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Medicare Supplement Insurance vs. Medicare Advantage Plans

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Comparing Medicare Supplements and Advantage PlansIf you are currently enrolled or soon to be enrolled in Medicare, you usually have just two insurance choices to close/minimize the gaps in this government insurance program: Medicare Supplements or Medicare Advantage plans.

It’s a good idea to choose one or the other as Original Medicare has several benefit gaps with open ended expenses. Either of these two choices will close these gaps and reduce your out-of-pocket exposure to a known amount.

Comparing Medicare Part C (Advantage) Insurance

Part C is the generic term that includes all privately sold Medicare Advantage plans available for purchase. Your county of residence will determine which Advantage plans are available for enrollment. These are sometimes referred to as MA or MAPD plans for short. (The P D stands for prescription drug.)

Medicare Advantage plans are private insurance programs offered from providers like Aetna, Anthem BCBS,  Cigna, Humana, United Healthcare among many others. These same insurance companies will also offer Medicare supplements as well, but you can’t have both. It’s one or the other.

When you compare Medicare supplements to Medicare Advantage (MA) plans, you are simply trying to determine a suitable and affordable way to cover the insurance gaps not covered by Original Medicare Parts A & B. There are pros and cons to both.

Comparing Medicare Supplements to Advantage Plans

Benefits Medicare Supplements Medicare Advantage Plans
Monthly Premiums Usually higher – Especially for plans C, D, F & G Usually lower than most Medicare supplements
Potential For Out-Of-Pocket Expenses? Less. Plans C, D, F, G, N and others offer more comprehensive coverage with less out of pocket exposure Greater. Most Advantage plans will have both in and out of network out of pocket maximums. These can be as high at $10,000.
Yearly Deductibles? Less. Most plans cover the larger Part A deductible. Some don’t cover the Part B deductible which is small, yearly amount. Yes. Varies from plan to plan and whether you are in or out of network. Copays and coinsurance are typically much higher with Advantage plans
Choice Of Doctors & Hospitals? Yes. Insured can use any doctor or hospital with almost all traditional Medicare supplements no matter the insurance company chosen. Depends on the plan. PPO’s have larger networks than HMO’s, but you must stay in network with both to reduce your out of pocket exposure. HMO plans offer no coverage out of network.
Includes Part D Rx Coverage? No. Part D coverage must be purchased separately on a stand-alone basis. Yes. Most Advantage plans bundle Part D coverage into one policy. These are called MAPD plans.
Overall Flexibility Yes. Allows insured to change plans and disenroll throughout the year. No network limitations and plans will travel out of state. Good for those who spend time in multiple states. No. Insured must wait until certain times of the year to disenroll. Medical underwriting may be necessary to later purchase a supplement. Usually only covers emergencies out of network.
Offers Ancillary Benefits? No. Supplements are not allowed to offer ancillary type insurance options at this time. Yes. Many Advantage plans include dental, vision, hearing and other perks.

Medicare Premiums, Out-Of-Pocket & Plan Flexibility

It is difficult to compare monthly insurance premiums versus potential out-of-pocket costs. If you remain in good health, a low cost Advantage plan will be the least expensive choice overall. However, if you have regular health issues or a significant incident, an Advantage plan can have much higher out-of-pocket expenses when compared to a Medicare supplement like Plan F, G or N.

Furthermore, your one year trial period is up, you may be unable to switch back to a traditional supplement if you have certain preexisting conditions. Most Medicare supplement providers require medical underwriting if you have been enrolled in an Advantage plan for over one year. In other words, you can be declined coverage. Additionally, it can be difficult to disenroll from a MA plan outside of the Oct.15th thru December 7th Open Enrollment window each fall.

In fairness, there are states like Florida where Medigap rates can be higher than most other places. And regardless of out-of-pocket expenses, some consumers simply cannot afford both a Medicare supplement and a stand-alone Part D plan. For these folks, an Advantage plan can be the most suitable option as some are offered at $0 per month.

Medicare Advantage Networks – Doctors and Hospitals

One important difference between supplements and MA coverage are the network options. Unlike almost all supplements, MA plans have a network of doctors, hospitals and medical facilities that the insured is mostly required to use for service. All plans will cover emergencies out of network, but your idea and the insurance company’s idea of an emergency may differ.

The problem arises when a specialist is needed for consult or if the insured is admitted to a rehabilitation or other medical facility that is out of the provider network. It’s not that the insured cannot see these professionals or use the facility, but the Advantage plan may provide little in the way of reimbursement – if any at all. This can lead to significant out-of-pocket expenses.

Prescription Drug Part D Rx Coverage

This is an area where MA plans tend to be more beneficial to the insured. Current laws allow insurance companies to package Advantage plans and Part D coverage together in one package. Not all MA plans combine Parts C and D together, but many do as an incentive to the consumer. And many of these combination MAPD plans can be found for under $75 a month.  Some are as little as $0 a month.

Conversely, Medicare supplements and prescription Part D coverage must be sold separately by law. There was a time when the two plans could be purchased in tandem, but past regulations separated the two. Many companies offer both supplemental and Part D, however they cannot be purchased together. And it’s wise to shop them independently on one another.

This means that Part D plans will come at an additional cost for those who want a traditional Medicare supplement. Part D premiums will vary, but plans that fit most consumers cost between $15-$30 a month. The plan that’s most suitable will depend on what prescriptions you take. Even if you don’t take any at all, it’s wise to have a plan in order to avoid the lifetime Late Enrollment Penalty.

What Is The Future For Medicare Advantage Plans?

It’s hard to say. Health care reform is an evolving piece of some of the most significant legislation passed in recent decades. Medicare supplements are here to stay, but Advantage plans seem to fall in and out of the political cross-hairs. For now, MA and MAPD plans are alive and well.

It is important to note that if your MA provider leaves your service area or discontinues coverage, you will receive an open enrollment window when you can purchase some supplements (or new MA plan if one exists) without any required medical underwriting.

Contact Us For Quotes And Coverage

In summary, there is not a one-size-fits-all plan for Medicare beneficiaries. While more of our clients tend to purchase Medicare supplements, many also are very content with Advantage plans. We do both and will help you narrow down your choices to the ones that look most suitable for your needs and budget.

Hyers and Associates is an independent insurance agency serving several states nationwide. We work with the leading Medicare insurance providers to help our clients compare their options and enroll in coverage directly – at no additional cost.

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Category: Medicare Advantage, Medicare Supplements

Last updated on February 9th, 2017