Medicare Advantage vs Medicare Supplement – Which is best?

Health insurance can be overwhelming, especially when you reach Medicare age and enroll without understanding the different Medicare plan options. Medicare is health insurance provided by the U.S. government for citizens who are 65 years and older and people who qualify due to specific disabilities. Medicare does not cover healthcare services in full, so you will have cost-sharing expenses for many of your healthcare services throughout the year.

Due to this, Medicare beneficiaries typically purchase an additional Medicare plan, such as a Medicare Advantage or Medicare Supplement, to help with their medical expenses. This article will discuss Medicare Advantage vs Medicare Supplement and which plan is best for you!

Medicare Advantage

Private insurance companies sell Medicare Advantage plans, also known as Medicare Part C. According to the Kaiser Family Foundation, more than 24 million beneficiaries were enrolled in an Advantage plan in 2020.

 If you purchase a Medicare Advantage plan, you will get your Medicare Parts A and B benefits through the insurance company you enrolled through. A Medicare Advantage plan might also include a Medicare Part D plan, which is drug coverage you would use at the pharmacy. You are still responsible for your Medicare Part A and Part B premium when enrolled in this type of policy.

The provider you purchase your Advantage plan from will provide you with a Summary of Benefits, which displays the plan’s details and services your plan will cover for the year. Your insurer will also set the cost-sharing amounts you will pay for the services you receive. For example, your carrier might set a flat copay of $20 for a visit to your primary care doctor but might charge a 20% coinsurance for an emergency room visit.

Medicare Advantage plans can provide additional benefits Original Medicare does not cover. For instance, some plans can include dental, vision, or hearing benefits, gym memberships, transportation, food delivery, hearing aids assistance, and more. However, providers are not required to offer these benefits, and they can be taken away the following year.

The time to enroll in a Medicare Advantage plan is during your Initial Enrollment Period. If you fail to enroll in an Advantage plan during that time, you will have to wait until the Annual Election Period (October 15 – December 7) or the Medicare Advantage Open Enrollment (January 1 – March 31) to enroll in a plan.

Advantage plan programs

Medicare Advantage plan carriers set a network of doctors and pharmacies where you can receive your health care services from. Whenever you search for a Medicare Advantage in your area, you will want to consider the different Advantage plan program options. The two most popular Advantage plan programs are HMOs and PPOs.

HMO Medicare Advantage plan

An HMO (Health Maintenance Organization) plan has network restrictions. Whenever you enroll in this type of plan, you will want to stay within your service area when you visit a doctor, hospital, or pharmacy. If you were to go outside of your network, you would pay the total cost of your medical bill (unless it’s a medical emergency).

Although this type of plan doesn’t allow you to go outside the provider network, you can find an HMO Medicare Advantage plan as low as $0 per month.

PPO Medicare Advantage plan

Preferred Provider Organization (PPO) plans provide more flexibility than HMO plans. With this type of plan, you can visit a doctor or hospital out of the plan’s network. However, you risk the chance of paying more for your services when you go out of network compared to in-network services.

Medicare Supplement

A Medicare Supplement (Medigap plan) works as secondary health coverage to Medicare Part A, and Part B. Medicare Supplement insurance helps cover the gaps in Medicare, things like deductibles, copays, and coinsurance. You have access to visit physicians across the United States that accept Medicare as insurance and use your Medigap policy. Referrals are also not necessary whenever you plan a visit to a specialist.

When enrolled in one of these insurance policies, you will still pay your Medicare Part A and Part B premiums. Supplement plans do not include Part D plans, so you need to purchase a standalone Part D coverage to have prescription drug benefits.

Supplemental premiums are based upon a number of factors, such as your age, gender, zip code, tobacco use, carrier, and more. Therefore, a 65-year-old woman in Massachusetts may have a premium of $95, whereas a 70-year-old man in Oregon might pay a premium of $200.

The different Medicare Supplemental plans

There are ten standardized Medicare Supplement plans on the market, and each of them covers a different set of benefits. The Medigap plans available in 2022 are Medigap Plans A, B, C, D, F, G, K, L, M, and N. However, Medigap Plan F, Plan G, and Plan N are the most popular supplements to this day. Here is the type of Medigap coverage these plans provide:

Plan F:

• Part A deductible
• Part A coinsurance and hospital costs
• Part A hospice care coinsurance and copays
• Part B coinsurance and copayments
• Part B deductible
• Part B excess charges
• Skilled nursing facility
• First 3 pints of blood
• $50,000 foreign travel emergency

Plan G:

• Part A deductible
• Part A coinsurance and hospital costs
• Part A hospice care coinsurance and copays
• Part B coinsurance and copayments
• Part B excess charges
• Skilled nursing facility
• First 3 pints of blood
• $50,000 foreign travel emergency

Plan N:

• Part A deductible
• Part A coinsurance and hospital costs
• Part A hospice care coinsurance and copays
• Part A hospice care coinsurance and copays
• Skilled nursing facility
• First 3 pints of blood
• $50,000 foreign travel emergency

As you can see, the only difference between Plan F and Plan G is that Plan F covers the Part B deductible, and Plan G does not. Keep in mind that Plan F is only available to enrollees who were eligible for Medicare before January 1, 2020. In contrast, the difference between Plan G and Plan N is that Plan G covers Part B excess charges, whereas Plan N does not. With Plan N, you will also pay up to a $20 copay for some doctor office visits and $50 for treatment at an emergency care facility.

Medicare Supplement Open Enrollment

There is a specific time to enroll in a Medicare Supplement without underwriting, your Medicare Supplement Open Enrollment. The Medicare Supplement Open Enrollment is based around your Medicare Part B effective date. You have six months to enroll in a Medigap plan without health questions. Therefore, you cannot be turned down from a plan if you have any pre-existing health conditions.

Some states, such as California and Missouri, have Special Medigap Enrollment periods, where you can apply for a Medigap plan at a particular time of the year without underwriting. So, be sure to research and see if your state has a special Medigap enrollment.

Which plan is better?

There are pros and cons to every Medicare plan, but which plan is better for you? The answer to this is not always straightforward, as it depends on each person’s budget, health status, and lifestyle.

Suppose you are a beneficiary with health conditions and might visit the doctor often. In that case, a Medicare Supplement might be the better plan for you, considering it gives you predictable healthcare costs throughout the year. However, if you are primarily healthy and do not believe you will visit the doctor often and would like added benefits such as dental and vision, then a Medicare Advantage plan could be the right plan for you.

Remember that just because a plan is good for one person does not mean it is the right one for you!

Overview

Medicare Advantage and Medicare Supplement plans have their differences from one another, and there are advantages to both types of plans. Therefore, it’s best to understand your options before you approach retirement and enroll in a plan.

A Medicare brokerage will carry both plans and typically represent multiple companies. Therefore, working with a broker could be beneficial to guide you with your plan decisions and help you find the most cost-effective plan in your area.