Is a Medicare Advantage or Medicare Supplement plan better for you?

Not sure which medicare plan to pick? We are here for you to try to make this process easier for you. This blog will explain the difference between a Medicare Advantage plan and a Medicare Supplement plan.

In short: A Medicare Supplement Insurance (Medigap) is a health insurance policy that can pay for several health care expenses that Original Medicare doesn’t cover. At the same time, a Medicare Advantage drug (MAPD, Part C) plan combines Parts A and B and can include Part D.

What is Medicare?

Medicare is Health-insurance for people who are 65 years old or older. Or for people under 65 with disabilities or people of any age with End-Stage Renal Disease.

Medicare consists out of four different parts:

• Hospital Insurance (Part A)
• Medical Insurance (Part B)
• Prescription drug coverage (Part D)
• Part C Medicare Advantage “bundled” plans include Part A, Part B, and usually Part D)
• Medicare Supplement plan 

Click here to go to our other Medicare blog if you want to learn more about the differences between these four different parts of Medicare.

You have two options if you want to replace or enhance your Original Medicare Coverage.

1. First, you can add a Medicare Supplement (or Medigap) insurance plan to your Original Medicare coverage that you have.
2. The second option is a Medicare Advantage plan; this plan is another way to get Original Medicare benefits.

These plans differ in costs, benefits, and how they work.

What is a Medicare Supplement plan (Medigap)?

Medicare Supplement Insurance, also called Medigap, will help fill some gaps that Original Medicare doesn’t cover. Original Medicare generally covers 80% of your hospital and medical expenses. 20% of the Original Medicare expenses will most likely come out of your pockets. Medigap exists to cover these out-of-pocket costs, such as copayments or deductibles.

Original Medicare doesn’t cover:

Long Term Care, most dental care, eye exams related to prescribing glasses, dentures, cosmetic surgery, acupuncture, hearing aids and exams for fitting them, and routine foot care. 

The Gaps Medicare Supplement Insurance (Medigap) can fill:

• deductibles,
• copays
• coinsurance

Which Medicare Supplement Plan fits you best?

What does a Medicare Supplement Insurance plan have:

• Has a Standardized plan letter with associated benefits.
• Medigap policies are standardized and go by letters: A, B, C, D, F, G, K, L, M, and N in most states. Each lettered plan’s benefits are the same, no matter which insurance company sells it.
• A monthly premium and will vary based on county/zip code.
• Will give you access to any Medicare-appointed doctor in the U.S.
• If you have Original Medicare + Medigap policy, Medicare will pay its share of the Medicare-approved amounts for covered health care costs. Then your Medigap policy pays its share and fills the gaps you otherwise would have to pay out of pocket.

A Medicare supplement plan does not cover:

Prescription Drugs: Drug coverage will need to be bought separately through
 a Prescription Drug Plan, or other creditable coverage

Other things you should know about a Medicare Supplement Policy:

1. The supplement coverage covers one person; your spouse would have to buy a separate policy.
2. You can buy it from any private insurance company that’s licensed in your state to sell one.
3. The insurance company can’t cancel your policy as long as you pay the premium.
4. Supplement policies sold after January 1, 2006, aren’t allowed to include prescription drug coverage.
5. It’s illegal for anyone to sell you a Medicare Supplement policy if you have a Medicare Advantage Plan, except if you are switching back to Original Medicare.
6. Since January 2020, Medicare supplement plans sold to people new to Medicare can’t cover the Part B deductible anymore. If you qualified for Medicare before January 1, 2020, but are not yet enrolled, you might be able to purchase one of the Part B deductible plans (Plan C or F). Were you covered by Plan C or F (or the Plan F high deductible version) before January 1, 2020? Then you can keep your plan (medicare.gov). 

The insurance plans listed below are not Part of a medicare supplement plan:

• Medicare Advantage Plans (such as HMO, PPO, or Private Fee-for-Service Plan)
• Long-term care policies
• Medicare Prescription Drug Plans
• Medicaid
• Employer or union plans
• Tricare
• Veterans’ benefits
• Indian Health Service, Tribal + Urban Indian Health plans

When is the right time to purchase a Medigap policy?

Your Medicare Supplement Open Enrollment Period (OEP) is the best time to buy a Medigap Policy. Most likely, you will get better prices and more choices among policies. OEP starts the first day of the month in which you are at least 65.  You will have a total of six months to buy a Medicare Supplement insurance plan. Another advantage of purchasing a Medigap during OEP is that you will get a guaranteed issue right. A guaranteed issue right means that companies can’t deny your Medicare Supplement insurance plan application because of pre-existing health conditions or disabilities.

It’s essential to understand when your Medigap Open Enrollment Period is, so make sure to check when your open enrollment period is.

Click here to schedule a virtual or in-person appointment if you have any questions about your Medigap Enrollment. 

You can still apply after your open enrollment period,  but you could be rejected or charged more if you have any health problems.

*Some states have additional Open Enrollment Periods, including for people under 65 who qualify.

Who sets the prices for Medigap policies?

Each insurance company can set its price, or premium, for its Medigap policies. It is essential to know how they set the price could affect how much you pay now and how much you would pay in the future. Insurance Companies can price Medigap policies in three different ways:

1. Community-rated (also called “no-age-rated”)
2. Issue-age-rated (also called “entry-age-rated”)
3. Attained-age-rated

How can you review Medigap costs best?

