What is the difference between Medicare Advantage Plans and Medicare Supplement Plans?
Medicare Advantage (Part C)
Medicare Advantage plans replace your Original Medicare coverage with similar coverage operated by a private, for profit insurance company.
The Medicare beneficiaries are then limited to a network of medical professional contracted with the insurance company. In addition, their doctor must obtain pre-authorization from the insurance company before performing any non-urgent procedure.
Medicare Supplement Insurance (aka Medigap Plan)
A Medicare supplement plan adds to your Original Medicare. Medicare is still the primary insurer, and the supplement pays all or most of the deductibles, copays and coinsurance such that the Medicare beneficiary will reduce their annual maximum out-of-pocket for medical expenses to as little as just a few hundred dollars.
Medicare Advantage vs. Medigap
Key Takeaways:
Medicare supplement plans (aka Medigap Plans) work with Medicare Part A and Part B to reduce your out of pocket costs. They provide a maximum annual out-of-pocket financial risk that is lower than that of a Medicare Advantage plan.
With a Medicare supplement plan you keep the two most important benefits of Medicare. You can see any doctor or visit any medical facility in the U.S. or its Territories, as long as they accept Medicare. Plus, a Medigap insurance company has no say in your healthcare. All decisions are between you and your doctor.
Medicare Advantage Plans replace your Original Medicare with a privatized option meant to provide similar benefits.
You must still pay your Part B premium and any IRMAA charge, with your Advantage Plan.
Medicare Advantage Plans are local coverage. They are not designed for people who travel outside their local area..
Medicare Advantage Myths
Many agents will say that Advantage plans are required to have the same benefits as Original Medicare. That is not accurate. The Advantage plan is only required to have coverage in the same benefit categories. The specific benefits and costs will be different.
Many agents will say that with an Advantage Plan PPO you can see any doctor that accepts Medicare. That is not accurate. You can ASK and doctor who accepts Medicare if they will accept the terms and conditions of your Advantage Plan PPO. They can, and often do say no.
Many doctors no longer accept Medicare patients. Studies show that doctors accepting new patients, accept both Medicare and non-Medicare patients.
What Is Medicare and How Does it Work?
Medicare is a federal government health insurance program in the United States that provides Medicare coverage for eligible individuals who are 65 years or older, as well as some younger individuals with disabilities (like end-stage renal disease). The federal Medicare program is administered by the Centers for Medicare & Medicaid Services (CMS) and operates on a national level. There are three Parts to Medicare. Medicare Part A, inpatient coverage. Medicare Part B, outpatient and physician services and Medicare Part D prescription drug coverage.
Medicare Part A
Medicare Part A (hospital insurance) is coverage for inpatient hospital stays, inpatient surgeries, skilled nursing facility care, hospice care, and some home health care services.
Medicare Part B
Part B covers doctor’s visits, outpatient care, outpatient surgeries, preventive services, and durable medical equipment. Both Medicare Parts A and B are often referred to as Original Medicare.
What Does Medicare Cover?
The intent of original Medicare is to cover everything that is medically necessary to diagnose and treat a medical disease or condition. The key to understanding Original Medicare coverage is knowing that any procedure to diagnose or treat a disease or condition can be covered if your doctor deems it to be medically necessary.
With Original Medicare the doctor does not submit the requested procedure to Medicare for prior authorization. There is no prior authorization. Medicare leans on your doctor’s expertise to help determine what is medically necessary.
(two greatest benefits of Medicare)
What Is a Medicare Advantage Plan?
A Medicare Advantage plan, also known as Medicare Part C, is a private health insurance option available to individuals eligible for Medicare. These plans are offered by private insurance companies approved by Medicare and provide an alternative way to receive Medicare benefits.
Medicare Advantage plans are required to provide benefits from the same healthcare categories as are provided b Medicare Parts A and B. This does not mean they are required to have the same benefits as Medicare Part A and Part B. This is a common misunderstanding.
For example: let’s say your doctor prescribes 20 physical therapy sessions to help you recover from surgery. With Original Medicare, you will get those 20 sessions, no questions asked. With an Advantage plan, the doctor must submit a request for them to approve 20-physical therapy sessions. The insurance company may deny any physical therapy, or limit your treatment sessions to only a fraction of what the doctor recommends. The more they can limit your care, the higher their profit margins.
