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Medicare Advantage Plans are health insurance programs provided by private insurance carriers. In addition to Traditional Medicare, they are one of two ways to receive your Medicare coverage. Many people who have Traditional Medicare, also have a Medicare Supplement and a Part D plan. As an alternative to Traditional Medicare and a supplement, these days many people are choosing to go with Medicare Advantage plan. The reason for this is that Medicare Advantage Plans can include more benefits than Traditional Medicare, for little or no extra cost.
Medicare Advantage benefits can include;
1. Manageable co-pays for doctors visits and other medical care with annual out of pocket maximums. This helps limit your out of pocket medical costs during any given year, something Traditional Medicare doesn’t have by itself.
2. Part D prescription coverage built into the plan.
3.Extra benefits such as dental, vision, hearing, and gym memberships.
Although Medicare Advantage plans can provide these extra’s, and are a great value in my opinion; There are still some holes you can fill. You still have copays when you see doctors, are hospitalized, or have other types of medical care. Your most expensive co-pays can occur if you are hospitalized, in a rehab facility, or if you are being treated for a critical illness. I will address the specifics on these later in the article.
Unlike Traditional Medicare, with Medicare Advantage, there is no specific supplemental insurance that helps pay your Medical bills directly. Plus, you should understand that you can only have a standard Medicare Supplement policy if you have Traditional Medicare. They do not work with Medicare Advantage. So, to have more coverage with Medicare Advantage, you have to get creative. Fortunately there are ways to do it, and do it affordably. Here are 3 ways to fill the gaps in Medicare Advantage Plans.
1. Hospital Indemnity Policies
Hospital Indemnity Plans are insurance policies that pay you a cash benefit if you are hospitalized or in a Rehab / Nursing Facility. Payments can include an initial cash benefit and a daily benefit for each day you are hospitalized. Cash benefits are paid directly to you, or in some cases, you can assign them to the hospital. If you have a Medicare Advantage plan, a Hospital Indemnity Policy can help you cover the copays you would incur for being hospitalized.
Under most Medicare Advantage Plans, you will have a daily copay for being hospitalized. These copays can range anywhere from $250 to $400 per day. The number of days that you have a copay are usually limited to 4 – 7 days. This means that you’ll only have a daily copay for a certain number of days. Over and above those days, you won’t have any additional copays and your Advantage Plan covers you 100%.. Although the number of days are limited, your copays can still add up to a relatively high number. Here’s an example of someone who has a hospital stay while covered by a Medicare Advantage plan and a Hospital Indemnity policy. This situation is for someone who has a 10 day hospital stay followed by 30 days in a Rehab/Nursing facility. As you can see, having a Hospital Indemnity plan can really help in this situation. Although this is just an example, I have seen real life situations very similar to this one. Needless to say my clients were grateful that they had the Hospital Indemnity coverage. By paying you a cash benefit if you are hospitalized; Indemnity insurance can help protect your savings and from having to pay large out of pocket costs.
2. Critical Illness Policies
Critical Illness insurance pays a lump sum cash benefit to the insured if they are diagnosed with a covered serious illness. The illnesses that are covered vary among plans but usually consist of; Cancer, heart attack, stroke, and other serious illness. Being diagnosed with a critical illness can happen to any of us and causes serious disruption to our lives. These situations usually require frequent medical care including; Surgery, hospitalization, doctors visits, chemotherapy, and others. As you may be able to guess, this type of care can be on the more expensive end.
When you are covered by a Medicare Advantage plan, you will have a copay or coinsurance when you receive treatment. You will be liable for these copays and coinsurance up to your annual out of pocket maximum. This is the cap on your out of pocket medical costs during any given calendar year. After you reach your annual maximum, your Medicare Advantage plan covers 100% of your medical costs for the remainder of the year. Even though there is a cap, it usually ranges anywhere from $3,000 to $7,000; depending on your plan. This is a relatively high number and most of us don’t have that kind of cash lying around for medical expenses.
