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When making decisions about your Medicare coverage, you may be faced with the choice of either having a Medicare Supplement or a Medicare Advantage Plan. This is especially true when you are new to Medicare. Medicare Supplements and Medicare Advantage plans are the two ways to set yourself up with extra coverage & fill the gaps in Medicare. These are two very different types of plans and your choice is one or the other; you cannot have both. With that said, it’s important to understand the differences between the two and the future implications of any decisions that you make.
Medicare Supplement Vs. Medicare Advantage Overview
Medicare Supplements are insurance plans that are secondary to Medicare A & B. To have a Medicare Supplement, you must be enrolled in “Original Medicare.” This means you have Medicare Part A & B directly through the Centers for Medicare & Medicaid, a department of the federal government. With Medicare A & B being your primary insurance, Medicare Supplements are designed to give you more coverage and lower out of pocket medical costs. Hence, more protection and peace of mind. When you have a Medicare Supplement, you will also need separate prescription coverage (Part D), and any other extra benefits that you want. Having this setup is like being at an “a la carte” buffet, piecing together the benefits that you want & need.
Medicare Advantage is when you receive your Medicare coverage through a private insurer and is also known as “Part C.” Medicare Advantage Plans include all of your benefits in one package. This includes Part A, B, D (drug), and potentially other extra benefits like dental & vision. If Medicare Supplements are like being at a buffet, Medicare Advantage Plans are like a “Value Meal.” Within this package you also have networks, which are the doctors and hospitals that have agreed to accept the plan. The two most popular type of Medicare Advantage Plans are HMO’s & PPO”s, each of which have their rules on how you can access doctors.
Being covered by either of these types of plans is better than just having Medicare A & B by itself. Having only Medicare A & B can be equated to getting the radio without the batteries or the car without lug nuts fixed to the wheels. There are many reasons to have either a Medicare Supplement or Medicare Advantage vs. just Medicare. The main reason being out of pocket maximums. If you have only Medicare A & B, you’ll have deductibles and co-insurance without any annual limits. Both Medicare Supplements and Medicare Advantage help you by limiting your out of pocket medical costs and making them more predictable.
Comparing Medicare Supplements Vs. Medicare Advantage In 5 Areas
In my experience, the differences between Medicare Supplements & Medicare Advantage break down into 5 key areas. In the sections below I will break down these 5 areas and assign a winner between the two plan types. Let’s start with a comparison chart chart to get a visual overview and then we’ll dig into the details.
Area 1 – Monthly Premium Costs
The first area of consideration is monthly premium costs. The good news is, relative to other types of medical insurance, many find both Medicare Supplements & Medicare Advantage plans to be affordable. The first thing to keep in mind is that the monthly premium you pay for either of these type of plans is in addition to what you pay for Medicare. You can see the most up to date Medicare premium costs by clicking here and visiting Medicare’s site.
Medicare Advantage Plans have lower premium costs vs. Medicare Supplements. On the low end, Medicare Advantage Plans start at $0 monthly premium. In fact, there are even some plans that essentially pay you for signing up. This is called “Part B giveback” and is when you get a rebate off of your Medicare premium. On the high end, Medicare Advantage Plans can reach upwards of around $100 per month in Texas. I have found, however, that many of the most popular plans stay between $0 and $47 per month. It is important to note that in contrast to Medicare Supplements, Medicare Advantage Plan premiums are the same for everyone enrolled in the plan. The premiums do not differ based on age, health, or claims.
As I said, Medicare Supplements are a little pricier than Medicare Advantage. Monthly premiums for Medicare Supplements in Texas range from $40 a month on the low end to upwards of $250 a month on the high end. Unlike Medicare Advantage, how much you pay can depend on several factors; Your age, zip code, sex, and tobacco status. For the most popular Medicare Supplement Plans, you can realistically expect to pay between $75 and $150 per month, depending on all of your factors.
Winner: Medicare Advantage
Area 2 – Coverage
With insurance, coverage is typically defined by how much protection a policy provides. Therefore, how much the insurance pays for and how much liability is left for you. When comparing Medicare Supplements vs. Medicare Advantage, Medicare Supplements will provide you with more coverage. For two of the Most Popular Medicare Supplements, G and F (related article: Plan G – The Best Medicare Supplement), your out of pocket costs for Medicare covered services is between $0 and $185 per calendar year in 2019. This is, as you can see, very rich coverage and low out of pocket costs for you.
