Medicare Advantage
Vs. Medicare Supplement Plans
Unlike traditional Medicare, the options available to you with Medicare Advantage plans or Medigap policies depend on where you live. So when you are trying to decide whether to choose a Medicare Advantage plan or buy a Medigap policy, look only at the plans available in your area to see if there is one that best meets your needs and your budget. Before you start comparing available plans, it helps to understand the primary differences between a Medigap policy and a Medicare Advantage plan, sometimes referred to as Medicare Part C.
Definitions
By law, if you have a Medicare Advantage plan, you cannot buy a Medigap policy. Medicare Advantage plans, typically HMOs or physician networks, must offer the same coverage as traditional Medicare, but the plans can charge different co-payment amounts and can offer extra benefits, such as vision, dental or drug coverage. In addition to the Medicare Part B premium, you pay an additional premium for extra coverage benefits or for lower co-pays.
Unlike Medicare Advantage providers, Medigap insurers receive no government subsidy. You must be enrolled in Medicare Parts A and B to buy a Medigap policy. These supplemental policies cover some of the out-of-pocket Medicare costs, such as the Part A hospital deductible and the 20 percent you would pay for doctor visits and other outpatient tests or treatments. There are 11 types of Medigap policies, and each is standardized by law. Each policy is labeled by a letter -- A-G and K-N -- and the benefits of each are the same, regardless of the insurer. However, premiums and service can vary by provider.
Costs
For either option, you first must pay your Medicare Part B premium. In most states, Medigap policies can be priced three ways. With attained-age policies, premiums increase as you get older; with issue-age policies, the premium is based on your age when you join the plan; with community-rated policies, everyone in the same area pays the same amount, regardless of age. Attained-age policies are cheapest in the beginning, but could cost more over your life. In Medicare Advantage plans, all members pay the same premium, regardless of age, gender or health. You also will have co-pays for most services, although many plans have an annual out-of-pocket maximum amount.
Choice of Doctors
With a Medigap policy, you can go to any health provider who accepts Medicare, and you won't need referrals to see specialists. Most Medicare Advantage plans use Health Maintenance Organizations or Preferred Provider Organizations that use a network of providers. A PPO plan typically covers out-of-network visits at a higher cost to you. Only Medicare Advantage private-fee-for-service plans have no networks of providers.
Drug Coverage
Medigap policies offer only the same coverage as original Medicare, and that does not include prescription drug coverage. If you want drug coverage, you must enroll in a Medicare Part D prescription drug plan in addition to your Medigap policy. Most Medicare Advantage plans offer prescription drug coverage, some with no additional premium.
Cancellation Danger
Medigap plans cannot be canceled and benefits never change as long as you pay the premium. Depending on your policy, premiums can go up, but not as a result of a change in your health status. Benefits, specifically co-pay amounts, may change annually in a Medicare Advantage plan, though you will always have at least the same coverage as traditional Medicare.
Comparison Shopping
The government's Medicare Website offers excellent tools for evaluating Medigap and Medicare Advantage plans. Things to consider: If you travel a lot or live parts of the year in different spots in the country, Medigap may be more suitable. If you don't visit a doctor or receive treatments often, you may save money with a Medicare Advantage plan.
Tags: Medicare Advantage, Advantage plans, Medicare Advantage plans, Medigap policy, Advantage plan
