Tue, Sep 12, 2017

Medicare Supplement vs. Advantage Plan - which is right for you?

Like any massive insurance enterprise, Medicare is confusing. Medicare.gov will give you hundreds of pages of explanation, but luckily, the basics of the program aren’t difficult to grasp. As the cliché goes, however, the devil is in the details.

Medicare has four basic parts – A, B, C and D. If you’re unfamiliar with how they work, read Medicare 101: Do You Need All 4 Parts? Taken together, Parts A (hospital care), B (doctors, medical procedures, equipment) and D (prescription drugs) provide basic coverage for Americans 65 and older. What's relevant for this article is what these parts don't cover – deductibles, co-pays and other medical expenses that could wipe out your savings should you become seriously ill. That's where Part C comes in. Also known as Medicare Advantage, it's one of two ways to protect against the potential high cost of an accident or illness. Here's what could happen.

You Have to Plug the Holes

Option 1: Medigap

Medicare Supplement Insurance, also called Medigap coverage, will protect people who buy traditional Medicare against many of the costs described above. In return, Medigap charges a premium that is in addition to what you already pay for Medicare Parts A (many people get this free), B and D.

Just to make life truly confusing, the various options offered by Medigap are also sorted by letter. Your choices are Plans A, B, C, D, F, G, K, L, M and N. What these plans include is standardized by Medicare. What you pay for them can vary, however, so it’s worth shopping around.

Medigap policies will cover you whenever you see any doctor or facility that takes Medicare. If the doctor or facility does not accept Medicare patients, Medigap won’t cover any of those costs, even though it is a private insurance policy.

Option 2: Medicare Advantage

On the surface Medicare Advantage Plans seem simple, but they can be very complicated. Seniors must first give up their original Medicare and then rely on a private insurance company to manage their health care. That means the private insurance company will decide which services you are eligible for and whether they will pay for those services. 

With a Medicare Advantage Health Plan (Medicare Part C) your monthly premium may be lower than traditional Medicare plus Medigap, but you also may face multiple co-pays for physicians, specialists, hospitals, diagnostic services, outpatient services, an ambulance, the ER or skilled nursing. It could be hundreds or even thousands of dollars out-of-pocket per illness or accident. Depending on what’s available in your area, Advantage plans could offer HMO or PPO network plans and place a yearly limit on your total out-of-pocket expenses.

No one wants to spend thousands of dollars out of pocket when a supplement can help fill that gap.

Also like private plans, each Advantage Plan has different benefits and rules and may not be guaranteed annually. Most provide prescription drug coverage; some may require a referral to see a specialist while others won’t. Some may pay some portion of out-of-network care, while others will only cover you for doctors and facilities that are in the HMO or PPO network.

Bottom Line: Ask about their summary of benefits to see exactly what is and isn't covered. Especially ask for a detailed list of all the co-pays you might face. At FirstCommunity in Huntsville, Alabama, we'll be glad to sit down with you, help you figure out the Part D Drug Plan and show you how to save money on supplemental coverage. Isn't that what's most important? Quality health care at an affordable cost. Plus the peace of mind that comes from a company you can trust.

Which is Better for You?

It is illegal for an insurance company to sell you both a Medicare Advantage and a Medigap policy. Three things to consider before choosing which one to get:

Cost: Medigap coverage usually has a higher monthly premium, but could result in lower out-of-pocket expenses than some Medicare Advantage plans. Medicare Advantage plans, on the other hand, generally cost less and cover more services, which can be the better option for your budget.

Choice: Medicare Advantage plans generally limit you to the doctors and facilities within the HMO or PPO, and may or may not cover any out-of-network care. Traditional Medicare and Medigap policies cover you if you go to any doctor or facility that accepts Medicare. If you require particular specialists or hospitals, check whether they are covered by the plan you select.

Lifestyle: Medicare Advantage plans often only operate with a certain region. If you’re a snowbird living in more than one state throughout the year, traditional Medicare plus Medigap is probably a better choice than an Advantage plan. This may also be true if you travel frequently: Some Medigap plans provide coverage when traveling outside of the United States and cover you in all 50 states; Advantage plans generally do not.

Cost: Medigap coverage usually has a higher monthly premium, but could result in lower out-of-pocket expenses than some Medicare Advantage plans (given the multiple copays if you become sick or require hospitalization). Medicare Advantage plans, on the other hand, generally cost less and may offer limited dental or vision services. 

The Bottom Line

Figuring out the Medicare plan that’s most appropriate for your needs is probably not a do-it-yourself activity. Once you understand the basics of Medicare, get some help.

Medicare.gov provides tools that will allow you to compare plans, but the decision is complicated. Work with a licensed insurance agent who can show you both Medicare Supplement Plans and Advantage Plans. Each type has its positives. The questions to cover are: the costs, doctor networks, coverage levels and maximum out-of-pocket for each. Enroll in what suits your situation best.” Organizations such as Consumer Reports and the Medicare Rights Center can also help you research your decision.

Take a closer look at our Medicare Supplement Plans and Rates.

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