When you have both Medicare A and B, you have the option of electing a Medicare Supplement (Medigap) plan or a Medicare Advantage plan. Both plans can be a viable option; however, there are some definite and distinct advantages and disadvantages of the two different options. Here is a list of things you should know before deciding on which option you wish to pursue:
- First of all, it is important to understand the root of how the plans work and what they are. A Medicare Supplement plan does just that – it supplements Medicare. It works with Medicare and fills in the Medicare “gaps”. A Medicare Advantage plan, on the other hand, takes the place of Medicare. It is, essentially, a privatized form of Medicare. Your coverage is provided exclusively through the private insurance company.
- Medicare Supplements are standardized – all companies are required to provide benefits from the standardized plans chart and do not vary. In other words, a Plan F with one company is the exact same as a Plan F with another. Medicare Advantage plan benefits are not standardized – the companies set their own coverage and those coverage outlines are approved by Medicare prior to the plans being sold to the public.
- Medicare Supplements, particularly at the top level of coverage, are designed to fill in the Medicare gaps. The top supplement plans pay everything so that you don’t have any out of pocket costs at all. Medicare Advantage plans are set up more like an employer plan, in that you have a system of co-pays and deductibles for different services/procedures.
- Both plans have an initial open enrollment period revolving around the time that you go on Medicare, lose your employer coverage, etc. After that point, you can change Medigap plans at any time. With Medicare Advantage plans, you can change during the annual enrollment period (October 15-December 7 each year). To go from a Medicare Advantage plan to a Medicare Supplement plan, you do have to “qualify” medically (i.e. answer health questions) unless your Advantage plan is ending its coverage of you.
- Medicare Supplements are “guaranteed renewable”. They are contractual and plan coverage does not change. If Medicare increases a deductible that the plan covers, the plan expands to cover that larger “gap” in Medicare. Medicare Advantage plans renew each year and can change coverage, premiums, formularies, etc. at that time.
These are just a few of the more important considerations that you must make when comparing the two types of plans. This is in no way a comprehensive list of the plan differences, and there are many. Regardless of whether you are already on Medicare or are just going on for the first time, it is important to make sure you understand how the plans work.
If you have questions about this information or would like more information, you can reach us at 877.506.3378 or on our website.