Medicare Supplement vs Medicare Advantage
The first decision a person makes when he or she goes on Medicare is whether to go down the Medicare Supplement or the Medicare Advantage path. Because they can not be combined at all, a clear choice has to be made. However knowing which is which can often be confusing because the carrier (Aetna, UnitedHealthCare, Humana, etc) are all sending you junk mail and doing advertising for both.
*NOTE: Regardless of which option you choose, you must continue to pay your Part B premium
A Medicare Supplement is added to Original Medicare (Part A and Part B). If you take this option, you usually also must add a Medicare Part D drug plan. You stay on original Medicare so you enjoy not having to deal with a network. You can see any healthcare provider that accepts Medicare. Because Part A and Part B do not pay everything, you are left with deductibles and co-payments.
What Part A and Part B covers is also confusing. Medicare says Part A is "hospital", but if you have out-patient surgery, at a hospital, it is covered under part B. I tell people "A is for Admission". If you are ADMITTED in the hospital, it is covered by Part A. If you are ADMITTED in skilled nursing care, it is Part A. If you are ADMITTED in Hospice, it is Part A. Most everything else is Part B.
Part A has a huge deductible that must be paid for each hospital administration benefit period (60 days, not a year). Part B has a annual deductible and a 20% co-payment. So for example if you are admitted in the hospital in February and then have an outpatient surgery that cost $13,000 in October, your out of pocket would be over $4,000 for that year. A Medicare Supplement pays those out of pocket cost for you.
Medicare Supplements are sold by plan letter codes like Plan F, Plan G, Plan A, etc. Those letter codes determine which Medicare deductible and co-payments the plan pays. By federal law, all plans in that letter code must provide the same coverage. All healthcare providers that accept Medicare must also accept all Medicare Supplement plans.
In most cases, you also have to add a separate Part D drug plan to this option, even if you don't take any drugs to prevent the Part D penalty.
- The Medicare Supplement/ Original Medicare / Part D option gives you the freedom to go to any healthcare provider that accepts Medicare. You do not have to deal with networks or approvals from anyone but Medicare.
- This option allows you to budget. If you select a Plan G, you know in advance that for medically necessary healthcare (other than drugs) your only cost will be the Part B premium, the Part B annual deductible, and the Supplement premium.
- This option provide some limited coverage outside of the US, which Original Medicare does not.
- You have a month premium, which does increase every couple of years or so.
- You have no routine dental, vision, nor hearing coverage.
- You must pay for a drug plan if you don't have creditable drug coverage elsewhere
A Medicare Advantage Plan is sometimes called "another way to get Medicare". You have all the advantages and protections of Medicare. But you trade in Original Medicare for private insurance. A Medicare Advantage plan combines Part A, Part B, and most of the time Part D into one plan. You no longer have to worry about what Part A covers and Part B covers. By law, all Medicare Advantage Plans must cover everything that Original Medicare covers. What you give up is the freedom to go to any provider. Most Medicare Advantage Plans are either an HMO or a PPO. A HMO is where you can only go to network providers. You are either in network or you are 100% responsible for the cost. A PPO still has a network, but you have some coverage if you go out of network. A PPO has "In Network" and "Out of Network" co-payments and co-insurances.
Because the government pays the insurance company the money they budgeted for your medical bills for that plan year (so to speak), most Medicare Advantage Plans have a very low or no premium. Everyone on Medicare Part A and B can get any HMO or PPO plan offered in their service area regardless of their income. The only restriction is an end stage renal disease diagnoses.
Medicare Advantage Plans also come with added benefits. Many plans include things like dental, vision, hearing aids, Telenurse, Silversneakers, Over The Counter benefit, transportation, medical alert devices, etc.
- In many counties, you can get a plan without having to pay anything other than your Part B premium
- Most plans do not have a health deductible
- Many plans have dental, vision, and hearing aid benefits
- Most plans include free gym memberships though programs like Silversneekers.
- Networks! You have to stay in network to take advantage of the savings or to prevent huge HMO out of network cost
- Approvals are required for a lot of procedures.
- Out of network coverage by PPOs sometimes requires you to pay the bill and then get reimbursement from the insurance company.