Since Medicare doesn’t cover everything it’s left to the senior to enroll in a supplementary plan to pick up some or all the rest of that cost. Before you can choose one or the other, it’s important to understand the fundamental differences between the two types of plan.
The most common concerns when comparing plan options is the price of the monthly premium, what is covered under the plan, the potential out of pocket costs left to pick up, what hospitals or doctors you can see (network requirements) and any limitations when it comes to changing to other plans. Once seniors understand these differences, they will be better equipped to decide which plan is best for their needs and budget.
Who’s in charge of my care?
Since Medicare Advantage Plans are paid partly by government tax dollars and partly by members’ premiums – the Advantage Plan oversees your health care to a certain extent. It decides which hospitals you can visit, which doctors you can see, which medications you’re allowed to take and how many at a time. If you want a certain procedure at a certain hospital, you may have to petition your Medicare Advantage Plan to get it approved beforehand.
Contrast that with seniors on a Medicare Supplement, who can decide which doctors and specialists they want to see – in any part of the country. Maybe they want to go to the Cleveland Clinic Heart Center or University Hospitals Seidman Cancer Center – as long as their provider accepts Medicare, they are free to choose wherever and whomever they get their care from.
How does coverage compare?
Seniors with a Medicare Supplement Plan F only have to pay their monthly premium, and the plan covers all of their Part B and Part A expenses that aren’t covered by Original Medicare. A Medigap Plan G offers similar coverage but requires the senior to pay the annual Part B deductible themselves. A Plan N is similar to Plan G, but it requires seniors to pay the Part B deductible in addition to doctor and ER copays and potential “excess charges” that may be balance-billed to them (outlawed in Ohio).
Seniors on a Medicare Advantage Plan, on the other hand, may pay a monthly premium, and they’ll also be responsible for various doctor and specialist copays, plan deductibles and coinsurance if they need any care. Medicare Advantage Plans usually provide prescription drug coverage as well, so that’s one less thing for the senior to juggle – whereas seniors on a supplement must get a separate Part D Plan for their drug coverage.
How do the costs of Medicare Supplement and Medicare Advantage Plans compare?
When comparing the differences between Medigap plans and Medicare Advantage, one of the most important things to consider is the cost. A plan’s cost can be split up into two parts, the monthly premium, or the front-end costs; and the second part which is the potential out-of-pocket costs, which can be considered the back-end costs. Out of pocket costs could be deductibles, copays or coinsurance amounts. Now let’s explore what the front-end and back-end costs of these two types of plans.
Seniors on a Medicare Supplement will pay anywhere from $50 or more per month for a High-Deductible Plan F to more than $300 or more a month for a normal Plan F if you’re 90 years or older. This is where an insurance broker will come in handy because they can shop the market, which is usually 10-15 or more companies offering 4-9 Plans a piece. If you have health conditions, it will pay off even more for you because they can shop around and find the companies who have more liberal health underwriting requirements.
Seniors on an Advantage Plan will pay anywhere from $0 per month – the closer the senior is to major metropolitan areas depending on whether they’ll be in proximity with Advantage Plans with $0 per month premium, and all the way up to more than $100 for Advantage Plans with preferred national networks and no referral requirements for specialists.
Even though seniors on a Medigap Plan will need to get a separate Part D Prescription Plan (often from another insurer), both the seniors on a supplement and advantage Plan will probably have some form of drug deductible with a tiered copay system for generics and brand name drugs. The only difference is those with a separate drug Plan will have to pay a separate bill whereas those on an Advantage Plan have the convenience of only paying one monthly premium – if any.
Which doctors and hospitals can I go to?
On a Medicare Supplement, there are no network restrictions – which also means no restrictions on the hospitals or doctors seniors can use through their plan. As long as the provider accepts Medicare, then you can go anywhere, and your supplement will work there.
Medicare Advantage Plans, however, have much stricter restrictions about where seniors can receive care. Generally, Advantage plans are split up into three care model groups; HMO’s, PPO’s and PFFS plans. Health Maintenance Organizations, or HMOs, require you to select a primary care physician and get permission from them to go see a specialist that is strictly within their network of doctors and hospitals.
A Preferred Provider Organization, or PPO, doesn’t have requirements to see a primary care physician before seeing a specialist – however seeing doctors and hospitals within their networks will give you preferred (lower) pricing on whatever services you need. A more uncommon option is the Private Fee for Service plan, or PFFS, which doesn’t limit you to specific doctors, but seniors wanting to see doctors that don’t already take the plan and are in network, will have to get the doctor to approve the payment terms of the plan before seeing them.
Can my coverage ever be canceled?
Every year, doctors must decide which Medicare Advantage Plans they will accept – which means every year, seniors on a Medicare Advantage Plan must check to see whether all their doctors still take their plan. This can be challenging if you see multiple specialists, which can be increasingly common as you get older. In addition to which doctors are covered, the plan may also change its drug formulary – so even if your plan still covers all your doctors, it may not cover all your prescriptions, or it may have raised the price on one or two drugs you need to take.
If you’re on a Medicare Supplement Plan, there’s really nothing to worry about, because you can always see the same doctors – or new ones, if you want. You can continue to go to the same hospitals (or new ones) and not worry whether they’ve dropped out of network. Any provider that accepts Medicare will be covered by your Medigap Plan. Your separate Part D Drug Plan may change its prices or the drugs it covers, year to year – but at least you don’t have to worry about juggling multiple doctors every year to see if they even take your plan.
