Original Medicare, or Medicare Part A and Part B, covers a range of healthcare services for seniors. However, Original Medicare is not always enough to protect aging seniors from the rising costs of healthcare. To access more benefits or to reduce out-of-pocket costs for healthcare, seniors may decide to enroll in a form of accompanying coverage.
There are two options in addition to just having Original Medicare: Medicare Supplement Plans or Medicare Advantage P-lans. Both options are provided by private insurance companies, and both extend coverage beyond Medicare Parts A and B. Between these two choices, there are a range of plans that are appropriate for any budget, so you’re sure to find something that meets the right balance of cost and coverage for you.
But what’s the difference between a Medicare Supplement Plan and Medicare Advantage Plan? If you’re considering your options, make sure you understand what makes these plans unique and which might be better for you.
Medicare Supplement (Medigap) plans
Medicare Supplement Insurance plans, also called Medigap, are private insurance plans that work alongside Medicare Part A and Medicare Part B. These plans do what the name implies—they supplement, or fill in the coverage gaps, for Original Medicare.
A Medigap plan helps pay for costs not covered by Medicare Part A or Part B. This might include deductibles, coinsurance or copayments. Medigap plans pay after Medicare Parts A and B. This means that Original Medicare is your primary coverage, and your Medigap policy is secondary.
For example, if you seek outpatient care, Medicare Part B may cover 80 percent of a covered procedure. Normally, you’d have to pay the remaining 20 percent of the bill out of pocket. But, if you have a Medigap policy, that plan may cover the remaining 20 percent for you.
Medigap plan types
There are 10 different types of Medigap plans that each cover different costs at varying amounts. These plans are standardized on the state and federal levels (outside of Massachusetts, Minnesota and Wisconsin). The following are all potential types of Medigap plans: A, B, C, D, F, G, K, L, M and N. Insurance companies may not sell all of these plan types.
The following Medigap plans are often the most popular:
- Plan F: Covers all deductibles, coinsurance and copayments for Medicare Parts A and B, as well as some emergency costs if you travel to a country outside of the U.S.
- Plan G: Covers the deductible for Medicare Part A, coinsurance for skilled nursing care and Medicare Parts A and B and any excess charge benefits for Medicare Part B.
- Plan N: Covers the deductible for Medicare Part A, coinsurance for skilled nursing care and Medicare Parts A and B and some emergency costs if you travel to a country outside of the U.S.
Regardless of the Medigap plan you choose, you can see any Medicare provider across the United States. This means you are not limited by a network.
Medigap plans do not offer prescription drug coverage. You may purchase standalone Medicare Part D, as well as a Medigap plan, but the Medigap plan will not offer any drug benefits. Additionally, Medigap policies do not cover extra services like long-term care, vision, dental or hearing.
Enrolling in Medigap
In order to purchase a Medigap plan, you must be enrolled in Medicare Part A and Part B. You will pay a monthly premium for this policy to your private insurance provider. This premium is in addition to the monthly premium you pay for Medicare Part B.
The best time to enroll in a Medigap plan is during a one-time, six-month Medigap Open Enrollment Period that starts as soon as you turn 65 and are enrolled in Medicare Part B. During this period, insurance companies cannot ask health questions to determine the cost of your policy.
If you want to purchase a Medigap policy after your Medigap Open Enrollment Period ends, you are able to. However, insurance companies can ask health questions and deny you a plan or charge you a higher premium due to pre-existing health conditions.
Medicare Advantage plans
Medicare Advantage plans are also known as Medicare Part C. These private insurance plans cover the benefits offered to you in Medicare Part A and Medicare Part B. However, they may also bundle in additional benefits, including dental, vision, wellness and hearing services, as well as prescription drug coverage.
A Medicare Advantage plan pays instead of Medicare Parts A and B. This means that your Medicare Advantage plan is your primary health insurance plan. Private companies that offer Medicare Advantage Plans must be approved by Medicare.
In addition to your Medicare Part B premium, you may need to pay an additional monthly premium for your Medicare Advantage plan. Typically, Medicare Advantage plan premiums are lower than Medigap premiums.
These plans may also charge you deductibles, copayments and coinsurance for services. What you ultimately pay for care under a Medicare Advantage Plan will be determined by a few different factors, including the type of plan, the services it covers and how often you access care.
