Medicare Advantage vs. Medicare Supplement
Medicare is a health insurance program funded by the federal government of the United States. Medicare is designed for older persons aged 65 and above, although younger people with disabilities or some medical conditions may also be eligible for the program.
Medicare has four parts that cover several healthcare services. These include the following:
● Part A for hospital insurance
● Part B for medical insurance
Part A and Part B make up Original Medicare.
● Part C, known as Medicare Advantage, is an alternative way to receive your original Medicare (parts A and B) benefits through a private insurance company.
● Part D for prescription drugs coverage
Original Medicare leaves consumers with quite a bit of out-of-pocket risk. So to help mitigate that financial risk most people consider purchasing a supplement or enroll in a Part C plan. Medicare Advantage and Medicare Supplements (Medigap) are both sold by private insurance companies but are completely different in what they do and how they function. To decide what is right for you it's important to understand the key differences.
Medicare Part C, also known as Medicare Advantage (MA), is an alternative way to get Original Medicare (Part A and Part B). It does NOT supplement Original Medicare but rather transfers it from being administered through the Federal Government to an Insurance company (which is not necessarily a bad thing). It can be a cost-effective and potential money saving option because it has out-of-pocket limits on costs associated with your covered services. Once you reach the limit, you pay nothing for the rest of the year.
Medicare Advantage plans must provide the same coverage as Part A (Inpatient/hospital services) and Part B (outpatient/medical services). When you enroll in a Part C plan, your Medicare coverage is then administered through a private insurance company instead of through the Federal Government. Depending on where you live these plans may offer coverage for additional benefits and services that are not covered under Original Medicare.
Advantages Of Medicare Advantage
Buying a Medicare Advantage plan may provide you with additional benefits like:
● Low or No monthly premiums
● Drug Coverage may be included in the plan
● Over the Counter allowances
● Fitness programs or Gym Memberships
● Routine Dental, Vision, and Hearing coverage
Disadvantages Of Medicare Advantage
The following are the downsides to buying a Medicare Advantage plan:
● Network Restrictions (HMO’s and PPO’s)
● Prior Authorizations
● Must medically qualify to switch to Medigap outside of your one time Medigap Open Enrollment
Medicare Supplements, also known as Medigap plans, are sold and administered by private insurance companies just like Medicare Advantage plans. However, unlike Part C plans, Medigap plans become secondary coverage behind Original Medicare and help pay for out of pocket coinsurance and deductibles left over after Original Medicare pays its portion.
Medigap plans are standardized by law in all but three U.S. states. These states are Massachusetts, Minnesota, and Wisconsin. To enroll in a Medicare Supplement plan, you must be enrolled in Original Medicare A and B.
Advantages Of Medicare Supplement
Advantages of buying Medicare Supplement plans include:
● Fewer out-of-pocket costs
● Access to all providers who accept Medicare (No Networks)
● Foreign travel coverage (depending on the plan letter you purchase)
● Lifetime Policies (Coverage does NOT change from year to year)
Disadvantages Of Medicare Supplement
The following are the cons of buying Medicare Supplement plans:
● Higher monthly premiums
● Drug Coverage is separate (Need to get Part D)
● Minimal Perks (No extra benefits like Routine Dental, Vision, Hearing)
Medicare Advantage vs. Medicare Supplement
Medicare Advantage and Medicare Supplement share certain similarities. However, they differ in several ways. Differences exist in their:
● Type of plans
● Access to healthcare providers
● Monthly premiums
● Enrollment periods
Types of Plans
Medicare Advantage plans are more complex and availability is different based on the county that you live in. There are 5 main types of Part C plans:
● Health Maintenance Organization (HMO) plans
● Preferred Provider Organization (PPO) plans
● Private Fee-for-Service (PFFS) plans
● Special Needs Plans (SNPs)
● Medicare savings account (MSA) plans
There are 10 different Medicare Supplement plans available nationwide. These include Plans A, B, C, D, F, G, K, L, M, and N. However, Plans C and F are not made available to people new to Medicare on or after January 1, 2020. This is because Medigap plans from that time can no longer cover the Part B deductible.
"People new to Medicare" refers to those who were not eligible to enroll for Medicare before January 1, 2020. If you were eligible before January 1, 2020, but were not enrolled, you may still be able to buy a Plan C or F. This does not apply to subscribers who already had Plan C or F before January 1, 2020.
Hence, there are 8 standardized Medicare Supplement plans available in 47 states of the U.S. for people new to Medicare after January 1st of 2020.
Medicare Advantage and Medicare Supplement plans differ in the services and items they cover.
Medicare Advantage offers the same basic coverage as Part A (Inpatient/hospital services) and Part B (outpatient/medical services). Plans may also provide supplemental coverage for specific items and services depending on the county you live in. Additional items and services that Medicare Advantage plans may cover include:
● Drug Coverage
● Routine Vision care, including glasses and contacts
● Routine dental care, including x-rays, exams, and dentures
● Hearing care, including testing and hearing aids
● Wellness programs and gym memberships
● Medical Transportation
● Non-medical services including meal delivery, home air cleaners, and home modifications.
Medicare Part C coverage and benefits can vary drastically from plan to plan and company to company.
The Medicare Supplement plan you choose determines what coverage you’ll get. However, all Medigap plans cover part or all of the following:
● Medicare Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up
● Medicare Part A hospice coinsurance or copayment costs
● Medicare Part B coinsurance or copayment costs
● Cost of the first 3 pints of blood (for blood transfusion)
Some Medicare Supplement plans also cover:
● Skilled nursing facility care coinsurance
● Medicare Part A deductible
● Medicare Part B deductible
● Medicare Part B excess charges
● Foreign travel emergency medical costs
Medigap plans do not cover prescription drugs, so you must enroll in Part D separately.
Here is a chart showing the coverage for each Medigap Plan letter:
Access to Healthcare Providers
If you're enrolled in a Medicare Advantage plan, your choice of doctors, healthcare providers, and hospitals is limited by the plan you choose. Some plans have nationwide networks while others are much less impressive.
Most plans require you to get your care and services from providers within the plan’s network to enjoy Medicare benefits (except in emergency situations). For some plans, you pay more when you get care from an out-of-network provider.
Also, some plans require prior authorizations and/or referrals from a primary care doctor for specialist care or procedures.
With a Medicare Supplement plan, you can use any doctor, healthcare provider, or healthcare facility in the U.S. as long as they accept Medicare. Bonus points, the majority do. This benefit will be the same regardless of which company you buy the supplement from because Original Medicare is still your primary insurance when you purchase a Medigap.
Also, you do not need a prior authorization or a referral from a primary care doctor to see a specialist.
Many plans have low or no monthly premiums. (You are still responsible for the Medicare Part B premium)
Members of any Medicare Supplement plan pay monthly premiums. Monthly premiums for Medigap plans will vary based on the company you purchase it from and the plan letter you choose.
Medicare Advantage plans do not have any health questions but you must have a qualifying enrollment period to enroll in a plan. Read more about these enrollment periods HERE.
You can enroll in a Medigap plan without going through any underwriting during your once in a lifetime Medigap Open Enrollment. Exceptions may happen when there are special events.
Medicare Advantage vs. Medicare Supplement Recap
The truth is both of these options are good but what works best for you may not be what works best for your friend or family member. There are many things to consider when making your decision and getting the help of a professional can really help to simplify the process.
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