I have worked with Medicare-eligible clients since 2015. A majority of people I have helped have actually enrolled in a Medicare Supplement with a separate stand-alone Part D drug plan. However, in past 18 months, there has been a trend of more and more Medicare Advantage plans.
To make an informed decision about your Medicare coverage, it is imperative to understand the differences between the two options: Medicare Supplement plans and Medicare Advantage plans.
Medicare Supplement Plans
All Medicare Supplement plans are standardized with 10 different plan designs and the varying monthly premiums, depending on how comprehensive the plan design is. For example, Plan F and Plan G are the most comprehensive of all Medicare Supplement plans so, the coverage is the same for all those plan types. However, in a given area, insurance company A might charge $150 for their plan G premiums, while insurance company B might only change $135 for the same plan G coverage. Not all plans are commercially available in all areas; the insurance company decides which plans they will offer in a given area or state.
To avoid overpaying for the supplement, it’s a good idea to speak with you agent, who can provide quotes from multiple insurance companies. You may already realize Medicare Supplement plans charge a monthly premium cost for the coverage. This premium cost will increase slightly each year as you age. For example, with a Plan G, in exchange for the monthly premium cost, the plan will pay all Medicare-eligible expenses after you meet an annual one-time $233 Part B deductible.
When considering a Medicare Supplement plan, also remember that:
- You can go to any doctor or healthcare facility anywhere in the US as long as the provider or facility accepts Original Medicare.
- Medicare Supplements require medical underwriting expect when first turning age 65, or first enrolling in Medicare part B after being in group health coverage. In those instances, the applicant has one-time right to a guaranteed issue policy without underwriting.
In summary, Medicare Supplement plans…
- Have a monthly cost that increases with age.
- Do not require members to use a network.
- Pays all Medicare approved cost after a $233 annual Part B deductible so anyone who enrolls has a very predictable cost for their medical coverage for the year.
- Do not include Part D prescription drug coverage, so anyone applying for a supplement will want to purchase a stand-alone Part D plan.
Medicare Advantage Plans
In comparison, Medicare Advantage offers an assortment of different plans including PFFS, HMO, PPO, or POS options. Availability of these plan types may be limited to specific geographic areas. Medicare Advantage plans can be available with or without Part D drug coverage, and anyone who enrolls in Medicare Advantage with Part D coverage will have medical and drug coverage all together in one plan; this is commonly referred to as MAPD or is sometimes referred to as an all-in-one plan or Medicare Part C.
The most commonly available Medicare Advantage plan types are the HMO and PPO. Generally, Medicare Advantage HMO and PPO plans are available with a $0 monthly premium, or if the plan does have a premium it is usually much less than the monthly cost of a Medicare Supplement plan. Anyone who selects an Advantage plan for their Medicare coverage will typically pay lower monthly cost than for a supplement.
When the member of a Medicare Advantage plan obtains medical treatment, they will be required to pay a pre-determined flat dollar co-pay amount or a coinsurance percentage for all services. These amounts are due to the provider at the time of service. To limit catastrophic medical costs, Advantage plans provide an annual max out-of-pocket amount that limits the members annual medical cost to a fixed dollar amount. Conditionally, the Advantage plan counts the members out-of-pocket medical cost toward the out-of-pocket limit. Some plans require the member to use network providers in order to count medical cost toward the out of pocket limit.
Except for a medical emergency, Medicare Advantage HMO plan members are required to obtain all of their health coverage from a network of providers. In the case of medical emergency, the member can go to the nearest hospital and the treatment will be considered as in-network according to policy terms and conditions. Medicare Advantage PPO plan members have an option to use a network provider and pay lower cost or they can go to any non-network provider of choice and pay more for services and have a higher out-of-pocket limit.
All Medicare Advantage plans are reviewed and approved by Medicare before they are offered commercially. In addition to medical and drug coverage, Medicare Advantage plans may offer various additional benefits and services such as routine dental and vision coverage, quarterly allowance for over-the-counter items, such as vitamins or medical supplies, home-delivered meals post hospital discharge, no-cost fitness club memberships, assisted devices for emergency, 24/7 nurse hot line, telemedicine, and more.
In summary, compared to the Supplement option, Medicare Advantage offers lower monthly premium cost for a good number of zero dollar premium or low monthly premium HMO or PPO plans. Medicare Advantage is a pay for services as you go option while each member has a built-in protection against high medical cost with the max out of pocket limit. Many of additional benefits and services available with Medicare Advantage are not included or available with the Medicare Supplement plans.
In summary, Medicare Advantage plans…
- Offer lower or zero-dollar monthly premium cost for HMO or PPO plans
- Are a pay-for-services-as-you-go option while each member has a built-in protection against high medical cost with the max out-of-pocket limit.
- Offer many additional benefits and services that are not included or available with the Medicare Supplement plans.
The Medicare maze can be confusing and it can be difficult to find the right plan for you and your situation. Contact your ARC licensed health insurance representative today and we will help you find options that work well for your health and your budget.