Medicare Supplement Plans And Medigap Policies 2015/2016
In order to add additional coverage to your Medicare insurance, you have the choice between Medicare Supplement plans, also called ‘Medigap’ insurance, and Medicare Advantage plans.
Understanding how those two insurance plans work is the best start to determine which option is better for you. The first fact to know is that traditional Medicare just covers you for a part of your medical expenses. It will only cover up Medicare approved service up to 80% of the costs.
As you can clearly see, being insured by Medicare alone will leave a gap in your health care coverage, which may add up to a huge amount in case you develop a serious health condition or have an urgent illness that needs expensive treatment.
The only way to make sure that you are fully covered for all eventualities is to compare Medicare Advantage plans and Medicare Supplemental Insurance plans that are available to you, and add a plan that best covers your individual medical needs to your original Medicare.
What Are The Differences Between Medicare Supplement and Medicare Advantage Plans?
- Standardized Policies vs. Wide Variety Of Plans
Medicare supplement plans are standardized into 10 Medigap policies while advantage plans only must meet original Medicare’s benefits (but most add additional benefits). Medigap plans are labeled as Medigap Plans A, B, C, D, G, F, K, L, M and N, and each plan, irregardless of the insurer that offers it, must provide identical benefits. This makes them easily comparable, as you only have to select the plan that best fits your individual health care needs and compare monthly premiums from different insurance companies that offer the plan in your state.
Medicare advantage plan benefits on the other hand vary widely, and cannot easily be compared. Each insurance company is free to set up a Medicare advantage plan with individual benefits and premiums, as long as the plan offers coverage that is equal to or better than original Medicare part A and B.
- Provider Choice
- Cost Sharing And Payment
With a Medigap policy you will still use your Medicare card to receive services, while an advantage plan basically substitutes your traditional Medicare insurance. If you are insured by a Medicare supplement plan, after seeing your health care provider, Medicare will pay its share of your bill first, and then your Medigap insurance will cover parts or all of the remainder (as defined in the policy you select). Medigap plans have higher premiums than advantage plans, but little or no out-of-pocket costs.
In a Medicare advantage plan, the government pays a private insurer to handle your healthcare needs. You do not deal with Medicare at all, but with the insurance provider which directly pays the service provider. This system allows advantage plan providers to offer better benefits with lower monthly premiums, but you may have higher out-of-pocket costs in case you get seriously ill. However, in most plans, the out-of-pocket costs are capped for each calendar year in order to protect the consumer.
- Prescription Drug Benefits
Many Medicare advantage plans include a prescription drug plan, while you will have to separately enroll in a Medicare Part D prescription drug plan in order to get help with your medication if you are enrolled in a Medigap policy.
You may elect to enroll in a Medicare supplement plan or in a Medicare advantage plan when you first become eligible for Medicare. After this ‘initial enrollment’ period, you are only allowed to enroll in or switch plans at specific times: You may enroll in or switch to a Medicare advantage plan once each year, either during the annual open enrollment period, which lasts from October 15th through December 7th of each year, or any time if you select a 5 star rated advantage plan. You may enroll in or switch Medigap plans at any time during the year, but you may have to go through ‘Medical underwriting’, which means any past or present health conditions may be considered by the insurer.
- Changing Plans
After you sign up for a Medicare advantage plan, you have to stay with that plan for the entire year – unless you cancel between January 1 and February 14 the following year. If you want to cancel or change plans, you can only do so from October 15 to December 7 each year, while you may change a supplement plan at anytime during the year.
Medicare advantage plans accept anybody, even with pre-existing conditions – except for End Stage Renal Disease (ESRD). For Medicare supplement plans you only have a ‘guaranteed right’ to join during the initial enrollment period (for most persons when they turn 65). After this time, the insurance company may use underwriting and consider your health condition in order to determine whether, or at which conditions, they are willing to accept you.
While supplement plans are typically accepted by any health care provider that accepts Medicare, advantage plans use local networks of medical service providers. You typically enroll in a Medicare advantage HMO (Health Maintenance Organization), PPO (Preferred Provider Organization), or PFFS (Private Fee For Service) plan, and must select a provider from the plan’s network in order to be fully covered according to your plan policy.
The best way to find out which plan – Medicare supplement or Medicare advantage – is better for you, is to do a comparison of available plans offered through several insurance providers in your local area.