Friday, April 17, 2015
Medicare Supplement Vs Medicare Advantage
A Medicare Supplement Insurance Policy is a standalone health insurance policy that is purchased by seniors to recover some of the costs not picked up by Medicare. The most significant savings could be Medicare’s Part A Deductible and the 20% of Part B expenses that are not covered by Medicare. Medicare Supplements are also called Medsup or Medigap policies. One of the most popular benefits of this type plan is that you can use it with any provider that accepts Medicare. You do not have to worry about unexpected out-of-pocket costs or networks. You will need to pick up a separate Part D drug plan because Medigap policies do not cover outpatient prescription drugs even if you do not have any prescriptions now to avoid a penalty later.
One of the reasons a Medicare Supplement is so popular with seniors is that you don’t have to worry about unexpected co-pays, whether your favorite physician is in the network, or if your plan will change next year.
Just because a senior can afford a Medicare Supplemental policy in combination with a Part D prescription drug plan, does not mean it is the best fit. No one can make a general statement as to which type of Medicare insurance policy will work best for every senior. Medicare plans are individualized to specific wants and needs. Husbands and wives may not even take the same plans because of different doctors, prescriptions and health issues.
A Medicare Advantage Plan is the Part C of Medicare and is known as MAPD for short. A MAPD is a health plan that includes Part D, outpatient prescription drug coverage. MAPD plans have special times during the year when you can sign up called “Open Enrollment Periods.” If you fail to sign up during these time periods, you will have to wait until the next year to pick a plan, unless you have a “Special Election Period,” which is an exception to the rule. Generally, Medicare Advantage policies are characterized by low or zero dollar premiums because they are subsidized by the federal government. Something else to keep in mind is that most Medicare Advantage Plans have provider networks. Going out of network may incur higher out-of-pocket costs or no coverage at all. Also note, Medicare Advantage plans have co-pays and coinsurance any time you receive medical care, which is your share of the cost. Keep in mind that these plans usually have a spending cap built in called the Maximum Out Of Pocket dollar limit.
One of the reasons that Medicare advantage plans are so popular with seniors is because of the low costs involved. We have to keep in mind that seniors are responsible for their Part B premiums of around $100 a month, so a lot of seniors don’t want to spend another hundred dollars a month or more money on Medicare Supplement premium, when they can get an advantage plan for a $0 monthly premium. The trade-off will come on the backend. Instead of paying upfront for the healthcare in the case of the premium for a Medigap policy, seniors are paying via hospital co-pays, coinsurance, etc. This makes the Medicare Advantage plan more of a pay-as-you-go type plan verses the Medicare Supplement which you pay every month whether you use it or not.
In the end which plan you choose comes down to what you can afford and which makes the most financial sense in your individual circumstance. Best advice is to contact your local Insurance Agent to assist you in finding the right fit plan for you.