Medicare Advantage Plans do help limit your costs, but not as low as Medicare Supplements. With Medicare Advantage Plans, you may have deductibles, co-pays, or co-insurance when you receive medical care. Anytime you pay out of pocket for your medical care, it goes toward your annual out of pocket maximum. Once this out of pocket maximum is reached, your plan will cover 100% of medical costs for the remainder of the year. On average, the annual out of pocket maximums for Medicare Advantage Plans is between $3,400 and $6,700 per year. As you can see, this is significantly higher than Medicare Supplements.
Winner: Medicare Supplements
Area 3 – Doctor Networks
The third area of consideration is doctor & medical provider networks. Medicare Supplements do not manage networks whereas Medicare Advantage Plans do. As mentioned earlier, Medicare Supplements are secondary insurance to Medicare A & B. Medicare Supplements help pay for any medical service covered by Medicare, at any doctor who provides it. Having Medicare and a supplement gives you the flexibility to see any doctor in the country, as long as they accept Medicare for insurance.
Part of what make Medicare Advantage Plans work is containing medical costs. They do this partially by creating agreements with doctors, hospitals, & other medical providers. By having an agreement with a particular Medicare Advantage Plan a doctor is considered “in network” and has agreed to accept members covered under that plan. The two main types of plans are HMO’s and PPO’s. Each of these plan types varies in how strict they are with accessing doctors. HMO’s are the more strict of the two and will only cover you at network doctors, except in cases of emergency. PPO’s will cover you at in network doctors, but also give you the ability to go to out of network at higher costs.
Winner: Medicare Supplements
Area 4 – Part D Prescription
Most Medicare Advantage Plans include Part D prescription coverage built into the plan. Part D is insurance for medications that you fill at the pharmacy. These can be medications that you fill regularly or from time to time. The monthly premium cost that you pay for your Medicare Advantage Plan includes the Part D and in most cases there is no extra premium. Having Part D included with your Medicare Advantage is beneficial because you don’t have to look for and pay extra for prescription coverage.
Medicare Supplement’s primary function is to help you pay for medical costs. As mentioned earlier, Medicare Supplement’s are secondary to Medicare A & B, which covers medical care. When you have a Medicare Supplement, you will need a separate Part D Plan to cover prescriptions you fill at the pharmacy. The negative to this is that you have to get a separate policy and pay an additional premium. The good news is that, in my experience, the most popular Part D plans range from about $20 – $30 per month. There is a positive to having to get a separate Part D Plan; Choice. With Medicare Advantage Plans you must use the prescription coverage that is included with the plan, which could be good or bad. With Medicare Supplements, you can select a Part D prescription plan from the array of choices that best suits your needs.
Area 5 – Extra Benefits
To add more value for members, Medicare advantage insurers have began to include dental, vision, and other extra benefits with their plans. These extra benefits are often included with the plan for no cost or as an optional package for an additional premium. Extra benefits can include coverage for teeth cleanings, fillings, and other dental care. On the vision end, $0 cost annual eye exams and an eye wear allowance are typical. A popular benefit often included with Medicare Advantage Plans is Silver Sneakers. With this program you get access to a network of participating gyms & health clubs for no cost. Some Medicare Advantage Plans are even including hearing benefits, which can help cover the cost of exams & hearing aids. The availability and generosity of these benefits with Medicare Advantage will vary based on the particular plan and where you live.
Extra benefits included with Medicare supplements are not as generous as with Medicare Advantage. As mentioned earlier, having a Medicare supplement is going “a la carte” vs getting a “value meal” with Medicare advantage. So, if you want coverage for dental, vision, etc.; you’ll have to buy a separate policy. Many insurance providers are now making individual dental, vision, and hearing plans available for purchase. Medicare Supplements can, however, include some extra benefits with your policy. This is usually in the form of discounts for services in these extra areas previously mentioned. As with Medicare Advantage, extra benefits included Medicare Supplements will vary with each company providing the insurance.
Winner: Medicare Advantage
One More Important Thing To Consider
In addition to comparing the features of Medicare Supplements & Medicare Advantage, it is good to look at the future implications of your either choice. What I mean by this is how difficult it will be to switch to one or the other if you change your mind. With Medicare Supplements, there are less opportunities for open enrollment than with Medicare Advantage. Open enrollment periods are time frames where you can sign up for a plan without answering health questions and having to qualify based on your health.
