If you are new to Medicare, you may just be learning the differences between Medicare supplement plans (Medigap plans) and Medicare Advantage plans. Both offer benefits beyond Original Medicare Parts A and B. Medicare supplement plans are meant to fill in the gaps left by Original Medicare, while Medicare Advantage plans actually take the place of Original Medicare and offer additional benefits.
In this article, we will quickly review the key differences between the two types of plans and then compare one of the more popular Medicare supplement plans – Plan N, with the most common coverage offered in Medicare Advantage plans.
The Basics of Medicare Supplement Plans
There are only ten Medigap plans on the market today. These ten plans are standardized by the federal government and sold by private insurance companies. What this means is that no matter where you purchase a Medigap plan, the coverage is the same. Since we’re discussing Medicare Supplement Plan N in this article, we’ll use that as an example.
Purchasing Plan N from Company X offers the same coverage as purchasing Plan N from Company Y. The only difference you will see is in the price of the monthly premium.
Medicare supplement plans are designed to fill in the gaps of Original Medicare. They only cover the services that Original Medicare also covers. However, Original Medicare will only pay up to 80% of the cost of services, but Medicare supplement plans are there to take care of the remaining 20%. (Each Medicare supplement plan is different, but this is the basic thought behind it.)
The Basics of Medicare Advantage Plans
Medicare Advantage plans are also referred to as Medicare Part C. These plans are also sold by private insurance companies, and while they are not standardized, they must be approved by the Medicare program. Because Part C plans are not standardized, there are a wide variety of plans. Premiums, deductibles, and coverage will vary by the plan. All plans will offer the same or better coverage than Original Medicare (Parts A and B).
In addition to the coverage seen in Medicare Parts A and B, Medicare Advantage plans often offer additional benefits like those for dental, vision, and hearing services. Many Part C plans also include prescription drug coverage.
Medicare Supplement and Medicare Advantage: 5 Key Differences
We have mentioned some of the differences you will see between these two types of plans, but let’s breakdown the key differences between the two.
First, Medicare supplement plans will usually have a higher premium than Medicare Advantage plans, but they will not usually have a copayments as the Advantage plans will. Second, Medicare supplement plans give their members the freedom to choose any provider. Medicare Advantage plans usually limit members to receive care from a specific network of providers. Third, you will not need a referral to see a specialist if you are enrolled in a Medicare supplement plan. You will need a referral in most Medicare Advantage plans. Fourth, Medicare Advantage plans offer coverage for routine dental, vision, and hearing services. Medicare supplement plans do not offer these additional benefits. Finally, Medicare supplement members have coverage across the entire United States, as long as the provider accepts Medicare assignment. Medicare Advantage members may only receive care for emergency services if they are outside of their network (and don’t want to pay out-of-pocket).
Plan N versus Medicare Advantage
Now that you understand how Medicare supplement plans and Medicare Advantage plans work, you already have a good idea of how Plan N will differ from Part C plans. Let’s get a little more specific.
Plan N will cover:
- Part A coinsurance and up to an additional 365 days of hospital costs after Medicare benefits are exhausted
- Part B coinsurance/copayment, except for a $20 copayment for some office visits and a $50 copayment for emergency services unrelated to inpatient admission
- Blood (3 pints)
- Part A hospice coinsurance/copayment
- Skilled nursing facility care coinsurance
- Part A deductible
- 80% of foreign travel exchange
- No out-of-pocket maximum
As we mentioned earlier, it is difficult to compare Plan N to a Medicare Advantage plan. Since the Part C plans vary widely, you may find one that offers the same, better or worse coverage than Plan N.
However, it is important to note that if you do enroll in Plan N, you will need to enroll in at least one other policy – Medicare Part D. Medicare Part D is your prescription drug coverage. This is part of many Medicare Advantage plans but is never part of a Medicare supplement plan. (Medicare Advantage plans with prescription drug coverage are commonly referred to as MAPDs.)
Medicare supplement members also often choose to enroll in a Dental, Vision, and Hearing (DVH) plan. There is no need for the additional DVH plan if you are already enrolled in a Medicare Advantage plan that covers these services.
When trying to choose between Medicarfe supplement Plan N and Medicare Advantage, first, you will need to consider their key differences. What kind of providers are in your area? If your provider is not in the Medicare Advantage network, are you willing to switch? How often do you travel? Answers to this questions will help you in deciding which plan is best suitable for your needs.
Next, consider your budget. Many Medicare Advantage plans have a $0 monthly premium. Considering they also offer benefits that Medicare supplement plans do not, this is often the most appealing part of a Medicare Advantage plan. That being said, Plan N offers a great value for a lower premium than some other Medicare supplement plans.
Can you switch between these plans?
It is logical to consider enjoying the cost savings of a Medicare Advantage plan while you are relatively healthy, and then switching back to regular Medicare if you develop a condition you want to be treated at an out-of-town facility. In fact, switching between the two forms of Medicare is an option for everyone during the Open enrollment period. This Annual Election Period runs from October 15 to December 7 each year.
But have in mind that if you switch back to Original Medicare (Part A and Part B), you may not be able to sign up for a Medicare supplement policy. When you first sign up for Medicare Part A and Part B, Medicare supplement insurance companies are generally obligated to sell you a policy, regardless of your medical condition. But in subsequent years they may have the right to charge you extra due to your age and preexisting conditions, or not to sell you a policy at all if you have serious medical problems.
You don’t have to make this decision alone! These are the exact dilemmas we help our clients with every day. We can help you compare coverage and even assist you in locating providers in your area that are any of the plan’s networks.
Give Better Place Insurance a call today, and let us help guide you through this process.
Call us at 863-603-3701