Original Medicare may not cover everything you need it to. Medicare Parts A and B don’t cover dental, prescriptions, vision care, or other medical expenses. There are also copays and deductibles you need to consider when deciding which plan is best. Many seniors will therefore enroll in Medicare Supplement or Medicare Advantage plans as an alternative way to supplement what’s not covered by basic Medicare. We’ll go over some pros and cons of Medicare supplement (Medigap) versus Medicare Advantage plans so you know which is better for you.
Most people enroll in two types of plans to get the full coverage they need. Let’s say you need a hip replacement. According to Statistica, hip replacements in the US cost an average of $40,364 in total. Only a portion of this would be covered by basic Medicare. For example, with Medicare Part A, you’d need to pay a deductible of $1,408 for the hospital stay alone. To reduce your bill, you’d need either Medicare plus Medigap (Medicare supplement) or a private Medicare Advantage plan.
Also Read: A Guide To All Medicare Coverage Plans (With Charts)
Medicare Supplement Plans
Medicare supplemented, or Medigap combines your regular Medicare that consists of Parts A and B. These plans fill the empty gaps in your regular Medicare plan. Most people sign up during the open enrollment period before they turn 65. You may have already signed up for Medicare Part D for prescription drug coverage already, but there are other gaps you’ll likely need coverage for. The key takeaways you need to understand about Medicare Supplement plans are:
- Medicare supplement is additional coverage you can buy from private insurers or brokers.
- You cannot combine Medicare supplement plans with Medicare Advantage.
- Plans are standardized, therefore, do not need a rating system.
- Premiums range between $50 to $250 a month, in addition to your regular Medicare premiums.
- There are no annual deductibles with Medicare supplement plans.
- Medicare Supplement plans do not use cost-sharing, with the exception of Part N.
- Only plans K and L use out-of-pocket limits.
Regular Medicare covers about 80% of your healthcare bills. Medicare supplement coverage is optional but will help cover the copays and deductible expenses left by Medicare. You can only use Medicare supplement plans with private Medicare Advantage plans.
Medicare supplement plans vary by state in both availability and premium costs. There are 10 plans available in most states, each categorized by a letter (A through N) and are available through private insurance companies or brokers. These are standardized plans, meaning that, unlike Medicare Advantage, you can be confident in your choices when it comes to coverage.
NOTE: Massachusetts, Minnesota, and Wisconsin use a different standardized scale. If you live in these states, seek additional information on your Medigap coverage.
Here are some additional factors to consider before purchasing a Medicare supplement plan.
Also Read: FAQ: What Does Medicare Part B Cover?
Medicare Supplement Premiums
With Medicare Supplement plans, you’ll pay a separate monthly premium. Just like your regular health insurance, this is determined by your age, location, sex, and a few more things. Premiums range between $50 to $250 a month, in addition to your regular Medicare premiums.
Medicare Supplement Deductibles
There are no annual deductibles with Medicare supplement plans. Unless you choose a high-deductible plan, most Medicare supplement plans pay your Part A deductible and coinsurance. All of your Part B costs are covered after you meet the Part B deductible.
Medicare Supplement Cost-Sharing
Medicare Supplement plans do not use cost-sharing, instead, the plan pays all your Part A inpatient and Part B coinsurance. However, some plans, such as Part N, have a small copay of around $20 for doctor visits and $50 for emergency room care.
Medicare Supplement Out-Of-Pocket Maximums
Only plans K and L use out-of-pocket limits. These plans have out-of-pocket limits of $6,220 (Part K) and $3,110 (Part L). These plans pay between 50 to 75% of your regular coverage until your reach your maximum. After that, Part K and L pay 100% of your costs.
Also Read: How Your Income Affects Your Medicare (2021)
Medicare Advantage (Medicare Part C)
Medicare Advantage plans can also help you fill the gaps by converging regular Medicare coverage. You’re still enrolled in Medicare, but you must purchase a Medicare Advantage plan through a private insurer. These plans still need to provide the same benefits as regular Medicare, with the exception of hospice care. However, unlike regular Medicare, you also receive additional benefits already included in one single plan. Since Medicare Advantage plans are designed by private insurance companies, which can allow a more customized plan and coverage. However, because all your coverage is combined into one plan, you’ll need to be extra careful when choosing the right one. The key takeaways you need to understand about Medicare Advantage plans are:
- These are privately-run plans, but you’re still enrolled in Medicare.
- Medicare Advantage plans offer “all in one coverage,” including prescription drugs.
- Most Medicare plans have specific networks of care and have high fees for out-of-network care.
- Most Medicare Advantage plans have $0 monthly premiums and $0 deductibles.
- To access care, you may have to pay a copay, which can increase for out-of-network care.
- All Medicare Advantage plans have an out-of-pocket maximum.
Once you’re enrolled in a Medicare Advantage plan, you don’t need any additional drug coverage. You may already be automatically disenrolled from previous Medicare Perscription Drug plans.
Most Medicare Advantage plans are HMOs (Health Maintenance Organization) and use specific networks of care. This means you’re limited to the healthcare providers in your network. There are other plans, such as PPO (Preferred Provider Organization) that allow you to seek care both in and out-of-network; however, you’re likely subject to pay additional and often higher copays and coinsurance.
Also Read: What You Need To Know About Medicare Advantage Plans
Medicare Advantage Premiums
For most people, the biggest selling point of a Medicare Advantage plan is the $0 monthly premiums. Medicare Advantage plans can offer these competitive premiums because they’re privately run.
Medicare Advantage Deductibles
Depending on which plan you choose, your plan may or may not include an annual deductible. Most Medicare Advantage plans have $0 deductibles, but some have deductibles for your Part D (prescription drug) coverage.
Medicare Advantage Cost-Sharing
With Medicare Advantage plans, you normally have a flat copay. Accessing care is still relatively affordable even with the copay. However, remember that access care outside of your network has much higher fees.
Medicare Advantage Out-Of-Pocket Maximum
All Medicare Advantage plans have an out-of-pocket maximum. Meaning, if you reach your limit, your plan pays 100% of your covered costs. As of 2021, most plans won’t surpass $5,000 in out-of-pocket expenses.
Also Read: Disadvantages To Medicare Advantage Plans (Medicare Part C)
How To Switch Your Medicare Plan
During open enrollment, you have the freedom to choose freely between Medicare Supplement and Medicare Advantage plans. Although it makes sense to just switch back and forth depending on your health, it’s not that easy.
Medicare Supplement insurance brokers must sell you a policy, regardless of your health and conditions. However, they could charge you more if you have a pre-existing condition. Some states have laws that protect you against this or have annual periods when you can switch freely. Protected states include:
- California
- Connecticut
- Massachusetts
- Maine
- Missouri
If you need help deciding which plan is right for you, you can speak to a live partner at any time. Call Quote Purple to take about what Medicare options you have today at 1(877) 200-6113.