: Your doctor may not be in-network (versus having access to 95% of all doctors in the country).
• Plan Networks Change Annually: Your doctor may not be in-network next year.
• Prior Authorizations: You have a for-profit insurance company, not Medicare, deciding what claims to cover and/or when a prior authorization is needed, etc.
• Higher Maximum Out-of-Pocket Costs: Approximately $8,850, depending on where you live. Better than original Medicare, but not as good as Part G or N.
• You Can’t Switch to a Supplement/Medigap Plan If You Have a Pre-Existing Condition: You will not hear this from your Medicare Advantage insurance company, but if you get frustrated by the restrictions in your Medicare Advantage plan you are trapped in the Medicare Advantage framework. You can switch to another Medicare Advantage carrier, but you can’t switch to the unrestricted Medigap offerings.

Here is a brief recap of the pros and cons. Consider your cost & access needs and preferences as you make your choices:

Medicare Supplement (G & N) Pros:

• Flexibility in doctors
• Fewer prior auth restrictions
• Predicable out-of-pocket costs (like budget billing for your utilities)
• Lower out-of-pocket caps
• Guaranteed and automatic renewals

Medicare Supplement (G & N) Cons:

• More complicated (3 different cards and premiums)
• Doesn’t cover dental, hearing, or vision, but they can be added with a rider to your supplement policy

Medicare Advantage Pros:

• Simple (one card)
• May include dental, hearing, or vision

Medicare Advantage Cons:

• Network restrictions
• Prior authorizations and potential gatekeepers to see your doctor
• Higher maximum out-of-pocket caps
• Can’t switch to supplement option with pre-existing conditions

To learn more about Medicare, you can visit: www.Medicare.gov or contact your health insurance agent or broker. You can also reach out to a Medicare SHIP counselor for assistance. I hope this is helpful as you decide, and that your bowl of alphabet soup is still warm!

Additional Resources:

Medicare Expands CGM Coverage for People with Type 2 Diabetes

Did Medicare Eat Their Part D Donut Hole?