As I said earlier, Critical Illness policies pay you a cash benefit if you’re diagnosed with a covered critical illness. For someone covered by a Medicare Advantage plan, a Critical Illness policy with benefits in the amount of $5,000 to $15,000 should be sufficient. This would provide you with the funds to pay out of pocket costs up to or above your out of pocket maximum. Let’s take a look this example where someone is diagnosed with cancer who has a Medicare Advantage plan and a Critical Illness policy.
As you can see in this situation, a Critical Illness policy can help you cover large out of pocket expenses that could reach into the thousands of dollars. It’s very likely that the treatment costs for this situation would end up reaching the individual’s out of pocket maximum for the year. The reality is, we just never know if or when this can happen to us. Having Critical Illness coverage can really be a relief and could quite literally be a life saver.
3. Life Insurance
As of 2019, Social Security pays beneficiaries a one time death benefit of $255. With the ever so rising cost of final expenses, this isn’t nearly enough. Medicare Advantage plans also do not provide any life or final expense coverage. According to Lincoln Heritage, a major funeral insurance provider, the average funeral / burial cost is $7,000 to $9,000 in 2019. For cremation, the average cost is $6,000 to $7,000. These costs vary based on one’s personal wishes, but rest assured they will add up into the thousands. So, what can you do?
Well, the first option of course, is to avoid the issue and hope it takes care of itself. As you may have experienced, avoiding something rarely solves anything and often times makes things worse. The reality is, when we die, we won’t be here to worry about worldly issues. But, more than likely, someone we love will. This can include our spouse, children, brother, sister, cousin, parent, or even a dear friend. Without a plan to pay for final expenses, the financial burdens will more than likely fall on one of these people. Fortunately, with a little pre-planning, you can take care of the problem and continue a life with less worry. This is what life insurance is for. There are many good options out there that are not only affordable but hassle free. The two main types of life insurance are term and whole life. In many cases, for the need addressed in this article, whole life is the best solution. So, let’s take a look at that.
Final Expense Whole Life
Final Expense Whole Life insurance is a type of life insurance policy that is specifically designated to cover final expenses. Policy amounts usually range between $5,000 and $25,000 and are a simple way to pre-plan. Here are a few features and benefits;
- Pays a cash benefit, upon death, to the person you designate as your beneficiary to handle your affairs.
- Because the policy is “whole life,” the benefits and monthly cost are locked in for life. You can keep the policy indefinitely so it’s stable.
- No medical examination, only a simple application with questions about your medications and health.
- In many cases you are covered immediately or at worst a modest waiting period.
- Reasonable, affordable monthly rates.
Life Insurance With Living Benefits
With life insurance there is a way to “kill two birds with one stone” (no pun intended) and get critical illness insurance built into your policy. Earlier in the article I reviewed Critical Illness insurance as a policy that pays you a cash benefit if diagnosed with a covered illness. Critical illness insurance can be provided as an individual policy or built into life insurance as an added benefit. When it’s built into a life insurance policy is called life insurance with “living benefits.” So, the life insurance not only pays a lump sum benefit to your beneficiary if you pass; It can pay you if you are diagnosed with a serious illness. Hence, killing 2 birds with one stone.
If you have a claim for critical illness, your life insurance policy will be reduced by the amount you receive. For example; Let’s say you have a $15,000 life insurance policy and you file a $5,000 critical illness claim due to being diagnosed with cancer. After the payout, your life insurance policy will now be worth $10,000. So, you still have the $10,000 policy and you get the funds you need now.
Depending on your situation, Medicare Advantage plans can be a great way to be covered under Medicare. You can get a lot of extra benefits, for little or no extra monthly premium (in addition to what you already pay for Medicare). You may be covered by a Medicare Advantage plan now or are considering it. In any case, it’s important to understand the coverage & costs. If you have medical treatment, you can expect to pay out of pocket costs in the form of copays or coinsurance. These costs can add up, especially if you’re hospitalized or need treatment for a critical illness. Hospital Indemnity, Critical Illness, and Life Insurance are 3 great ways to fill these gaps in Medicare Advantage. For just a little more of a monthly premium, you could have the extra coverage and peace of mind the these plans offer.
The insurance plans mentioned in this article are subject to eligibility and qualification.
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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.