Medicare Advantage Plan types
There are multiple types of Medicare Advantage Plans available. Not all companies will offer all types of Medicare Advantage Plans, and you must use a plan that is eligible in the county where you live. These plan types largely resemble the group or individual private health insurance plans you may have been covered by prior to enrolling in Medicare.
Some of the most common Medicare Advantage Plans types are:
- Health Maintenance Organization (HMO) Plans: With an HMO plan, you choose an in-network Primary Care Physician (PCP) and visit in-network health providers, aside from in emergency situations. If you seek care outside of the network, you may have to pay the full cost out of pocket. To see a specialist, you typically need a referral. HMO plans might include prescription drug coverage.
- Preferred Provider Organization (PPO) plans: In a PPO plan, you do not usually need to choose a PCP. You may seek covered healthcare services from an in-network or out-of-network provider. You typically pay less to visit an in-network provider, but the plan may still cover costs for an out-of-network provider. Some PPO plans include prescription drug coverage.
- Special Needs Plans (SNP): SNPs are for people with specific diseases or disabilities. These plans are more closely tailored to meet the specific medical needs of their members. Plan types may include Dual Eligible SNPs for people with Medicare and Medicaid and Chronic Care SNPs for seniors with severe chronic conditions like diabetes or cancer.
Prescription drug coverage may be embedded into your Medicare Advantage plan. However, if your Medicare Advantage plan does not include prescription drug coverage, you may only be able to purchase standalone Medicare Part D if you have certain plan types, such as a Medicare Medical Savings Account plan or Private Fee-for-Service plan.
Enrolling in Medicare Advantage
Seniors who wish to enroll in a Medicare Advantage plan can do so during the Initial Enrollment Period that starts around their 65th birthday. If you do not enroll in a Medicare Advantage plan at this time, or you enroll in one plan but want to change it, you may have opportunities to do so during other enrollment periods.
During the Annual Enrollment Period from October 15 to December 7 for Medicare Advantage and Medicare Part D, you may:
- Switch from Original Medicare to Medicare Advantage
- Switch from one Medicare Advantage plan to another
During the Medicare Advantage Open Enrollment Period from January 1 to March 31, you may:
- Switch from one Medicare Advantage plan to another
Outside of these periods or Special Enrollment Periods, you are unable to change or begin a new Medicare Advantage plan.
Which is right for you?
Now that you understand more about Medicare Supplement/Medigap plans and Medicare Advantage Plans, you’re probably wondering which one is better. Ultimately, the right plan for you will depend on a number of factors, including your monthly budget, network restrictions and necessary benefits.
It’s important to note that a Medigap plan and a Medicare Advantage Plan cannot work together. If you want to purchase a new Medigap plan but are currently enrolled in a Medicare Advantage plan, you’ll need to switch back to Original Medicare during the appropriate enrollment period, then purchase a Medigap policy.
To determine whether a Medigap or Medicare Advantage plan is better for you, consider the following factors:
- Premium: Seniors on either a Medigap or Medicare Advantage plan will still need to pay their Medicare Part B premium. Medigap premiums tend to be higher and may increase annually. Medicare Advantage premiums tend to be lower (you may even be able to get a $0 premium) and they may increase annually, but not always.
- Out-of-pocket costs: With a Medigap plan, your out-of-pocket costs will be minimized thanks to the coinsurance and copayment coverage provided by your plan. In a Medicare Advantage plan, you may pay more out of pocket until you reach your out-of-pocket maximum, but this depends on how often you seek care.
- Networks: With Medigap, you’re able to see any doctor in the U.S. who accepts Medicare, giving you greater choice in providers. In a Medicare Advantage plan, you may be limited to networks and service area restrictions that may or may not include your preferred doctors.
- Value-added benefits: Medigap plans do not offer benefits that aren’t already included in Original Medicare, such as dental and vision care. Some Medicare Advantage Plans do offer these benefits, among others.
In addition to these factors, it’s important to consider things like prescription drug coverage, access to specialists and more.
Do you have more questions about Medigap or Medicare Advantage Plans? SeniorCare Benefits is ready to help! We represent a range of Medicare plans that can help you access the specific benefits and coverage you need. To learn more, please call us at 1-888-230-0269 so one our agents can assist you today.
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