Medicare Supplements vs. Medicare Advantage: Pros and Cons
Choosing between a Medicare Supplement plan and a Medicare Advantage plan is arguably the most important decision you’ll make when entering the federal Medicare program. Neither option is bad, but each has pros and cons that you need to be aware of to make the best choice for your healthcare needs.
There is quite a lot to know about these two types of Medicare plans, but today, we’ll give you a brief overview of how they work, followed by their most notable pros and cons. Keep these in mind as you begin your transition into Medicare.
Medicare Supplements
A Medicare Supplement acts as your secondary form of insurance. Your primary insurer will be Original Medicare (Parts A and B). There are about ten different Medicare Supplements to choose from, each labeled by a letter of the alphabet. They include plans A, B, C, D, F, G, K, L, M, and N.
An important thing to understand about Medicare Supplements (also called Medigap plans) is that they are standardized. That means that no matter where you purchase a plan, it is always the same. So, for example, Plan G from Company A is the same as Plan G from Company B.
Pros
● Predictable. Based on the letter plan you choose, you’ll know exactly what your out-of-pocket costs will be for the year.
● Mobile. Medigap plans do not rely on provider networks. As long as the provider accepts Medicare (and most do), they will accept your Medigap plan, no matter which insurance company it’s through.
● Standardized. Your Medicare Supplement will never change from one year to the next or one company to the next. You will not need to worry about reviewing the benefits each year.
Cons
● Higher Premiums. The excellent benefits you find in a Medicare Supplement plan will come at a cost. However, if you use your insurance frequently, the coverage will greatly outweigh the price.
● Underwriting. If you do not enroll as soon as you are eligible for Medicare, you’ll likely need to pass medical underwriting to be issued a plan. If you have serious or chronic health concerns, you may not be able to enroll in a Medigap plan.
● No Extra Benefits. Medicare Supplements carry only the same benefits as Medicare Parts A and B. You will need to enroll in Medicare Part D for prescription drug coverage and should also consider a policy for dental, vision, and hearing care.
Medicare Advantage
Medicare Advantage (also called Medicare Part C) is the other way Medicare beneficiaries can enrich their benefits under Original Medicare. Medicare Advantage plans do not act as your secondary insurer, unlike Medicare Supplements. Instead, they bundle your benefits under Parts A and B, add extra benefits, and wrap them all into one plan.
Every Medicare Advantage plan is different, and not every plan is offered in every county. In addition, there are several types of MA plans, so you will need to know how each works before enrolling.
Pros
● Affordable. According to the Kaiser Family Foundation, the average cost for a Medicare Advantage plan with prescription drug coverage (MAPD) was $25 in 2020. In most parts of the country, beneficiaries even have access to plans that offer $0 monthly premiums.
● Guaranteed Issue. Medicare Advantage plans are always guaranteed issue, so there are no medical underwriting requirements. Anyone can enroll, regardless of current or past health conditions.
● Extra Benefits. As we mentioned, every Medicare Advantage plan is different, but most offer many extra benefits. You may find a plan with prescription drug coverage, routine and restorative dental care, vision and hearing benefits, gym memberships, meal delivery, and more. These extra benefits are included at no extra premium in most cases.
Cons
● Provider Networks. Unlike Medigap plans, most MA plans are not very mobile. To keep their premiums low, they rely on provider networks. Some plans offer no benefits outside their network, while others require higher out-of-pocket costs. This means the beneficiary has less freedom to choose their providers and less coverage (or no coverage) when traveling.
● Yearly Maintenance. Plans can, and usually do, change every year. You will need to review your current plan each fall during the Annual Enrollment Period to be aware of those changes. This might mean a change in premium, benefits, and provider networks.
● Less Predictable. MA plans are more of a “pay-as-you-go” type of insurance plan. You’ll have deductibles, copayments, and coinsurance costs each time you use the plan’s benefits. These costs can make it harder to plan and budget your medical expenses. You may also enroll in additional policies to help with some of the larger expenses.
We know, that’s quite a lot to remember! Medicare can be overwhelming and confusing, especially to new enrollees. Fortunately, there are people who can help with the entire process! At Jackson Insurance Brokers, we have a team of licensed Medicare advisors who are experts in all things Medicare. We’ll help you understand how the program works and take the time to understand your specific needs so we can guide you through these big decisions.
The agents at Jackson Insurance Brokers are contracted with many insurance companies, so we’ll be able to find a plan that fits your needs and your budget. The best part? Our services are completely complimentary. Call us today and speak with one of our knowledgeable Medicare advisors.