How do Medicare advantage plans compare to supplement plans?
Original Medicare, Part A and B, is administered by the CMS, the Centers For Medicare and Medicaid Services. It is well known that this basic Medicare health insurance doesn’t cover all health care costs. When you need more benefits or a cap on medical costs, you must add private insurance like Medicare advantage insurance or a Medigap plan.
Medicare Advantage plans basically substitute your traditional Medicare and have by law to provide at least the same coverage as Medicare. This means they have to provide all the Part A and Medicare Part B benefits, including emergency and urgent care. Most include additional benefits such as wellness and fitness memberships, prescription drugs, and you are able to include hearing, dental and vision therapy which the traditional Medicare program fails to provide. You will have to keep paying for your Part B, plus your monthly advantage premium – if any. Some so-called ‘zero premium’ Medicare advantage plans do not have a monthly premium at all.
Almost 50% of all seniors enrolled in Medicare have Medicare Advantage plans
So what makes advantage plans so popular, that so many seniors select a Medicare advantage plan (MAP)?
There is one huge argument in favor of Medicare advantage plans: They take individuals in spite of pre-existing medical conditions.
As the majority of Medicare advantage plans are PPO or HMO plans, insurance plan providers are able to add more features and keep the premiums, co-payments and deductibles down, so your out-of-pocket obligations are likely to be low. There are even “Zero-Premium” advantage plans offered. Sure, in HMO or PPO plans Medicare beneficiaries are generally restricted to visit medical service providers that are approved by the plan network, but adhering to these limitations also means they will receive maximum cost sharing by the plan thus saving on medical costs.
How do Advantage plans compare to Supplement plans?
Medicare supplement insurance policies have been around for more than 40 years. They are also offered by private insurance companies, as standardized Medigap plans, labeled A through N (some states are different), and must follow federal laws. Medigap also helps to fill in the gaps that original Medicare does not pay on covered services by assisting with copays, coinsurance, and deductibles. You will still have to use your original Medicare Card, and add your Supplement health card. For covered services, your plan will pay the portion of your medical bill that Medicare will not pay. For example, Medicare may pay 80% of a hospital bill, and the supplement insurance will pick up the remaining 20%. The difference to advantage plans is that Medigap Insurance pays after Medicare pays, and an advantage plan policy pays instead of Medicare.
Supplemental policies generally provide a broader access to doctors and hospitals, compared to advantage plans.
Many beneficiaries do, however, not qualify for a Medicare supplement plan. This may happen, for example, if you have missed the original guaranteed enrollment period for a supplement when you first became eligible for Medicare, and now you cannot qualify medically anymore, due to the plan’s underwriting requirements. Another reason is that the premiums for a Medigap policy are not as affordable.
You can see that for many seniors, Medicare Advantage plans really are an outstanding alternative to standard Medicare insurance, as well as to supplemental Medigap policies.
How to decide whether Medicare Advantage or Supplement is better for you
Comparing advantage and supplemental plans is a very complex and time-consuming task, and you may want to take on the help of a licensed health insurance agent specializing in Medicare.
A good starting point is to ask yourself some questions about your current medical needs, such as: do you have a chronic health condition that needs regular care? Do you like to travel a lot and may need international emergency health care? Are you comfortable seeing health care providers in a specific ‘plan network’ in order to save on monthly premiums, or do you rather select a specific doctor at all costs? What are your medication needs?
While Medicare supplements provide better coverage of medical services, and you can greatly reduce or, with some plans, completely eliminate your out-of-pocket costs. They are in general the more expensive option, compared to Medicare advantage.
If you decide for a Medicare Advantage plan, you must be aware of the limitations and exclusions when it comes to choosing your health care providers, but you typically enjoy the same or more benefits at lower costs.
