Medicare Advantage vs Medicare Supplement

Part D & Medigap Plans (0:57)
Medicare Advantage Plan (1:56)
Medicare Supplement Plan vs Medicare Advantage Plan (4:31)
3 Things to Consider When Deciding Which Plan to Go With (4:57)

Medicare beneficiaries have the option to obtain additional coverage that will supplement their original Medicare benefits. You can choose between a Medicare Advantage plan or a Medicare Supplement plan.

When you enroll in Medicare, you have the option to enroll in Part A and Part B. Part A is your hospital coverage and Part B is your doctor’s coverage, or medical coverage.

There are still many out-of-pocket costs when it comes to Part A and Part B. This includes deductibles and coinsurance. In order to fill in the gaps of coverage that original Medicare doesn’t include, you’ll need to enroll in supplemental coverage. For this, you have two options. Option 1: a Part D plan with a Medigap plan, or Option 2: a Medicare Advantage plan.

If you are enrolling in a Medigap plan, it is recommended to add a stand-alone Part D plan because Original Medicare does not include prescription drug coverage. Medicare Supplement (Medigap) plans cover additional, out-of-pocket costs you are otherwise responsible for, such as coinsurance and deductibles.

The second option you have is to enroll in a Medicare Advantage plan. Medicare Advantage is not the same as Original Medicare. Medicare Advantage plans are managed healthcare plans offered through private insurance companies.

Medicare Advantage plans tend to have lower monthly premiums when compared to Medigap. Some Medicare Advantage plans come with ancillary benefits like dental and vision. Some also include prescription drug coverage. Due to the low or $0 monthly premium, beneficiaries need to pay more out-of-pocket as they use the benefits.

You may be wondering, how are Medicare Advantage plans free?! The Medicare Advantage carrier is paid around $1,000 per month by Medicare to take on your risk. That is how they are able to offer such low premiums, including some $0 monthly premiums.

In addition, Medicare Advantage carriers make money from cost-sharing. Unlike Medigap, you’ll have copays every time you see a doctor. If you see multiple doctors within one visit, you could have just as many copays to pay in one exam.

It is also important to know that you still have to pay your monthly Part B premium with a Medicare Advantage Plan. A common misconception is that you don’t have to pay the monthly Part B premium. This is not true and you will still be responsible for it.

You see many Medicare Advantage commercials throughout the year, especially during the Annual Enrollment Period. This is because carriers want these policies to seem more attractive to you with their $0 premiums and additional benefits. This makes them seem like all-inclusive plans. Keep in mind, however, that they are paid by Medicare to take on your risk and they will make their money between Medicare and cost-sharing you pay out of pocket when you use those benefits.

Medicare Advantage Plans need to cover the same benefits as Original Medicare. However, it is up to the carrier how much they will cover for that specific service. While Medicare may pay 80% for your doctor visit, Medicare Advantage might cover less than that as well as throw on additional cost-sharing in the form of copayments and coinsurance. All of this can quickly add up to more than the premium would have been for a Medigap plan.

So, is it better to have a Medicare Advantage plan or a Medigap plan? This depends on your specific situation. One may not be better than the other. However, one might be better than the other for you.

Three Things to Consider When Deciding Which Plan to Go With:

1. Budget
2. Medical Usage
3. Travel Frequency

The last thing you should keep in mind is that if you enroll in a Medicare Advantage plan, you may not be able to enroll in a Medigap plan in the future. This is because most people only get a one-time Open Enrollment Period to enroll in a Medigap plan. This enrollment period lasts six months and it begins the first of the month after your Part B effective date.

During your OEP, you can enroll in a Medigap plan without having to answer any health questions and you’re guaranteed to be accepted. If you choose to enroll in a Medicare Advantage Plan but later want to switch to a Medigap plan, you’ll have to answer health questions and may not be accepted to the plan.

Medicare Advantage vs Medigap:

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