Since each insurance company can set its prices, the cost of Medigap policies can vary widely. This means: that there can be significant differences in the premiums for the exact same coverage. As you shop for a Medigap policy, it is essential to review the same type of Medigap policy and check the kind of pricing they have used. Luckily you can review different medicare insurance companies on our website, so you get competitive price and never overpay for the same insurance.

What will be covered if you travel with a Medigap Policy?

Some Medigap policies offer emergency health care services for when you are outside of the U.S.

• Standard Medigap Plans C, D, F, G, M, and N can cover foreign travel emergency healthcare when you travel outside the U.S.
• Plans E, H, I, and J is no longer available. However, if you bought one before June 1, 2010, you might be able to keep it. These plans cover foreign travel emergency health care when you travel outside the U.S.
• Medigap Plan C, D, E, F, G, H, I, J, M or N; Cover foreign travel emergency care in the first 60 days of your trip
• Pays 80% of the billed charges for some medically necessary emergency care outside the U.S. after you meet the $250 deductible for the year.
  Medigap Foreign travel emergency coverage has a lifetime limit of $50,000.

How can I buy a Medicare Supplement Insurance plan?

• First Step: Decide which benefits you want, then decide which standardized Medigap policies fit these needs best.
• Second Step: Review on our website the policies you’re interested in and review the costs.
• Third Step: Buy the Medigap policy online or Schedule a meeting with a licensed insurance agent

What are the Medicare Supplement Insurance Pros & Cons?

PROS

1. Medigap will help fill some of the gaps that Original Medicare doesn’t cover.
2. You will have access to providers nationwide who accept Medicare.
3. Most Medigap plans will help pay the Part A deductible.
4. You can get a supplemental plan that covers Part A and Part B coinsurance.
5. There are plans with no copayments.
6. With Plan F, you don’t have to worry about out-of-pocket expenses.
7. Standardized – 10 plans that have exactly the same coverage no matter which company. 
8. A Medicare Supplement company cannot cancel your policy for using the policy too much.  your policy will renew every year automatically
   You have the option to change your Medigap plan or company at any time you want.
9. You have 30 days to drop the coverage and receive your premium back when your policy is approved.

Cons

1. Medigap plans do not cover prescription drugs.
2. More expensive, your rate most likely increases
3. You have to have Part A and Part B.
4. Do not cover routine dental, vision, or hearing care.
5. After your Guarantee issue right ends, it might be hard to get approved if you have certain health conditions.

What is a Medicare Advantage Prescription Drug Plan?

Medicare Advantage, Part C is a replacement policy for original Medicare coverage. This plan offers lower out-of-pocket costs and extra benefits such as vision care service. Coverage typically includes all of Parts A and B, a prescription drug plan (Part D), and other possible benefits depending on your choice of a Medicare Advantage plan.


• Offered through private insurance companies
• Many plans also include prescription drug coverage
• This plan includes Part A and Part B services that Original Medicare covers. Part C is required to cover every service that the original Medicare does.
• May cover extra benefits such as; coverage for prescription drugs, Routine dental care including cleanings, x-rays, and dentures, Routine vision care including contacts and eyeglasses, Routine hearing care including hearing aids, Fitness benefits including exercise classes, and more.
• Some policies have lower copayments and coinsurance or a smaller deductible.
• With these all-inclusive Medicare Advantage plans, you will get all your health services covered in a single plan.
• Possibly you will have some network restrictions.

Fees

• You don’t have to enroll in a Medicare Advantage plan, but these plans can be a better deal for many people than paying separately for Parts A, B, and D.
• You still have to pay for your Part B premium and your Part A premium if you have one.
• Depending on the plan, you may or may not need to pay an additional premium for Part C.
• Low to no cost premiums may be available.
• Some advantage plans have lower out-of-pocket costs than Original Medicare.
• Your total costs for the Part C advantage plan will depend on the plan you choose (compare different plans and carriers.
• Medicare puts an out-of-pocket maximum for all Medicare Advantage part C plans; this was $7,550 in 2021

An overview of the different types of Medicare Advantage plans

• HMO (Health Maintenance Organization): 
• PPO (Preferred Provider Organization) 
• PFFS (Private Fee-for-Service)
• SNP (Special Needs Plan) 
• HMO-POS (Health Maintenance Organization Point-of-Service)
• MSA (Medical Savings Account). 

When should you enroll in Medicare Advantage?

• During your seven-month Initial Enrollment Period for Part D.
• Annual Election Period (AEP) every year: from October 15 to December 7.
• Special Election Period (SEP) during other times of the year, so you can make a change to your Medicare Advantage coverage.

Shop for Part C plans with Medicare’s plan finder tool on our website on our website to review part C plans available in your area.

What are the Medicare Advantage Insurance Pros & Cons?

PROS

1. The out-of-pocket maximum is $7,550 a year
2. Many plans cost low to no cost a month
3. Can include drug coverage
4. Many plans may include vision, hearing, and dental
5. Gym discounts

CONS 

1. You can only change your policy during Open Enrollment
2. Smaller network, so no nationwide coverage
3. Many plans require referrals to see a specialist
4. Plans are not standardized 
5. Medicare Advantage can change its benefits every year

Main Differences between Medicare Supplement (Medigap) and Medicare Advantage plan:

A Medicare Supplement Insurance (Medigap) policy is health insurance that can help pay some healthcare costs that Original Medicare doesn’t cover. Medigap helps you pay for deductibles, coinsurance, and other out-of-pocket costs. Medicare Advantage drug (MAPD, Part C) plan combines Parts A and B and can include Part D and, in addition, coverage plans may include hearing, dental, vision, and many other services.