Medicare Advantage vs Medigap Supplement

The difference between Medicare Advantage vs Medigap Supplement

Medicare beneficiaries have several different routes to choose from in terms of additional coverage with Original Medicare. If a beneficiary does not have retiree coverage, their two options for additional coverage are a Medicare Advantage plan or a Medicare Supplement (Medigap) plan. Many people don’t know the difference between the two and think they can change from one to another at their convenience. However, that is not always the case. So, what is the difference between Medicare Advantage vs. Medigap Supplement plans? Keep reading to find out!

What is Medicare

First, it is important to know to understand Medicare. Medicare is a national health insurance program provided by the federal government in the United States. The program is for those 65 and older and those who qualify early due to specific disabilities. There are two parts of Medicare, Part A and Part B. Part A provides hospital inpatient coverage, and Part B provides outpatient medical coverage. Some services covered between the two parts are emergency care, specialist care, doctor visits, primary care visits, office visits, exams, surgery, and more. Many beneficiaries think Medicare covers 100% of the costs for approved services and prescription drugs, but that is not true, so beneficiaries will enroll in Medicare plans to help with those costs.

Why do I need additional coverage with Medicare?

Since Medicare does not cover 100% of the costs for approved services, a beneficiary must pay for the expenses after Medicare. Those costs include the Part A deductible, hospital coinsurance, copayments, skilled nursing facility care costs, home health care costs, first three pints of blood, Part B coinsurance, Part B deductible, and more. There is no limit to the beneficiary’s costs so that those costs could be financially devastating. Since there is no cap with Original Medicare coverage, many beneficiaries will choose to enroll in a Medicare Supplemental plan or a Medicare Advantage plan.

Medicare Supplement Plans

Medicare Supplement policies are secondary plans to Original Medicare. This type of plan will pick up the costs after Medicare pays its portion first. There are ten standardized Medicare Supplemental plans, and each plan provides different coverage. This also means that the premiums will vary with each plan. In fact, plan premiums will vary based on age, zip code, gender, and tobacco use, so location does plan a factor. A beneficiary would purchase a Medicare Supplement plan from a private insurance company or a Medicare broker.

Networks and referrals

Since Medigap plans are secondary to Original Medicare, they can be used across the U.S. Any provider or facility that accepts Original Medicare must accept the Medigap plan no matter the plan or insurer. Since there is no confined provider network, patients do not need a referral to see a specialist or schedule specialist visits.

Services not covered by Supplement Plans

If Medicare does not cover a service or procedure, a Medigap plan won’t cover it. A Medigap plan will only help pay for a service if Medicare pays first. Medicare should pay for any medically necessary service to treat, diagnose, or monitor a health condition.

Services that Medicare does not cover are routine dental, vision, hearing, prescriptions, or cosmetic procedures, and therefore, a Medigap plan does not cover them either. Since Supplement plans do not provide prescription drug coverage, a beneficiary would want to enroll in a Medicare Part D plan for drug coverage.

Plan G vs. Plan F

Plan G coverage covers all gaps in Medicare except the Part B annual deductible. This means Plan G covers the hospital costs, Part B coinsurance, first pints of blood, hospice care coinsurance, skilled nursing facility coinsurance, the Part A deductible, and Part B excess charges. So, the beneficiary is only responsible for the Part B deductible regarding hospital and medical costs

Plan F is another popular Medigap plan. It is also the most comprehensive as it covers the Part A and Part B deductibles and the other costs after Medicare. However, this plan is no longer available to those new to Medicare as of January 1, 2020.

Foreign Emergency Coverage Benefit

Another benefit that Medigap Plan G covers is foreign travel emergencies. If you are out of the country and have a medical emergency within 60 days of leaving the U.S., your Medigap Plan G will cover 80% of those costs after you pay the $250 deductible. All Medigap Plan G health insurance companies must provide this benefit.

What is a Medicare Advantage Plan

A Medicare Advantage plan is an alternative way to receive Medicare benefits. You must be enrolled in Medicare Part A and Part B to enroll in an Advantage plan. The Advantage plan will then manage your hospital and medical benefits instead of Medicare. Most plans will have a $0 monthly premium, but you will be responsible for copays or coinsurance for services. There are several different Advantage programs such as HMO (health maintenance organization), PPO (preferred provider organization), PFFS (private fee-for-service), and SNPs (special needs plans).

Doctor Networks

Medicare Advantage plans have networks of doctors. HMOs will have a smaller network of providers and physicians. Whereas PPOs will have a broader range because it allows you to see out-of-network providers. You will pay more for out-of-network services provided by the plan.

Drug Benefit

Prescription drug coverage is included in most Medicare Advantage plans, so a beneficiary would not need to enroll in a separate Part D plan for their drugs.

Services Covered and Not Covered

An Advantage plan must offer the same services that Medicare Part A and Part B offer. However, some services may have restrictions or limitations, such as prior authorization.

Additional benefits

Advantage plans can cover additional benefits such as dental, vision, hearing, transportation, gym memberships, and telehealth services. They can also provide coverage on hearing aids as well as other things.

Cost-sharing with an Advantage plan

Your cost-sharing will depend on the plan you choose. Each Advantage plan insurer has different copays or coinsurances for each service. For example, an office visit or doctor visit, might be a $35 copay with one plan, but with another plan, it may be $50. For more information on the services covered by your plan and what you may pay, you can look at your plan’s Summary of Benefits.

Can you change from one plan to the other?

There are specific rules that vary with each state regarding changing from one type of plan to another. However, it also depends on the kind of plan you currently have.

Underwriting

When you are outside of your Medigap Open Enrollment window and want to enroll in a Medigap plan, you may need to answer health questions. Some states have exceptions, such as California, Oregon, and a few others. Since you may have to answer health questions, the insurers do not guarantee your approval. The carrier will evaluate your health conditions and determine if they will approve or decline your application.

Guaranteed Issue Option

There are certain circumstances in which you can be outside your Medigap Open Enrollment window and not answer health questions. An example would be enrolling in a Medicare Advantage plan and moving out of your plan’s service area. In that case, you have a 63-day window to enroll in a Medigap plan in your new zip code, and there are no health questions asked. Guaranteed Issue rules will vary by state and policy.

Trial Right

In addition to the example above, there are also Trial Rights. One Trial Right option is when a beneficiary enrolls in an Advantage plan right when they are 65. This means the Advantage plan, Part A, and Part B effective dates are all the same. If so, they have 12 months to decide if they want to stay with the Advantage plan or change to Medigap coverage. However, when you enroll using a Guaranteed Issue situation, some plans may not be available such as Plan N.

Under 65

It is essential for those who qualify for Medicare early due to disability to know they will have a second Medigap Open Enrollment when they turn 65. This is because most states do not offer Medigap plans to those under 65, and if they do, they might be costly. However, Minnesota, Missouri, Wisconsin, Maine, Colorado, and a few other states provide Medigap plans to those under 65. Each state has its law on this situation.

Summary

Medicare Supplements are quite a bit different from a Medicare Advantage plan. Although you need to be enrolled in Medicare Part A and Part B, there are significant differences between Medicare Supplement vs. Medicare Advantage plans. You may consider consulting with Medicare brokers before you decide, as it is important to know all your choices and options that are available to you.