It’s that time of year again! Open enrollment for Medicare is upon us, and with more changes than ever being made to the health care system, you may be among many across the nation who are confused about how these changes will affect you.
You may be unsure whether or not you should switch plans or keep the one you currently have. Furthermore, you hear talk about Medicare Advantage plans being better than Medicare supplement plans, and vice-versa; it’s hard to know the difference between the two, and therefore what to believe.
If you are unhappy with your existing plan (or even if you’re just “okay” with it) and if you don’t truly understand the difference between these two options—Medicare Advantage and Medicare supplement—I am here to help make sense of them both for you, because I believe that it is important for you to fully understand what you’re committing to before you sign on.
A lot can happen in a year, and you don’t want to find out too late that you’re not fully covered in the areas you need to be. Plus, while it’s hard to say that one plan is definitely better than the other, one plan might be better for you.
Understanding Medicare Advantage
A Medicare Advantage plan—or MA for short—is a medical plan offered to individuals 65 years and older by a private insurance company. It differs from Original Medicare in that it is private, as opposed to government-funded, and it typically covers a lot more than traditional Medicare.
Medicare Advantage plans always offer standard hospitalization and the medical coverage of Medicare Parts A and B, but more often than not, the provider will offer additional benefits. Occasionally, the plan may even include prescription drug coverage. Medicare Advantage premiums are extremely low—sometimes even $0, which makes them all the more enticing.
A New Kind of Alphabet Soup
With Medicare Advantage plans, you might hear some new acronyms, specifically HMO, PPO and PFFS. Medicare Advantage plans can work through an HMO (health maintenance organization), a PPO (preferred provider organization), or a PFFS (a private fee-for-service).
An HMO is a network of health care providers and facilities from which you can choose a primary care physician to work with.
A PPO is a network of providers and facilities as well; however, with a PPO, you do not need to choose any one specific primary care physician, and you have more options when it comes to out-of-network care.
A PFFS is much more flexible than both the HMO and PPO in that you’re not limited to one specific network. However, with a PFFS, there are no guarantees that your physician or hospital will accept your plan.
Understanding Medicare Supplement Plans
Medicare supplement insurance—or Medigap insurance—is designed specifically to cover those health care expenses not covered by Medicare Parts A and B. Every state but three—Massachusetts, Minnesota and Wisconsin—has 10 standardized Medigap plans (plans A-N), all of which have varying combinations of benefits and deductibles.
One of the most popular Medicare supplement plans is Medicare supplement plan D, as that is prescription drug coverage. While prescriptions used to be covered automatically under Parts A and B, they aren’t any longer.
Because of this, prescription drug coverage is subject to change just as frequently as any other health care plan; it is speculated that in the coming years, Medicare Part D coverage will see a lot of variation, and most of it unwelcome.
The Key Differences
The great thing about Medigap insurance is that the plans are standardized throughout the 47 states that have them. Therefore, if you have, say, Medicare Parts C, D and G in Idaho, you know that your exact coverage will be accepted by doctors in the Medicare programs of other states as well, regardless of the insurance company that provides the policy.
Another bonus is that, excluding drug coverage, any standard Medigap plan with Medicare Parts A and B will have more benefits than a standard Medicare Advantage plan, because Medicare Advantage plans are only required to duplicate Medicare Parts A and B benefits.
On the other hand, if you have a Medicare Advantage plan, you’ll know that you’re automatically covered for Medicare Parts A and B, and your provider will cover more benefits for no additional charge.
Some Medicare Advantage plans may even choose to offer prescription drug coverage, whereas with Medigap insurance, you would have to enroll in a separate prescription drug plan in order to receive those benefits. However, because Medicare Advantage plans are offered through private insurers, there is no guarantee that your policy or provider will be accepted by your chosen doctor, or from state to state.
Which Is Better?
As I stated above, neither Medicare Advantage nor Medigap insurance is better in and of itself, but one option will be better for you. When determining what that option is, there is a lot you need to take into consideration: price (while Medigap plans have standardized benefits, their prices vary from state to state), location, your health needs as of right now, your projected health needs, and even your health care provider.
In order to make the best decision for you, it is crucial that you read the benefits description of every plan you are looking at. Once you have narrowed down the plans based on the benefits they offer, begin to look at price. If a Medicare Advantage plan offers everything you need, this might seem like the cheaper choice, but keep in mind that you will experience out-of-pocket costs that would probably be covered by a Medigap plan.
Here is a list of what to look for, when comparing a Medigap plan to a Medicare Advantage plan:
• Monthly premium
• Doctor and health care facility restrictions
• Anticipated plan costs given your standard use of health care services
The last thing to take into consideration is future ability to change. If you currently have a Medicare supplement plan and you decide to switch to Medicare Advantage, know that you may not be able to switch back. Medigap’s guaranteed enrollment is a once-in-a-lifetime opportunity, just like Medicare enrollment—so if you have health problems, you may not be able to switch back to a Medicare supplement plan.
If you are new to Medicare, again, this is your only opportunity to enroll guaranteed-issue in Medigap; if you decide to go with Medicare Advantage, you may not be able to take that decision back.
Finally, do not go about making this decision alone. There are so many intricacies involved in these insurance policies that it would be extremely difficult to make sense of them all without a trained insurance specialist by your side.
Now is your opportunity to get the coverage you need at a price that is affordable. Let us help you. We will take care of all of your insurance needs and be by your side whenever you need help, from now on, free of charge. Visit our website to see how we can begin to make the insurance buying process easier for you.
Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage. For more information visit www.MediGapAdvisors.com.