Out-of-pocket expenses are a big issue when it comes to choosing a Medicare plan. Original Medicare (Part A and Part B) covers many health-care expenses, but it doesn’t cover everything. Things like prescription drugs or routine dental, vision, and hearing care are not covered under Original Medicare. Even with covered health-care services, beneficiaries are still responsible for a number of copayments and deductibles, which can quickly add up. In fact, a major drawback of only having original Medicare is that it has no maximum out-of-pocket, meaning catastrophic expenses never stop.
As a result, many people with Medicare choose to enroll in one of two types of plans to cover these gaps in coverage. There are two options commonly used to supplement or replace Original Medicare. These two options have some significant differences when it comes to costs, benefits, and how they work. It’s important that you understand the differences in Medicare Advantage vs. Medicare Supplement to make sure you pick the best option for you.
Medicare Advantage vs. Medicare Supplement Plans
Medicare Advantage plans are an alternative to Original Medicare Parts A and B. It’s a different way to get your Medicare benefits. That means if you enroll in a Medicare Advantage plan, you’re still in the Medicare program, but you’ll get your Medicare benefits through your Medicare Advantage plan instead of through the federally administered program. In short, while you are not giving up your Medicare, the Medicare Advantage Plan becomes your way of accessing your Medicare benefits.
Medicare Supplement insurance plans work with Original Medicare, Part A and Part B, basing payments on the Original Medicare coverage. This supplemental insurance may help pay for costs that Original Medicare doesn’t cover, such as copayments or deductibles. Supplement plans may help with other costs that Original Medicare doesn’t cover such as Medicare Part B excess charges or emergency medical coverage when you’re traveling outside of the country. These plans don’t provide stand-alone coverage, and you need to remain enrolled in Part A and Part B for your hospital and medical coverage.
Both Medicare Advantage plans and Medicare Supplement plans are offered by private insurance companies approved by Medicare. When trying to choose between Medicare Advantage plans and Medicare Supplement plans, you can ask yourself these questions:
- Do you want the choice of any provider? Or, are you willing to choose a provider from within a network?
- Would you rather buy a separate prescription drug plan or get drug coverage included in one plan?
- Would you rather pay more in monthly premiums and have lower out-of-pocket costs for services you receive? Or pay a low or $0 monthly premium and copays for services as you use them?
Medicare Advantage Plans
Medicare Advantage plans combine doctor, hospital, and in some cases, even drug coverage into one plan. Most Medicare Advantage plans also include dental, vision, and hearing care. These plans are offered by private insurance companies who contract with the federal government. These insurance companies are required to provide all the benefits of Original Medicare, with the exception of hospice care, which is still covered by Original Medicare. You must sign up for Medicare Part A and Part B to be eligible for a Medicare Advantage plan. There are many different types of Medicare Advantage plans, including HMOs, PPOs, PFFS, and others. If you decide to sign up for a Medicare Advantage plan, you may want to shop around, because costs and coverage details are likely to vary.
With Medicare Advantage plans:
- You may be required to use doctors and hospitals in the plan network.
- You may need referrals and may be required to use network specialists.
- You may have network restrictions. Emergency care is covered for travel within the US and sometimes abroad.
- Generally, there are specific periods during the year when you can enroll or switch to another Medicare Advantage plan.
- Generally, you pay a low or $0 monthly plan premium. When you use the services, you pay copays, coinsurance, and deductibles.
- Prescription drug coverage is included with most plans.
Medicare Supplement Plans
Medicare Supplement plans are also sold through private insurance companies, but are not comprehensive medical coverage. These plans function as supplemental coverage to Original Medicare, covering costs not covered by Original Medicare, including copays, deductibles, and coinsurance. There are 10 standardized plan types, each given a lettered designation. Coverage is standardized across each plan letter, which means you’ll get the same basic benefits for Medicare Supplement coverage within the same letter category, regardless of where you purchase your plan. However, while benefits are standardized, premium costs may vary by insurance company and location. Massachusetts, Minnesota, and Wisconsin offer their own standardized Supplement plans.
With Medicare Supplement plans:
- You can select your doctors and hospitals as long as they accept Medicare patients
- You can see specialists without referrals
- No network restrictions. Coverage goes with you across the US
- You can apply to buy a Medicare supplement insurance plan any time after you turn 65 and join Medicare Part B.
- You pay a monthly plan premium in addition to your Part B premium. When you use services, your out-of-pocket costs are limited.
- Prescription drug coverage is not included. Consider also purchasing a Medicare Part D plan.
When deciding between Medicare Advantage and Medicare Supplement plans, remember to look at the big picture. Every beneficiary is different, and it’s important to consider all your options. Think about how you will use your benefits and which plan has the right coverage for you. Coverage Made is here to help you plan your future.