Medicare Vs. Medicare Advantage
Medicare Advantage vs Medigap (Medicare Supplement):
Which one is right for you?
Though both policies help you cover your gaps in Medicare, they are designed very differently.
Medicare supplements pay as a secondary insurance to Medicare Part A and Part B.
This means they pay after Medicare first pays its portion of the bill.
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Medicare Supplement Plans (Medigap)
Medicare Supplement plans cover 10 million Medicare beneficiaries. Also referred to as Medigap plans, these policies help pay for your share of Medicare expenses, such as your deductibles and co-insurance. Medicare supplement insurance plans are available for purchase in all 50 states and are very popular with people who want little to no copays when they access healthcare services.
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Many people new to Medicare feel surprised to find that Medicare covers only 80% of your Part B expenses.
The other 20% can be devastating to you financially if a serious illness arises. You can choose a Medicare Supplement that will pay some or all of that 20% for you, among other things. Supplemental insurance for seniors with Medicare essentially buys you peace of mind by eliminating that cost-sharing responsibility.
Your doctor or medical service provider bills Medicare for your service or procedure.
Medicare pays the approved portion and sends the excess amount to your Medigap Plan.
Your Medigap plan pays the excess amount according to the terms of the plan you chose.
Each Medigap plan provides different benefits and the top most popular plans are Plan G and Plan N.
See the latest chart here
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Medicare Advantage Plans
Medicare Advantage plans, on the other hand, are entirely separate from Medicare. When you enroll into a Medicare Advantage policy, you get your benefits from the plan, not Medicare. You agree to use the plan’s network of providers except when you need emergency care. You’ll pay copayments for your health care treatment as you go along.
Think of these plans as an alternative to Original Medicare.
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A Medicare Advantage plan is a private Medicare insurance plan that you may join as an alternative way to get your Part A and Part B benefits. When you do, Medicare pays the plan a fee every month to administer your Part A and B benefits.
You must continue to stay enrolled in both Medicare Part A and B while enrolled in your Medicare Advantage plan. Medicare pays the Advantage plan company on your behalf to take on your medical risk.
This is how Medicare Advantage plans are funded.
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You will present your Advantage plan ID card at the time of treatment. Your providers will bill the plan instead of Original Medicare. Again, this is also why some providers consider them Medicare replacement plans, but it’s important to remember that you can always return to Original Medicare during a future annual election period.
Low Monthly Premiums
Outpatient Medical Coverage
Inpatient Hospital Benefits
Part D Drug Benefits*
Medicare Advantage plans have networks of doctors you must use when seeking medical care. Some networks are less strict than others.
You pay copays for approved services up to the out-of-pocket maximum.
The OOP can be as high as $7,550.
Part D costs not included.
How to Choose a Medicare Plan Type
There are a few considerations to keep in mind as you begin searching for Medicare Supplemental insurance.
Once you understand how each plan works… ask yourself some of these questions to help you filter down to which kind of plan might best suit you:
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Do your important physicians participate in any Medicare Advantage plans or do they only accept Original Medicare?
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What insurance is accepted by your preferred hospitals?
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Do you travel out of the area frequently? If so, you might find Original Medicare with a Medicare Supplement to be a good fit for you since you can use it for any doctor or hospital in the nation that accepts Medicare.
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What is your risk tolerance? If you have a year of heavy health spending, do you have enough savings to spend the possible out-of-pocket maximum that a Medicare Advantage plan might require?
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How about peace of mind? Are you a person who will sleep better at night if you have a lower premium and just pay for services as you go? If so, you might be a good candidate for a Medicare Advantage plan. By contrast, if you tend to worry about unexpected expenses, a Medicare Supplement could give you the peace of mind of knowing exactly what medical spending you will incur regardless of your health.