Your overall health might be a factor in deciding between a Medicare Advantage Plan or a Medicare Supplement Plan. Generally, depending when and how you enroll, your health has to qualify for coverage on a Medicare Supplement, whereas it can be easier for seniors with health conditions to get a Medicare Advantage Plan. Medicare Advantage Plans have no health qualification questions, aside from asking if you have end-stage renal disease.
Seniors who want to apply for a Medicare Supplement outside of a Special Enrollment Period (SEP) must answer some health questions to make sure they qualify for the plan. Because Medicare Supplement companies take steps to ensure they’re covering relatively healthy seniors, this correlates to fewer claims, which equals lower costs. Traditionally, the stricter the underwriting for an insurance company, the lower and more stable the rates are, because they generally have healthier people on the books.
Do I need a separate drug plan?
Seniors with a Medicare Supplement have to enroll in a separate Part D Prescription Drug Plan – or else face financial penalties until they do. Even after they find a prescription plan, they’ll still have to re-shop their drug coverage every year to make sure they’re getting the best price for their drugs.
Seniors on the other hand, can choose a Medicare Advantage Plan that offers prescription drug coverage – which is convenient because you only have to deal with one company, one plan, one monthly premium.
Can I visit any doctor or hospital on my plan?
There are no network restrictions on a Medicare Supplement Plan, which means any medical provider in the country that accepts Medicare will be covered by your plan. Medicare Advantage Plans, however, have stricter rules to determine which hospitals you can visit, which doctors you can see, and which medications you’re allowed to take – depending on whether it’s a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO).
HMO’s are generally more restrictive and have smaller networks with a primary care doctor that is assigned at enrollment. PPO’s may not require you to pick a primary care physician which you would need to get referrals to go see a specialist – but seniors do get preferred pricing if they stay within the network’s hospitals and doctors.
Although seniors with a Medicare Supplement and separate Part D Drug Plan have to juggle two separate plans and two separate bills, the trade-off in convenience comes in the freedom they have to choose which doctors or hospitals to visit for their care. Seniors with a Supplement don’t have to worry about staying within preferred networks or getting referrals to see a specialist – which, for some, is a greater convenience than Medicare Advantage.
Will my plan still cover me while traveling?
Most Medicare Advantage Plans have distinct networks with certain providers that seniors must stick to – so getting care outside of this network while traveling can be a real challenge, unless it’s a medical emergency. There are some Medicare Advantage Plans that have national PPO networks (helpful for snowbirds) but their monthly premium is usually considerably higher than the lower-to-no monthly premium advantage plans seen in the suburbs and city areas.
Getting care on the go is generally easier with a Medicare Supplement. Seniors with one of the three most popular Medicare Supplement Plans (F, G or N) can receive care in other states, whether it’s an emergency or not. They also receive limited foreign travel benefits from doctors who accept assignment from Medicare.
Plans F and G also cover any balance billing that providers may charge above and beyond what Medicare covers (capped at 15%) – whereas Plan N doesn’t cover balance-billing or what’s labeled “excess charges.” The exception is if you’re in the 8 states that have outlawed balance billing Medicare beneficiaries, which are: Connecticut, Minnesota, Pennsylvania, Rhode Island, Vermont, Massachusetts, New York and Ohio.
Which plan has more predictable costs?
Both Medicare Supplement and Medicare Advantage Plans have consistent costs – it just depends whether you’re looking at the front-end (monthly premium) or the back-end (out-of-pocket medical costs). Seniors with a Medicare Advantage can enjoy a consistently low monthly premium and if they happen to need care, they can pay with some of the money they saved by forgoing a more expensive Medigap Plan.
Seniors on a Medicare Supplement Plan might have a consistently higher monthly premium, but in exchange, the plan caps unpredictable out-of-pocket costs. So, neither plan is necessarily better or worse; it just depends what you prefer and whether you can afford the larger (more predictable) monthly premium with the supplement or the larger (possibly unpredictable) out-of-pocket costs with the Advantage Plan.
