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Medicare Advantage vs. Supplements
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Medicare Supplement Insurance policies complement your original Medicare plan and will pay some, if not all, of the expenses that Part A and B do not cover. These expenses could be co-pays, coinsurance, deductibles and other excess charges. There are many different types of Supplement policies available today and they are offered by many different carriers. However, these policies have all been standardized by the federal government, meaning that the benefits for these policies, known as Plan A through N, are all the same regardless of the carrier; the only difference is in the premium. Premiums vary depending on how the carrier prices the policy, which is dependent on different factors such as age or geographical location. You can get the exact same plan for a lot less through a different carrier. Also, as the rules and regulations for healthcare are constantly changing, it’s important to note that plans E, H, I, and J are no longer for sale, but you can keep these plans if you already have one. Ultimately, the best supplement plan is one that is purchased from a quality carrier, has a low premium and leaves you with the least or no out of pocket expenses.
Medicare Advantage Plans are part C of Medicare and Part C plans combine Part A and Part B into one plan. Some Advantage Plans have a part D (prescription coverage) built into them. Although they are offered and serviced by many different private carriers, these carriers have all been contracted by the federal government to administer the plans. These plans have no or low premiums and provide the same benefits that Medicare provides, in addition to extra benefits. Types of Medicare Advantage Plans include Health Maintenance Organizations (HMOs), Preferred Provider Organization (PPOs), and Private Fee-for- Service Plan (PFFS).
Here are the pros and cons of each plan.
Medicare Advantage Pros:
• No or low premiums. Because your Part B premium, along with your original entitled coverage (additional funds from the government) is applied to the Medicare Advantage plan, the premium can be as low as $0.00 to $50 per month on average.
• Depending on how often you need certain services such as doctors' visits and outpatient hospital care, an Advantage plan could save you more money than a Supplement plan because the premiums are much lower.
• Easy enrollment process as the carrier will only be interested in knowing if you have End Stage Renal Disease.
• Medicare Advantage Prescription Drug (MAPD) plans include prescription coverage.
• Some Medicare Advantage plans include Vision, Dental and Hearing coverage as well.
Medicare Advantage Cons:
• Too many choices. Unlike Supplement plans that are standardized, there are literally hundreds of different types of Medicare Advantage plans offering different coverages. It’s hard to know if you getting the best plan without reading and comparing each MA plan.
• Under the current rules and guidelines, Medicare Advantage plans can be changed or discontinued on a yearly basis, leaving you to start the process over or be stuck with different coverage than you originally agreed to.
• Always subject to decrease in benefits do to current economic conditions and funding cuts.
• Not all doctors accept Medicare Advantage coverage; even those who accept Medicare may not accept your MA plan.
• Medicare Advantage has co pays and deductibles, in which the exact amount may not be known until months later when all the paperwork has been completed and processed.
• Not all plans are offered in all states, so if you move you may be forced to start the process over and get a new MA plan for that particular area.
• Out of pocket maximums could go as high as $5,000 which may not be hard to reach if you become seriously ill or have many illnesses in any given year.
Medicare Supplement Pros:
• Because Medicare Supplement plans work with Medicare, any doctor who takes Medicare, will also accept Medicare Supplement insurance.
• Unlike the HMO’s or PPO’s of the Medicare Advantage plan, you do not need to stay within your network or need a referral to be covered for services.
• There is less paperwork, as medical bills are submitted to Medicare directly and then automatically submitted to a secondary payer (your Medicare Supplement carrier) to pay the balance.
• While the premiums may vary with Medicare Supplement plans, there are much fewer types of coverage (only Plans A through N) unlike the hundreds of Medicare Advantage plans available. This makes is much easier to compare plans as you are only really comparing premiums. Coverage stays the same for each type of Medicare Supplement plan, regardless of geographical area, age of insured, or carrier of plan.
• With some Medicare Supplement plans (like Plan F) there are no out-of-pocket expenses at all; with other Medicare Supplement plans, there are much lower out-of-pocket expenses when compared to Medicare Advantage. Under the current rules and guidelines, Medicare Supplement Plans must be renewed annually, as long as you make you premium payments on time.
• If you move to another city or state, your Medicare Supplement policy moves with you.
Medicare Supplement Cons:
• While premiums do vary, expect to pay around $150 a month on average for Medicare Supplement insurance. As with regular insurance policies, you may qualify for discounts for being in good health, being a non-smoker, being married, etc.
• Like regular insurance plans, enrollment is not guaranteed and is subject to preexisting health conditions.
• Medicare Supplement policies usually do not include Prescription coverage. You need to get a separate Medicare Part-D plan to cover your prescriptions.