For Medicare Supplements, you have an open enrollment 6 months before and 5 months after the month you turn 65 or start Medicare Part B. Times where you may start Part B outside of turning 65 are if you deferred enrollment because you were working or if you are under 65 and on disability. Outside of the 6 month open enrollment period, there are times when you have a “guaranteed right” to enroll in a Medicare Supplement Plan. One example is the “trial right,” which gives you the ability to change to a Medicare Supplement if you do so within a year of enrolling in a Medicare Advantage Plan. Outside of qualified open enrollment or guaranteed periods, you are able to apply for a Medicare Supplement anytime throughout the year. You will just need to qualify and answer health questions on your application. If you have to have your health reviewed, do not let this discourage you from applying. There are many options available and the health qualification standards may not be as strict as you think. For details on eligibility for Medicare Supplement insurance, read pages 21 – 23 of the Guide To Health Insurance For People With Medicare.
Medicare Advantage Plans give you many opportunities to enroll and you will never have to qualify based on your health. Similar to Medicare Supplements, you can enroll in a Medicare Advantage Plan 3 months before and after the month you turn 65 or start Part B. This is called your Initial Enrollment Period. Also, from October 15th through December 7th each year, you can change your Medicare Advantage Plan or sign up for the first time. This is called the “Annual Enrollment Period.” There are other periods where you can enroll in a Medicare Advantage Plan known as “Special Enrollment Periods,” which are special situations. For details, click here to visit Medicare.gov Special Circumstances page.
Choosing either a Medicare Supplement or Medicare Advantage for your coverage is often an important decision that has to be made. Going in either direction will affect how much you pay for your insurance premiums. Just as important; It will affect how and where you receive care as well as how much you pay out of pocket when you receive it. In reviewing the chart and comparison above, the question is; which type of plan is right for you? The answer to this depends much on your personal needs, preferences, and your budget for insurance. Another important consideration is how easy it will be for you to change to one or the other in the future. As an objective Insurance Agent, I am not biased to either of these plan types. In my experience both can be good, depending on which is most suitable for your particular situation. With either Medicare Supplement or Medicare Advantage, there are usually lots of good options. Being covered by either is, in my opinion, better than just having Medicare A & B.
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When learning about and shopping for Medicare Supplement plans, many often ask; Which is the best plan? This question often subjective because “best” of anything often depends on your individual situation and preferences. In the case of Medicare Supplements, this can be a good question because it helps cut through the clutter of information and available option. With that said, If I were to list one plan as the best, it would definitely be Medicare Supplement Plan G.
So, what does G stand for? Guapo, good looking, gorgeous? Due to it’s popularity, you might think so. Actually, G doesn’t really stand for anything. One important thing to understand is that all Medicare Supplement policies are represented by a letter. Because they are standardized and regulated by Medicare, that letter means you get a certain set of benefits. I like to refer to Plan G as the “Gold” standard. It’s not Platinum or Silver, but right in the middle of the top plans offering a great value.
Plan G Coverage
As a Medicare Supplement, Plan G is a secondary insurance policy that helps you cover out of pocket costs under Medicare A & B. If you only have Medicare A & B, you can be liable for deductibles & co-insurance (20%) up to an unlimited amount. These are your out of pocket costs known as “cost shares” when you receive medical care. What having Plan G does is simple. It pays for these costs for you, all except one; The Medicare Part B deductible. In 2019 the Part B deductible is $185 for the year. So, If you have Plan G, your out of pocket medical costs are limited to $185 per year in 2019. Pretty good right? You’re starting to see why Plan G is so popular.
The chart below provides a simplified overview of what Plan G covers. The Medicare Part A & B costs listed are the most common.
To reiterate, when you are covered by Plan G, you are only liable for the annual Part B deductible. This deductible is set by Medicare and can change each year. To see the most current deductibles and other costs, click here to visit Medicare’s Part A & Costs page.
The chart above is a simplification that lists the most common costs covered by Medicare Supplement Plan G. If you are looking at buying a policy, you can ask for a full outline of coverage that will show more details. One other important note. Like all Medicare Supplements, Plan G will only pay it’s share of services covered by Medicare. So, in order to be covered, the medical care you receive has to be covered by Medicare A & B.
