Medicare Advantage Plans vs Supplement Plans. Which one should you choose?

When it pertains to the vast amounts of options for retirees in todays day and age, it can be quite overwhelming to choose the right plan for your personal needs. With so many plans to choose from, how can you be sure that you have the right fit by your side. In this blog post, I will be going over some key differences between Medicare advantage plans and supplement plans in order to illustrate the pros and cons of each type of coverage option.

 

Medicare Advantage Plans

With inflation ravaging people’s pensions and savings, it comes to no surprise to me that many individuals on Medicare are opting to go with a Medicare advantage plan instead. Now in order for a Medicare recipient to qualify, they must satisfy the following requirements. First and foremost, a Medicare beneficiary must have both parts of Original Medicare in order to qualify. Aside from that, they must reside in the service area of the plan in which they wish to enroll. Last but not least, a Medicare beneficiary must have a valid election period in order to enroll into a Medicare advantage plan. Examples of valid election periods would include the Annual Election Period which runs from October the 15th to December the 7th, a change in residence, a loss of employer group coverage and various other changes might merit an opportunity to enroll into a Medicare advantage plan.

 

Pros of having a Medicare Advantage Plan

 

Out of Pocket Maximums.

Now that we’ve discussed a bit about what it takes to qualify for a Medicare advantage plan, lets discuss in further detail  the advantages of having a Part C Plan by your side. Of all of the benefits that advantage plans offer, the one that seems to be of the most importance to me would be the annual out of pocket maximums that all Medicare advantage plans integrate within the coverage. For those of you who are unfamiliar with the concept of an annual out of pocket max, what it is essentially is a cap on medical expenditures that members might incur within a year. This dollar figure will vary from plan to plan and will only take into account medical expenses paid for while seeing an in network provider if it’s an HMO or both in and out of network providers if it’s a PPO.

 

Transparency 

While Medicare is great at reducing medical costs, what it seems to lack is a sense of transparency for those who use it. With Original Medicare, there is a coinsurance of 20% that may be due should a Medicare recipient use any service that is covered under Part B. With an advantage plan on the other hand, there may be no need to guess what your costs might be if you have a copay instead. It sure is better to pay 20 dollars as opposed to 20% of the total cost of a medical bill for simplicity’s sake.

 

Additional Benefits

In a world filled with sky high prices for domestic goods and services, it can be a small blessing in disguise to get anything that might be beneficial to you at little to no cost. Although it might not always be the case, it is possible to get more bang for your buck with a good Medicare advantage plan by your side. With many but not all plans in the market, it’s common to find additional dental, vision and hearing aid coverage. Aside from that, you might also find coverage for over the counter items and possibly even transportation as well. With benefits such as these, what isn’t there to smile about.

 

Affordable premiums

For those of you who are trying to get more more for less, I have good news. In 2023, there is an average monthly premium of about $28 dollars per Medicare advantage plan. As good as that may sound, it gets even better. In select cities and counties across the states, it’s possible to find Medicare advantage plans with zero dollar premiums!

 

Disadvantages of having a Medicare Advantage Plan

 

Network Limitations

When we compare Original Medicare vs a Medicare advantage plan, what stands out like a sore thumb is that there are more doctors who are willing to accept Medicare than there are who are willing to accept a Medicare advantage plan. Although advantage plans may cover out of network services, they may do so at a higher cost if it’s a preferred provider organization and possibly not at all if it’s a health maintenance organization. This in and of itself can be a deal breaker for those who would like to obtain broader access to a vast amount of doctors without having to worry about network restrictions.

Prior Authorizations

One requirement that takes away from the experience of having an advantage plan would be the need to acquire prior authorization before a claimed can be paid. This requirement is in part due to the need for insurance companies to avoid paying for services that might not be needed or medically necessary. This as you may already know can be a problem for members who are trying to treat their illnesses or diseases in the shortest amount of time possible.

 

Formularies

If there’s anything that most resembles a two edged sword in the medical insurance industry, it would be a formulary. I say this in part because they tend to help members as much as they do hurt them. A prime example of the disadvantages of a formulary would be the denial of coverage for a certain type of insulin that might be crucial for a member to maintain their health. Although the advantage plan may recommend that the member take another brand or form of insulin that is covered, it may not be sufficient  for the needs of the member.

 

 Supplement Plans 

For those of you who are trying to save money on your medical expenses, there exists an alternative to Medicare known simply as a supplement plan or supplemental insurance. This form of medical coverage can substitute for Medicare and pay for various medical expenses that Medicare may not be able to cover. In order for a Medicare recipient to be eligible, they must have both parts of Original Medicare and be considered insurable by the underwriting department of the supplement plan that they wish to join.

 

Pros of having a Supplement Plan 

 

Reduced cost sharing

A great feature that attracts many individuals to supplement plans would be the cost savings provided by these type of policies. The savings themselves will vary based upon the plan that the enrollee chooses, but for the most part, it’s possible to pay less for various costs associated with Original Medicare. These plans if offered can help Medicare recipients save money on the deductibles for Part A and or Part B, the coinsurance for Part B,  excess Part B charges and so much more.

 

Nationwide coverage

Unlike Medicare advantage plans which will limit the medical coverage to certain service areas, a supplement plan will allow a member to receive medical services in any part of the country by doctors contracted by Medicare. This in and of itself can be advantageous for snowbirds on Medicare who travel from one state to another or anybody who travels on a consistent basis.

 

Network free coverage

Obtaining medical services in todays day and age can be a challenge due to the network limitations that insurance companies can impose. With a good supplement policy by your side, the need for having to check for in-network providers won’t be necessary. As long as a member sees a provider that is contracted with Medicare, the claims themselves can be honored.

 

Disadvantages of having a supplement plan

 

Premium costs

According to multiple sources, the average supplement plan can cost around $128 per month which is about more than 6 times the cost of your average Medicare advantage plan. Aside from having to pay a higher premium in comparison to a Medicare advantage plan, members might notice that their premium might go up as they age. This can be attributed to the insurers need to offset the spike in claims as we age and become prone to illness. 

 

No drug coverage

Although supplement plans might cover certain medications under Part B, it will not cover any sort of medication that can be dispensed in a pharmacy. In order for a member of a supplement plan to get drug coverage, they must acquire drug coverage separately by paying for it. This can over time, lead to higher premium costs when compared to having a Medicare advantage plan.

 

Lack of additional benefits 

For those of you trying to get more for less, I have bad news. Most supplement plans will offer great discounts for eyewear and possibly even hearing aids but, will fall short in terms of offering more comprehensive coverage. This lack of coverage might not be ideal for those of you who would like to get more dental, vision, hearing aid or over the counter coverage at little or no cost.

What option should you go with?

At the end of the day, what best suites your needs will ultimately depend on you. If you would like to avoid networks while having coverage nationwide in exchange for a higher premium, than maybe a supplement plan might be appropriate for you. On the other hand, if you would like to get more coverage overall at the expense of having to be wary of networks and prior authorizations, than maybe a Medicare advantage plan might be the right choice for you. If you still have questions regarding what to choose, feel free to give us a call or follow this link to learn more about your plan options. As always, thanks for reading my blog posts and have yourself a wonderful rest of the day.