For example: let’s say your doctor prescribes 20 physical therapy sessions to help you recover from surgery. With Original Medicare, you will get those 20 sessions, no questions asked. With an Advantage plan, the doctor must submit a request for them to approve 20-physical therapy sessions. The insurance company may deny any physical therapy, or limit your treatment sessions to only a fraction of what the doctor recommends. The more they can limit your care, the higher their profit margins.Advantage Plans often include additional benefits such as a bundled prescription drug plan (Medicare Part D), dental, vision, hearing, and even programs to help with food insecurity. These plans may also offer coverage for services not typically covered by Traditional Medicare, such as fitness memberships or transportation services.
Advantage plans operate within a network of healthcare providers, and beneficiaries may need to receive care from in-network providers to receive the best price. You can select your doctors and hospitals as long as they are contracted with your insurance plan, which may be limited to your local area.
The costs and coverage details vary among plans, and change each calendar year. You must continue to pay your Medicare Part B premium, in addition to any costs associated with the Advantage Plan and with IRMAA.
Most Advantage Plans are structured as either an HMO or PPO.
What Is Medigap (Medicare Supplement Insurance Plan)?
Medigap insurance plan, also known as Medicare Supplement Insurance, is a type of private health insurance that helps cover the gaps or “gaps” in coverage left by Original Medicare. Medigap policies are designed to work hand-in-glove with Medicare.
Medigap plans are offered by private insurance companies and are regulated by both federal and state laws. The benefits are standardized to be the same regardless of the insurance company. Medigap plans are labeled with letters A through N, and each plan offers a specific set of benefits. All Medigap plans of the same letter offer the same benefits, regardless of which insurance company is offering the plan. However, the premiums for these plans will vary among insurance companies and locations.
Compare Medicare Advantage vs. Medicare Supplement Insurance
Now that you know a little bit about Medicare Advantage and Medigap plans, let’s compare Medicare Advantage vs Medicare supplement insurance plans.
Cost
Medicare supplement plans reduce your out of pocket expenses for
medical services, but require a monthly premium. The cost of a supplement is in the monthly premium.
A Medicare Advantage plan will have very low, or no monthly premium. However, the consumer will pay more for any medical services they need. The cost of an Advantage plan is in the copays, deductibles and coinsurance required when you need medical care.
Coverage
With a Medicare supplement plan, Medicare acts as your primary insurer, ensuring that decisions about your healthcare are made directly between you and your doctor. The Medigap plan has no say in your insurance coverage.
Also, you have the flexibility to visit any doctor or medical facility across the United States and its territories, as long as they accept Original Medicare. Although your Medicare supplement premium may increase over time, the benefits provided by the plan remain consistent and never change.
In contrast, a Medicare Advantage plan will come with limitations. Prior authorization from the insurance company is typically required for any non-urgent medical procedure your doctor intends to perform. Moreover, the network of doctors you can see is usually restricted, and they must accept the specific Medicare Advantage plan you have chosen. While some Medicare Advantage plans may allow you to inquire if an out-of-network doctor will accept your insurance, all doctors have the right to refuse your request. Additionally, the benefits and the list of in-network doctors associated with Medicare Advantage plans can change annually.
When Can I Enroll In An Advantage Plan?
To sign-up for either a supplement or a Medicare Advantage plan, you must be enrolled in Original Medicare (Part A and Part B).
Medicare Part C enrollments are limited to your Initial enrollment Period, the Annual Election Period, or a Special Enrollment Period created when you lose your health insurance through no fault of your own. There is never any medical questions or review of your health history to apply for an Advantage plan.
When Can I Enroll in a Medigap Plan?
You can enroll in a Medicare supplement plan any day of the year. However, after your first 180-days on Medicare Part B the insurance company can review your health history and deny your applications.
Some states have annual enrollment periods for a Medicare supplement that allow limited access to supplement plans without medical underwriting.
Prescription Drug Coverage
The majority of Part C plans offer bundle coverage for Medicare Part D prescription drugs, unlike Supplement plans. You cannot change
your insurance for prescription drugs without changing your healthcare.
If you choose a Medigap plan, it does not include prescription drug coverage. However, you have the option to separately enroll in a stand-alone Prescription Drug Plan to help you cover the expenses related to your medications.
