Medicare Advantage Versus Medicare Supplement Plans
The only thing better than having choices is understanding exactly what you are choosing between. If you are about to be Medicare eligible or you are contemplating changing your Medicare coverage, it’s important to understand the differences when considering Medicare Advantage versus Medicare supplement plans. If you are unsure of the differences, you are not alone. Even people who have been enrolled in Medicare for some time do not always understand the difference.
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Understanding Medicare Advantage versus Medicare supplement plans
Even though the title of this article should make it clear that Medicare Advantage Plans and Medicare supplements plans are two separate types of coverage, many people use the terms interchangeably and believe that Advantage plans are actually Medicare supplements. This is not the case.
Medicare supplement plans have been around as long as Medicare. The government refers to Medicare supplements as Medigap. The term Medigap is a reference to the plan filling the gaps left by Medicare. Plans are standardized and will include the same coverage no matter which company is offering the plan. AARP Medicare supplement Plan N, will be identical to any other company’s Plan N, as far as the coverage is concerned. Rates will vary from one company to the next.
It is important to note that Medicare supplement plans, from one degree to another, will only fill the gaps for covered expenses. The supplement will pay your portion of the covered expense, for example; your hospital deductible and 20% coinsurance for outpatient charges. Your supplement will not pay anything toward non-covered expenses such as dental, vision or hearing.
When you have a Medicare supplement plan, you will pay your Medicare Part B premium and a premium to the the insurance company for the Medicare supplement. Supplement plans do not include Part D drug coverage, so you will need to enroll in a separate Part D drug plan. Medicare supplement plans do not require that you use a network, but rather choose any provider that accepts Medicare assignment.
Medicare Advantage plans are not Medicare supplement plans, but rather another way to receive your Medicare benefits. With an Advantage plan, a private insurance company contracts with CMS (Centers for Medicare and Medicaid) to administer your Medicare. The thought behind this is that a private insurance company is more cost efficient than the federal government and you should be able to receive some additional benefits. Medicare Advantage plans are annual plans and you are subject to enrollment periods.
Unlike Medicare supplements, Advantage plans are not standardized plans. Humana Medicare Advantage plans and AARP Medicare Advantage plans, for example, will not offer identical coverage. Plans may or may not have a monthly premium. Advantage plans do have cost sharing features, such as, co-pays, coinsurance and deductibles.
Many Medicare Advantage plans are network based plans, so you may need to check out the plans network to insure that your happy with the providers. Most Medicare Advantage plans include Part D drug coverage and many added benefits not offered by traditional Medicare. Extras include; dental, vision, hearing, gym memberships, discounts on medical supplies and in some cases transportation to and from medical appointments. Benefits vary from plan to plan.
Medicare Advantage versus Medicare supplement plans – finding resources
Once you have decided on either a Medicare Advantage plan or a Medicare supplement plan, it’s time to do your homework to get the best plan.
Shopping online is probably the easiest way to cover a lot of ground. Meeting with several agents can be time consuming. Also a good resource for an overview is the Medicare website.
You can request quotes online or be mailed written brochures than you can review in your home. Once you understand the differences between Medicare Advantage versus Medicare supplement plans, you have the hard work behind you.
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Comments
Autum, I’m sorry to hear about your health problems. Medicare Advantage plans change on an annual basis. Some plans may not renew, while others may enter a market. Don’t merely accept the renewal of your current plan without exploring your options. Also, many insurance companies are making Medicare Supplement Plan N available with little or no underwriting. This may also be something to explore.
Turning 65 next month and receiving piles of insurance companies mailing regarding supplemental plans. Naturally, very confusing. Had a friend who works for AFLAC come and sit down with me to help me understand. She of course wants to sell my their products but wanting to do more research of what other companies have to offer. My question…I currently have Kaiser (retired from a company in which I have had coverage since day one form Kaiser). Knowing Kaiser picks up percentage, how does this work with Medicare + supplemental plans? Do I really need to keep paying for a Kaiser coverage?
Gael, You ask some good questions. You’re ahead of the game by questioning whether your former employer’s policy is by default, the best. Many people assume that keeping their group policy after they retire will give them the best coverage at the lowest cost. This is not always the case. Often this type of policy will require deductibles, co-payments, coinsurance and require you to utilize network providers. Frequently the premium will be as high or higher than a traditional Medigap policy, where depending on the plan, you may have little or no out-of-pocket costs.
Medigap policies are standardized plans and coverage will be the same from one provider to the next. Medicare supplement Plan F is the most comprehensive and Medicare supplement Plan N is a good alternative to keep your premium lower if you don’t mind a small amount out-of-pocket. With a supplement you will need to continue to pay your Medicare Part B premium and also purchase a stand-alone Part D plan.
To compare, look at Kaiser’s premium and any potential out-of-pocket expenses. Also check the network restrictions. Then look at standardized Medigap policies and add the cost of a Part D plan. Recognize that you may have very little or no out-of-pocket expenses and can use any provider that accepts Medicare.
My husband will be turning 65 in March. We are looking into purchasing some type of supplement to his Medicare. We have had someone come and talk to us about Advantage plan. Not sure if we should go with Advantage plan or go with Supplement. He is currently covered on my insurance through my employer and will be covered until June. He is currently in good health condition, but never know what the future could bring for either of us. What should be our biggest determinants about our choice.
Paul, For most people the biggest determinant related to which type of Medicare plan to choose is money. If affordable a Medigap policy will afford you the most predictable coverage and product stability without the network restrictions. The biggest reason someone would endure the constant changes to Medicare Advantage Plans and have less freedom of choice is because they cannot afford a Medigap policy or don’t completely understand the cost sharing structure of Advantage plans. Unfortunately, some Medicare Advantage plans are as expensive or more expensive than many Medigap policies for someone aging into Medicare. Check out Medicare Supplement Plan N to see why many people are choosing it over a Medicare Advantage plan.
If I chose a Medicare Advantage plan, at a latter date will I be able to get back into the government Medicare plan?
Johnny, If you enroll in a Medicare Advantage plan you can either keep the plan for the full calendar year and choose not to renew the plan or dis-enroll during the dis-enrollment period (Jan. 1 through Feb. 14). In either case you will return to original Medicare.
I am 63 years old and on disability, I have had Mutual of Omaha supplement I am very pleased with it especially last year I was in the hospital 2 times and spent 6 weeks in rehab and did not receive a bill for any of it. The only thing is the expense over 200.00 for the insurance plus the cost of medicare and Part D. I feel I probably would be better to stick with the supplement instead of an Advantage plan but I would like to make sure. Any help would be appreciated.Thanks
Lea, As long as the supplement is not causing a financial hardship it sounds as though you have answered your own question. As we age the likelihood that we will need to use our insurance increases. If it’s affordable, there is no hurry to make a change. Even if the premium is a little pricey, at least you know what to budget for.
Can you explain or direct me to documentation of what types of insurances can AND which cannot be secondary or supplemental to the Medicare Advantage Plans? We were given the impression that Medicare Advantage Plans could not have supplemental insurances.
Rhonda, You cannot be enrolled in a Medicare Advantage plan and have supplemental coverage. Learn more by visiting medicare.gov or reviewing the Medicare and You Handbook.
What I found, when I was turning 65 and making the decisions involved with Medicare… was that none of the doctors that I called accepted anything but advantage and only 2 of those. Off the record information seemed to indicate that the government did not pay promptly and advantage covered that. I am not well versed, or all that intelligent, this is just what my experience was.
I went with one of the two accepted advantage plans… with little out of pocket expense. Now I face some real health challenges and find my advantage plan for 2011, is offering much less help.