As you can see, Medicare Supplement Plan G provides great coverage and makes things simple for you. By only having to worry about a small deductible each year, being covered by Plan G can give you great peace of mind.
Plan G Premium Costs
The second reason Medicare Supplement Plan G is so popular is that many find it to be a great value. In terms of the top 3 Medicare Supplements that are most often chosen, Plan G is in the middle for coverage and premium costs. Traditionally, Medicare Supplement Plan F has been the most popular plan; but not in recent years. Plan F differs from Plan G very slightly as far as coverage goes. As I mentioned earlier, Plan G covers all of your costs under Medicare A & B except the annual Part B deductible. Very simply, Plan F also covers this deductible. So the only difference between Medicare Supplement Plan G and Plan F coverage, is the annual Part B deductible. Which, as I said, is $185 in 2019.
So why isn’t Plan F more popular? It covers more. As I said earlier, Medicare Supplement Plan F has traditionally been the most popular because it offers the most coverage available. But coverage is only one factor. The second is what you pay to have the plan, a.k.a your premium cost. Both plans are great coverage, keeping your out of pocket medical costs to a very low amount. What makes Plan G so popular is it’s combination of great coverage and value premiums. The chart below gives you a comparison of the average monthly premium’s for Medicare Supplement Plan G vs. Plan F. The rates are for one of our major insurance providers, in one of our service area’s in Texas.
As you can see, the difference in premiums for Plan G vs. Plan F is between $366 and $476 annually. With the difference in coverage only being $185 and the premium being $366 or higher; this is why many Medicare Supplement buyers are choosing Plan G over Plan F. Another thing to notice as well is that the cost difference gets larger as you get older. One thing that I have observed over the years and that many in the industry are aware of is that Plan F has higher premium increases than Plan G over time. This makes Medicare Supplement Plan G more stable in terms of costs, another benefit in comparison of the two.
Premiums vary based on your exact age, sex, tobacco status, and zip code. We can provide you with more information on your eligibility for coverage and a personalized price comparison. Click Here to navigate to our request information page.
Many folks who are on Medicare are seeking financial security, value, & peace of mind. Either you are on a fixed income now or you know you will be in the future. It’s for these reasons that many choose to have more coverage through a Medicare Supplement Policy. It can often be a challenge to find out which plan will give you the right combination of cost and benefits, so you have good coverage without over paying. For many Medicare Supplement Plan G is the answer. In an era of high deductibles and even higher premiums, it is a breath of fresh air. By keeping your out of pocket costs to a small deductible, while offering affordable premiums; Plan G has become the gold standard the best of all Medicare Supplements.
A question that is often asked early on in the process of considering Medicare Supplement insurance is; Is it worth it for me? Being that Medicare A & B is your primary medical insurance and the “meat” of the whole thing, so to speak, this is a valid question. In fact, it brings to mind similar similar situations we’ve probably all had when buying common items. When you were renting a car and that awkward moment arrives; “Would you like to add the extra insurance on the vehicle?” Or when you were buying that new computer at Best Buy and then comes the question; “Would you like to add replacement protection in case it breaks?” I have to admit, in many of these situations, I will decline. In a way, Medicare Supplement Insurance is like this; extra protection in case you break. But, there’s a huge difference between you, a rental car, and a computer; You are your most valuable asset.
During my experience as a Medicare Insurance Agent I have been given insight into many of the hardships and situations that can arise from making the wrong insurance decisions. My humble, professional opinion it is that is smart to have some kind of extra insurance rather than just Medicare A & B. Medicare Supplement Insurance, also known as Medigap, is a very specific type of insurance. Many people often get the different types of insurance available with Medicare into the same category. Besides Medicare Supplement insurance, the other main type of coverage is Medicare Advantage. In some cases this type of type of insurance may be more suitable to your situation and preferences. This post deals specifically with Medicare Supplements but I encourage you to learn more about Medicare Advantage and how the two compare.
When determining if anything is a good decision, we usually evaluate it’s pro’s and cons. Here are 6 reasons why many Medicare Beneficiaries decide to purchase a Medicare Supplement policy.
