When you first become Medicare eligible, you come to a crossroads with which products you should enroll in. Both Medicare Advantage and Medicare supplement plans offer similar benefits but which one is best for you?
Why enroll in another plan?
Although enrolling in Original Medicare, which includes Medicare Part A for hospitalization and Medicare Part B for outpatient care, will cover almost every medical cost you could have, there are gaps in this coverage.
This can be a problem, especially if you have specific healthcare needs. In addition, there are cost responsibilities associated with Medicare Part A and B. With Medicare Part A you will have to pay a deductible of $1600 (in 2023) before Medicare will cover the cost of hospitalization, skilled nursing care, or hospice care.
With Medicare Part B, you not only have a deductible of $226 ( in 2023) but you are responsible for 20% of all medical costs up to an unlimited amount. What’s more, you have a premium of $164.90, and it may be higher depending on your income level.
That’s where Medicare Advantage and Medicare Supplement plans come in. They not only help cover costs that Medicare Part A and B do not cover but can include extra benefits like dental and vision.
Here are the differences between the two plans:
Medicare Advantage (Medicare Part C)
Medicare Advantage plans are the one major parts of Medicare. In recent years, they have been included in Medicare enrollment because of how they work with Medicare Part A and B. It is a bundle plan that covers the costs of Medicare Part A and B as well as Part D (drug coverage). Care is paid for as you use it.
Features at a glance:
- $0 premium: no extra premium is required to own this plan, making it a great way to lower your monthly premiums.
- Deductible: this plan includes a deductible that covers both your Part A and B deductible as well as any extra costs you must share before Medicare will cover everything at 100%.
- Copays: Medicare Advantage plans have set costs for services, making it easy to know what you will pay.
- Drug coverage: drug coverage is required when enrolling in Medicare, or you could face a penalty. Medicare Advantage plans make it easy to meet this requirement because it is already built into the plan. Just remember the cost of drugs is not included in the deductible.
- Dental, vision, and hearing coverage: Many Medicare Advantage plans include dental, vision, and hearing benefits, giving you comprehensive coverage. Be sure to check the benefits to understand what the plan does and doesn’t cover.
- Fixed network of doctors: see doctors within a specific network on this plan. It can be convenient to keep track of your care and keep it simple to find a doctor, but you may need a referral to see a specialist.
- Don’t hold pre-existing conditions against you: you can enroll in these plans regardless of your health condition.
- Other benefits: some plans cover things like fitness, meals, at-home health care, and transportation. This varies between carriers so it is important to read plan details carefully and work with a broker because they know what plan is right for you.
Medicare Supplement (Medigap) Plans
Medicare Supplement plans, also called Medigap plans, are different from Medicare Advantage plans because coverage is meant to cover any gaps in Medicare Part A and B rather than be a “bundle package” of plans. These plans include a higher out-of-pocket cost upfront because of the monthly premium you pay, but when you go and use the coverage, virtually every expense is covered, from doctor’s visits to hospital stays to hospice care.
There are many types of Medicare Supplement plans (Part A, B, G, K, L. M, and N), the differences being any cost shares or copays you may be responsible for. Generally, there are options available that limit your out-of-pocket responsibility, and working with a Medicare-certified broker can help you determine which option is best for you.
Features at a glance
- Monthly premium: you pay based on your age, gender and zip code. Generally, pricing is lower the younger you are when you enroll.
- Limited out-of-pocket costs: paying a monthly premium gives you access to limited out-of-pocket expenses.
- Lower deductible: while on this plan, you are responsible for the Medicare Part B deductible of $226, but the Medicare Part A deductible is already included in the coverage.
- A nationwide network of doctors: Medicare Supplement plans have a wide network to choose from, so it can make it more convenient if you are looking to see specialists.
- Doesn’t include drug coverage: Medicare Supplement plans are only an additional product and do not cover drug coverage as Medicare Advantage plans do. Because of this, you need to get a separate Part D drug plan to meet the Medicare requirements.
- Doesn’t include dental and vision coverage: Medicare Supplement plans do not include dental and vision coverage so you will need a standalone plan to cover this.
- May look into your health history: depending on when you enroll in these plans, they could look into your health history. If you enroll when you are eligible for Medicare, you can automatically get accepted, but changing to a Medicare Supplement plan can be tricky, especially if you try to do so outside of Annual Enrollment Period.
- Bonus: these plans may cover international travel emergencies, so are a good option if you like to travel.
Whether you choose to enroll in a Medicare Advantage plan or a Medicare Supplement plan, both choices offer great benefits. Speak to a Medicare certified broker to determine which plan is best for you. And remember, you can always make a change during the Annual Enrollment Period (October 15- December 7).