About Medicare Supplement Plans
In this article, we will discuss the difference between a Medicare Supplement vs Medicare Advantage Plan. Do you enjoy healthcare freedom? If you do, a Medicare supplement plan helps provide that peace of mind. Medicare supplement plans are also called Medigap plans. Having a Medicare supplement plan (Medigap) allows you to see any provider, without a referral, that accepts Medicare, regardless of what Medigap plan you choose. One of the best benefits of having a Medigap plan is the access of national providers. You are not limited to your local network of providers. If they accept Medicare, you have access to them.
How will Medicare pay your claims? When you enroll in a Medicare supplement plan, the carrier will notify Medicare that you have enrolled in a supplement plan with their company. When Medicare pays a portion of your bill, they will automatically send your portion of the bill to your Medicare supplement carrier. It’s a seamless process!
It’s About Freedom of Access & No Referrals
Medicare supplement plans will provide you with the most flexibility and freedom to choose your healthcare provider. There are over 1 million Medicare providers in the US. Medigap plans allow you to see any specialist in the country without a referral as long as they accept Medicare.
Because these plans offer you the most freedom and flexibility, they have higher premiums than Medicare Advantage plans. Plans and rates also vary by region, age and sometimes gender. If you and a spouse need a Medicare supplement plan, many carriers offer household discounts that might help reduce your monthly premiums. Since these plans are standardized, it is important to talk with an agent who specializes in Medicare supplements to make sure you have the most cost-effective plan for you.
Your Retail Drug Coverage is Separate
Even though Medigap plans cover medications administered in a hospital setting, such as injectables or chemotherapy drugs, they do not cover retail medications. This is why it is important to enroll in a separate Part D drug card.
If you enroll into a Medigap plan during your one-time open enrollment window (within 6 months of your Part B effective date), there are no health questions and your applications is automatically approved. If you miss this window and apply later on, you will have to answer questions and go through medical underwriting. Based on those questions, the insurance company can accept or decline you based on your medical history. This is why it is important to enroll in a Medicare supplement plan when you are initially eligible during your one-time open enrollment period.
About Medicare Advantage
Medicare Advantage plans usually have lower monthly premiums than Medigap plans. We receive a lot of calls during open enrollment asking about these zero-dollar premium commercials. Is it too good to be true? When a plan has a $0 premium, it means that you will pay no additional premiums for the plan itself. It is important to remember that you will still pay for your Part B premiums each month. You must be enrolled in both Medicare Parts A and B to be eligible for a Medicare Advantage plan.
A zero-dollar plan is tempting so why would a carrier offer a $0 premium plan? For a zero-dollar or lower cost premium, you agree to use the plan’s network providers to get your care. This means you’ll have substantially fewer doctors to choose from than if you chose a Medigap plan. The insurance company has more control over your choice of providers, with whom they negotiate contracted rates.
Make Sure You Check Your Doctors
It’s important to check with your doctors first to see if they are in the plan’s network. This is especially important if the Advantage plan you are considering is an HMO plan, will generally have the smallest networks. It is important to do your homework to see what doctors are participating in the network. Don’t only think about today but who you think you would want to see in the future if that need arises. Could it be a particular hospital system? If you develop a serious condition later you want to make sure you have access to the available care you need. You may live in a part of the country that has the best cancer facilities around. Make sure they are in the network for the Medicare Advantage plan you are considering. You never know what tomorrow holds!
Your Medicare Advantage insurance company will pay your healthcare bills instead of Medicare paying them. You will pay copays for the services you obtain from providers in the plan’s network as you go along. Generally, the copays are reasonable, but you’ll want to review them before you enroll to make sure.
Medicare Advantage Plans
These copays can vary from plan to plan as well. One plan might charge $40 for a specialist visit while another plan charges $80. These copays can add up while you are using medical services so think about your medical usage when selecting a plan.
As of 2022, there are no health questions when applying for a Medicare Advantage plan. There are certain times of year that are designate for enrolling in, dis-enrolling from or changing your Advantage plan.
Check the Drug Formulary
A lot of Medicare Advantage plans will include Part D coverage. In most cases there’s no need to buy a separate drug plan.
You must do your due diligence. It will be devastating if you aren’t careful to check whether your plan includes the medications they take. You’ve checked all your doctors but didn’t check to see if the built-in drug plan included your medications. It’s horrible to be stuck in a plan that doesn’t offer an important and usually expensive medication.
Why are you stuck? Medicare Advantage plans have specific enrollment periods. If you enroll in a plan, Medicare locks you into that plan through December 31st. You can change mid-year only if a circumstance gives you a special election period, such as moving out of state. This makes it very important that you choose a plan wisely.
It’s important to remember that you must be enrolled in both Medicare Parts A and B to be eligible for Medicare Advantage. Enrolling in Medicare Advantage does NOT mean you get to skip the premiums that you are already paying for Part B. You will continue to pay for Part B.
Know Your Out-of-Pocket Maximum
All Medicare Advantage policies have an Out-of-Pocket (OOP) Maximum to protect you. In 2022, Medicare maximum out of pocket cannot be higher than $7,550. However, $7,550 is a lot of money for people on fixed incomes. Most years while on a Medicare Advantage plan you won’t come near this. If you develop a serious illness, like cancer, you can reach that maximum out of pocket very quickly. There are Medicare Advantage plans have a lower out of pocket maximum. Research all your plan options to determine which plan is right for you.
In a worse case situation, do you have enough financial resources to meet those financial obligations. If the answer is yes, then Medicare Advantage may work fine for you. If the answer is no, then Medigap may be a better fit since the back-end expenses on Medigap plans are minimal and therefore far more predictable.
Changing Between Medicare Advantage vs Medicare Supplement Plans
Sometimes people see the dollars. They decide to go with the lower cost plan because they are healthy. They are not thinking long term. I’ll get the most comprehensive plan later when I need it. That sounds like a good plan, right? It doesn’t work that way. If you leave a Medigap plan to go on Medicare Advantage plan instead, you may not be able to get back into a Medigap plan later on.
Changing Between Medicare Advantage vs Medicare Supplement Plans
Can I change from Medicare Advantage to Medigap?
This why it’s important to understand how a Medicare Advantage plan works. If you decide you don’t like it, you just can change it at will. You might be outside of your one-time initial enrollment window and that means the Medigap plan insurance companies will ask you health questions on your application. The insurance carriers can decline you for certain health conditions, so be aware of this before changing to Medicare Advantage.
An exception: There is a trial period for people who try Medicare Advantage for the first time. If you decide to dis-enroll from the plan and go back to Original Medicare within the first 12 months of Medicare Advantage coverage, then you can return to your Medigap plan with no underwriting. After the 12 months is up, it’s time to answer the health questions.
Another exception is for people under age 65 who got Medicare early due to a disability. When that person turns 65 and now is eligible for Medicare based on age instead of disability, that person will get a second open enrollment window. They can then change from Medicare Advantage to Medicare supplement without underwriting.
To understand Medicare in more detail, watch our YouTube videos on everything Medicare.
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