1. Financial Protection Against Out Of Pocket Costs
Medicare Supplements were designed specifically to help you pay for out of pocket costs not covered by Medicare A & B. These are costs you are probably familiar with; deductibles, co-pays, and the Part B 20% co-insurance. These are your out of pocket costs, or cost share, when you receive medical care. Depending on the situation, these costs can really add up and put a strain on your finances. In fact, and many are not aware of this, but Medicare by itself does not set limits on your out of pocket medical liability. This means that without supplemental insurance, your share of medical expenses is virtually unlimited. This can really put a strain on your finances and is the number 1 reason to have Medicare Supplement insurance in my mind.
2. More Access To Better Healthcare
By limiting your out of pocket costs, Medicare Supplements also encourage you to utilize healthcare. In layman’s terms, this means that if something hurts, you’re more likely to see a doctor because your expenses will be affordable. Of course, over utilization and abuse of healthcare by medical practitioner’s and patients can be a bad thing and cause waste in our system. Good utilization, when you need it, is positive. You, and many others, have been paying into Medicare for many years. Being able to see doctors when you need to will help you stay ahead of your health and get the treatment you need to live healthier and longer. This is the whole reason the program exists.
3. Live Happier & Healthier
Medicare Supplement insurance, or any insurance for that matter, is so much about your peace of mind. It has become common knowledge that there is a relationship between financial security and mental / physical health. When deciding on whether to supplement your Medicare coverage I think one of the biggest questions is; How do I want to feel? How do I want to live my life? Do I want to live with more freedom and less worry? You have more than likely done many things in your life. Worked a job, paid taxes, paid into social security, saved money for retirement, and raised a family. This, and much of what we do is for ours and our family’s peace of mind. Medicare Supplement insurance is just another tool for this.
4. Medicare Supplements Are A Right and A Privilege
Over the years you have paid into Social Security, Medicare, and federal taxes. Medicare is a right you have earned, and so are Medicare Supplements. In the medical insurance arena, there is nothing quite like Medicare Supplements. This is primarily because they work directly in sync with Medicare to cover all or most of your out of pocket medical bills. As you may know, individual and employer insurance deductibles have gotten higher & higher over the years. This has made good access to healthcare unaffordable, or at least expensive for many who are covered under these plans. In fact, I’m sure you, and many others may have wished that something like Medicare Supplements that exist for these other types of insurance. Now, being eligible for Medicare, this type of insurance is a right and a privilege to take advantage of.
5. They Have High Levels Of Customer Satisfaction
Medicare Supplements (also known as Medigap), have a track record of high customer satisfaction across the board. A 2017 survey conducted by AHIP, found that 9 out of 10 people with Medicare Supplement coverage are satisfied and would recommend it to a friend. 7 out of 10 surveyed indicated they were very satisfied and 2 of the 10 somewhat satisfied. Aside from the study, the feedback I get from my clients who have supplemental insurance is that they are happy. Many of us may have had a bad experience with medical insurance in the past. High monthly premiums, things not being covered, you know what I mean. Being covered by quality medical insurance, that does what it’s supposed to, can be a breath of fresh air.
6. They Are Affordable And Therefore Attainable
Many people who don’t sign up for Medicare Supplement insurance may think that it’s not affordable. This is not the case. There are currently 11 listed Medicare Supplement plans listed, 5 of which are most commonly purchased. Within these 5, there’s bound to be a plan that’s affordable for you. Medicare Supplement plans are represented by a letter, the top 5 are; A, F, G, N, and High Deductible F. Monthly premiums for these plans range between $40 – $200 per month, depending on the plan and other factors. In reality, the most popular plans are on the lower end of the scale and range between $80 and $115 per month. The plans in this range; G, and N, are high quality coverage and limit your out of pocket medical costs to a very low amount. At a minimum, for $40 to $60 a month, High Deductible Plan F will limit your out of pocket costs to $2,250 per year in 2018.
Also, if cost is an issue, Medicare Advantage plans may be a good alternative for you. These are an alternative to Medicare Supplements and can help limit your medical expenses for $0 extra monthly premium. Remember, Medicare by itself doesn’t limit your annual out of pocket medical costs. So, having some kind of extra coverage is a good idea. And, as you see, affordability is not a good reason not to.
There are many good reasons to have a Medicare Supplement plan. In your personal decision making, the question is whether these things apply to you. Do you value good healthcare? Do you want to have more financial security and peace of mind? Do you have the financial means to afford a Medicare Supplement? If you answered yes to these questions, then it may be a good idea for you to be covered.