I’ve been working with people to select Medicare plans for five years now, and I am often perplexed by the understandings people have about these two pathways for supplementing original Medicare.
Medicare Supplement plans have substantial monthly costs but are more predictable and often require additional insurance policies to get prescription drug and other coverage.
Medicare Advantage plans usually have quite low monthly premiums, have provider networks, and more co-pays and co-insurance to pay as you use the healthcare system.
One thing is clear: they are both Medicare! The benefits you get from Medicare Part A and B are the foundation of each approach. Both help protect people from unexpected and costly medical expenses that original Medicare does not cover. Over one’s life it is easy to see how one pathway or another could be more expensive over one’s lifetime.
You can pay a monthly premium for a Medicare Supplement plan and pay little to nothing out of pocket for covered medical services. If that plan costs $150 a month, for example, that is $1800 a year.
With a Medicare Advantage plan, your monthly premium can be $0 a month, but you would have a co-pay to visit the doctor, and co-pays or co-insurance for labs and procedures. In either case, you could have higher out-of-pocket costs for either choice. In addition, Medicare Advantage plans typically provide other benefits such as dental, vision, and hearing benefits. To get these benefits with a Medicare Supplement plan, there are usually an add-on policy that can mimic these benefits along with a part D prescription drug plan.
Let’s review the differences in a little more detail and review original Medicare first.
Understanding Original Medicare
Original Medicare, administered by the federal government, consists of two primary parts:
Part A covers hospital stays, skilled nursing facility care, hospice care, and some home health services. Most beneficiaries do not pay a premium for Part A if they or their spouse paid Medicare taxes while working.
Part B covers outpatient services, preventive care, medical supplies, and professional healthcare services like doctor visits, lab tests, and diagnostic screenings. Part B requires a monthly premium and typically covers 80% of approved medical expenses.
Medicare Supplement (Medigap) Plans
Medicare Supplement plans, sold by private insurance companies, are designed to fill the coverage gaps in Original Medicare. Key characteristics include:
– Standardized plans labeled A through N with consistent benefits across providers
– Ability to see any doctor or specialist that accepts Medicare
– Coverage of out-of-pocket costs like copayments, coinsurance, and deductibles
– No network restrictions
– Guaranteed renewable regardless of health conditions
– Separate monthly premium in addition to Part B premium
Medicare Advantage Plans
Medicare Advantage plans, also offered by private insurers, provide an alternative way to receive Medicare benefits:
– Combine Part A, Part B, and often Part D prescription coverage into a single plan
– Typically operate through network-based models like HMOs or PPOs
– May offer additional benefits not covered by Original Medicare, such as dental, vision, and hearing services
– Often have lower monthly premiums compared to Medigap plans
– Annual out-of-pocket maximum to limit healthcare spending
– Require using in-network providers for lowest costs
The best choice depends on individual health needs, budget, and preferences. Factors to consider include:
– Current health status
– Financial resources
– Preferred healthcare providers
– Prescription medication requirements
– Desire for additional benefits
Consulting with a licensed insurance professional can help navigate these complex options and find the most suitable coverage. At Hill Financial Solutions, I strive to work with a variety of Medicare supplement providers, prescription drug plans, and Medicare Advantage plans so that I can consider a wide range of options. If your or someone you care about is considering their Medicare options, please feel free to reach out at (717) 899-1841 or email jscotthill@hillfinancialsolutions.com to schedule a free consultation.
As a Certified Financial Planner™ professional, and a trained anthropologist, I understand that finances are an important part of a happy and fulfilling life. Originally from Delaware, I now live in Gettysburg with my family and enjoy cooking, gardening, playing music, talking, and a variety of outdoor activities.
I share financial advice with the Adams County community through my business, Hill Financial Solutions.
Extremely helpful. I’m a fan of Medicare Advantage. Dropped my premiums from $183 a month to $29. Co-pays went down, caps on ER visits and surgeries, and most of my meds are free. Who can argue with all this?