ADVANTAGE PLANS VS. SUPPLEMENT PLANS
SUPPLEMENT VS. ADVANTAGE PLANS
UNDERSTANDING YOUR MEDICARE OPTIONS
While Medicare Parts A (Hospital Coverage) and B (Doctor Visit Coverage) combined, cover roughly 80% of medical costs, there are two main ways to fill the gap not covered by A & B: Medicare Supplement Plans (Medigap) and Medicare Advantage Plans. Which is better for you? A Medicare Supplement Plan or a Medicare Advantage plan?
BEYOND MEDICARE PART A & PART B
Once you enroll in Medicare Parts A and B, you can look for ways to cover the healthcare costs not covered by Original Medicare. One way is to keep your Original Medicare and purchase a Medicare Supplement Plan that acts as secondary coverage. Or you can switch to a Medicare Advantage plan. Read on or watch the videos below to find out which option is best for you.
WHAT TO KNOW ABOUT MEDICARE SUPPLEMENT PLANS AND MEDICARE ADVANTAGE PLANS:
WHERE TO START?
YOU HAVE PRIMARY CHOICES TO FILL GAPS IN BASIC MEDICARE COVERAGE:
1. Purchase a separate Medicare Supplement Plan (also known as a Medigap plan). You will also want to purchase a Part D Prescription Drug Plan. Medicare will be your primary insurance and the supplement will fill the gap.
2. Enroll in a Medicare Advantage Plan (Part C). The Advantage Plan becomes your insurance at doctor’s offices and the hospital. But no matter what, you must still be enrolled in Part A and pay for Part B when you are in an Advantage Plan.
Before making this decision, you need to consider:
Monthly premiums - Medicare Advantage Plans are typically zero premium, while Supplement Plans have a monthly premium.
Out of Pocket costs - meaning the extra costs you will have to pay above your premiums - Supplement Plans have very low out of pocket costs, while Advantage Plans can have very high out of pocket costs up to $10,00 per year.
Whether you expect to need care from a specialized medical facility that may be outside of your network or immediate geography. Supplement plans can be used at any provider that accepts Medicare, anywhere in the U.S. while Advantage Plans typically have network and geographical limitations.
Understand that once you choose a Medicare Advantage Plan, you may be unable to purchase a Supplement Plan in the future based on your answers to the insurer’s medical questionnaire.
WHAT IS THE DIFFERENCE BETWEEN MEDICARE SUPPLEMENT (MEDIGAP) AND MEDICARE ADVANTAGE PLANS?
You have to pay your Medicare Part B premium whether you choose a Medicare Supplement Plan or a Medicare Advantage plan.
Medicare Supplement plans do just that - they supplement your Original Medicare, covering most of the costs that Medicare doesn’t cover. You have to pay a premium for Medicare Supplement Plans, but there are lower out of pocket expenses for health costs including hospitalization, doctor’s visits, treatments, specialists, and most other medical procedures. Supplement Plans work WITH Medicare and you can use them at any medical provider that takes Medicare - anywhere in the U.S. Most people enrolled in a supplement plan pay under $20 per visit to a doctor or provider. Supplement Plans do not cover prescription drugs, dental, hearing, vision or fitness costs. Supplement Plans are subject to the Part B deductible ($226 in 2023).
Medicare Advantage Plans can be compared to an HMO because it is required that you stay in their network of doctors to receive coverage. Advantage plans essentially replace Medicare and become your primary insurance provider when enrolled. They typically have a $0 premium and often include some coverage for prescription drugs, dental, hearing, vision and fitness classes. However, most doctor visits include a copayment, you are usually limited to certain doctors in a restricted geographic area and have an out of pocket maximum of up to $10,000, meaning your costs could be quite high if you become ill. Some Advantage plans have an out of network option, which gives you more flexibility.
WATCH: SUPPLEMENT VS. ADVANTAGE PLANS EXPLAINED
WHICH IS BETTER?
MEDICARE SUPPLEMENT PLANS (MEDIGAP) OR MEDICARE ADVANTAGE PLANS?
Ultimately, each person needs to assess their own financial needs, not just now, but for the rest of your life. Once you select a Medicare Advantage plan, it can be difficult to return to traditional Medicare.
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If you want access to any doctor or hospital in the U.S., Original Medicare with a Medicare Supplement (Medigap) plan is preferred. It does require an additional monthly premium on top of your Part B premium.
If premium costs are a factor, then go with an Advantage plan with an out of network option, knowing that your out of pocket costs could be as high as $10,000 per year.