Benefits and Disadvantages of Medigap vs. Medicare Advantage
Both approaches to Medicare have their pros and cons. Let’s explore the advantages and disadvantages of each type of plan in more detail.
Benefits of Medicare supplement insurance
• Medigap plans offer the same benefits, no matter which insurance company you choose.
• Medigap can help cover the costs of care that Original Medicare does not cover.
• Your potential out-of-pocket costs for medical care are very limited.
• Medigap policies are affordable and can help reduce your out-of-pocket costs.
• Medigap does not have provider networks, so you can see any doctor or healthcare provider who accepts Medicare patients.
• Prescription drug coverage is not included in most Medigap plans, but you can purchase a separate prescription drug plan if needed without disrupting your primary health coverage.
• Supplement plans work in any US state or U.S. territory.
• Referrals are not required with Supplement plans – you can see any specialist you like without a referral from your primary care doctor.
• Emergency medical care is often covered while traveling outside of the United States with a Medigap policy.
Disadvantages of Medigap
• Supplement plans typically have higher premiums than Medicare Advantage plans.
• Medigap does not cover dental or optical care.
• Outside of your initial enrollment period, the insurance company can require that you qualify medically if you wish to purchase a Medicare supplement plan.
• You must purchase a separate Prescription Drug Plan to get prescription drug coverage with a Medigap policy.
Benefits of Medicare Advantage
• Compared to Medigap insurance, Medicare Part C plans generally offer lower monthly premiums.
• Some Medicare Advantage plans cover the cost of standard dental and vision care as well as other health and wellness options.
• There is no medical underwriting to qualify for a Medicare Advantage Plan.
• Most Medicare Part C plans offer a bundled Part D prescription drug plan.
Disadvantages of Medicare Advantage
• When you enroll in a Medicare Advantage plan, you may need a
referral from your doctor before getting to see a specialist.
• Medicare Part C plans are local coverage. They typically only provide urgent or emergency coverage outside the plan’s service area.
• Higher out-of-pocket costs. Your maximum out-of-pocket costs are higher than with a Medicare supplement and those limits do not include unapproved services.
• You can only change plans during the annual or special enrollment periods.
Considerations to Make Before Choosing Medicare Advantage vs. Medigap
When deciding between Medicare Advantage and Medicare supplement (Medigap) Medicare plan, there are several factors to consider. Here are some key considerations for these Medicare plans:
1) Budget: Evaluate how much you can afford to pay for coverage each month. Medicare Part C plans may involve premiums, copays, and coinsurance, while Medigap plans typically require a monthly premium with most other medical costs covered. Both plans will increase in cost over time.
2) We always recommend you purchase today the insurance you will want to have when sick or injured. Do not limit your decision based on your health today.
3) Location: if you travel, you should have insurance coverage that travels with you. An Advantage plan will only offer urgent or emergency services outside your local area.
4) Doctor preference: if you choose an Advantage plan you must make sure your doctor(s) are in network. Even then, the network may change over time.
Remember that the best time to purchase a Medigap policy is within the 6-month period starting from the first day of Medicare Part B coverage.
In Conclusion
We know Medicare plans can be confusing with their various options, terms, and rules, making it hard to determine the best choice for you. However, after assessing your needs, budget and priorities, we can help you decide between Medicare Advantage and Medicare supplement.
Request a free consultation today by calling us at 800-847-9680 or filling out our Contact form on this website. As an Independent Medicare Insurance Agent, we have a successful track record and numerous testimonials to support our expertise. Let us reduce your health care costs!
We look forward to helping you choose the right plan and answering all of your medical coverage questions!
Matthew Claassen
Matthew Claassen, CMT and CEO of Medigap Seminars Insurance Agency. Medigap Seminars is an award winning premier national Medicare Insurance Brokerage, ranked among the top in the U.S.A. Matthew is considered a leading national expert on Medicare and Social Security. Mr. Claassen is a distinguished member of the Forbes Business council, an invitation only organization of business leaders and entrepreneurs. He and his team have received awards from many of the countries largest insurance companies including Mutual of Omaha, Aetna, Humana, Cigna, United American, United Healthcare and others. His videos have become the most popular Medicare educational videos on YouTube with millions of views. As a financial analyst Matthew lead a team of researchers to win the 2009 Best Equity Research & Strategy Award from The Technical analysis magazine.
