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Which is Better: Medicare Advantage vs Medicare Supplement

Tuesday, May 5th, 2020

You’re probably already aware that there are two ways to help reduce the huge mandated out-of-pocket costs typically related to Medicare Parts A & B (often referred to as Original Medicare). Medicare may strike some folks as confusing; but, alongside one another, the basics of the program aren’t that difficult to grasp. As the old adage goes – the devil’s in the details.

Medicare has four basic parts: taken altogether

  1. Part A is hospital inpatient care
  2. Part B includes medically necessary outpatient treatments such as doctor visits, other outpatient medical procedures & durable medical equipment and/or supplies
  3. Part C is also known as Medicare Advantage
  4. Part D is prescription drug coverage

The issue at hand in this article is the huge out-of-pocket costs of Medicare Part A & B. (referred to as Original Medicare)

While Medicare Advantage and Medicare Supplement plans help cover expenses NOT completely covered by Original Medicare (like deductibles, copays/coinsurance & some other medical expenses), which could wipe-out someone’s savings should they become chronically ill, or suffer a serious accident, the reality is, they’re not the same.

Medicare Advantage

This is where Medicare Part C comes into play. It’s one of two ways to protect yourself against potentially huge out-of-pocket costs related to an accident or chronic illness. Medicare Advantage Plans are a type of Medicare health plan offered by a private company that contracts with Medicare to provide all your Part A and Part B benefits, but Medicare always has oversight. Most Medicare Advantage Plans also offer prescription drug coverage; and depending on the plan you choose, some include extra coverage beyond typical Medicare benefits that you may want or need.

If you want to join a Medicare Advantage plan offered in your zip code, you must be enrolled in Medicare Parts A & B and you must continue paying the Part B premium. Upon joining, the private company that offers your chosen plan administers your medical bills 100% less any plan specific out-of-pocket costs.

There are many different kinds of Medicare Advantage plans. Before signing up for a particular plan in your zip code, consider shopping around, because coverage details and costs are likely to vary depending upon where you live. More important to you, depending on the plan you choose, Medicare Advantage sponsors can offer extra benefits beyond typical Medicare benefits, such as routine dental, vision, hearing aids, and sometimes they’ll include prescription drug coverage.

Medicare Supplement

Medicare Supplement (also known as Medigap or Med-Supp) Plans are also offered through approved private carriers; but the reality is, these are not comprehensive medical coverage. Medigap acts as supplemental coverage to Original Medicare plans.

Med-Supp Plans typically cover between 50% and up to 100% of Original Medicare’s Part A & B out-of-pocket costs, like deductibles, copays/coinsurance – and they usually add limited emergency medical care while traveling outside of the country. Most Medigap plans also cover a maximum of one year of Medicare Part A coinsurance and hospital costs, but only after Medicare benefits are used.

While Medigap plan benefits are standardized, each carrier’s premium costs are not! In other words, some companies charge higher premiums for the same exact thing. For example, while Med-Supp Plan G has the same coverage, no matter where you purchase it or which carrier issues your chosen plan, the monthly premium for each plan can vary quite a bit between companies. By the way, not every standardized plan design is offered in every zip code.

Bottomline:

If you decide to sign-up for a Medicare Supplement plan, the best time to do it is during your Medigap Open Enrollment period, (a six-month period that usually begins the same month you turn 65 and enrolled in Original Medicare). If you enroll in a Med-Supp Plan during this period, you can’t be turned away or charged more because of any health conditions. But, if you apply for a Medigap Plan at a later date, you could be subject to medical underwriting (medical history review), and your acceptance into that plan will not be guaranteed.

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