As the annual enrollment period has begun, it is a good time to review the differences between Original Medicare, Medicare Supplements and Medicare Advantage. Let’s start with Original Medicare. This is a plan by the Federal Government for people 65 and older (there are also some ways to qualify if you are disabled in which you would qualify under age 65). You have been paying for Medicare Part A (hospitalization) all of your life through a payroll deduction. You will pay a Part B premium. It covers a lot of your health care, but NOT ALL of your health care. There are a lot of “gaps”. That is why Medicare Supplements are often times referred to as “Medigap” policies. They are designed to fill the “gaps” in Medicare. Medicare Supplements are offered by private insurance companies, but unlike the under 65 market, all Medicare Supplement plans are the same. In other words, Plan F, is Plan F regardless if it is with United Health Care, or Blue Cross, or Aetna, or Mutual of Omaha. So you do not have to wonder if Blue Cross is better coverage, or Aetna is better coverage, they are the same. Now there are different supplement plans such as Plan N or Plan G, but again they are the same.
Medicare Supplement is guaranteed renewable, the benefits will never change and you can use your supplement plan anywhere in the country as long as the doctor or hospital takes Medicare. This is important if you travel to see your grandkids or like to go to the warm weather climate in the winter.
Now let’s migrate to what is called Medicare Advantage plans. These are often times referred to as MA plans or Medicare Part C. These are also offered by private insurance companies, but they get some funding from the Federal Government. These plans are usually network based and vary not only from state to state, but from county to county. In some counties, you might pay $0 premium. The same plan in the next county might cost $100 per month. There is also more cost sharing than with a Medicare Supplement. You usually will have a co-pay for doctor visits as well as what is called an out of pocket maximum. This is very significant and varies from plan to plan. Some plans may have a $3000 out of pocket maximum others might be $7000. Now that is per person, so if you and your spouse each have a plan and have a tough year medically and are on say a plan with a $5000 out of pocket maximum each, well that is $10,000 combined.
Because these plans are often times regionally based, if you travel a lot, they might not be the best plan for you. Also, you really need to look past the premium and know what the out of pocket maximum is, and can you afford that if you were to be hospitalized. Medicare Advantage plans also can change from year to year, and may not be offered in your county next year. Every year during the Annual Election Period (AEP) you should review your Medicare Advantage plan to see what kind of coverage you will be offered for the upcoming year. You can change carriers at that time. If you have a Medicare Supplement you do not have to do anything during the AEP.
Medicare Supplement plans are usually more comprehensive in design, but also come with a higher premium. Medicare Advantage plans sometimes come with a dental of a vision program as well.
Medicare Advantage plans often times come with a prescription plan. Prescription Drug Plans (PDP) are known as Medicare Part D. The MA plans that come with Part D are referred to as MA-PD plan. Medicare Supplement plans do not come with a PDP, so you need to purchase them separately. Before purchasing a Part D plan, you should provide your broker with all of the medications that you take so he or she can find the right PDP for you. Each PDP will vary either in premium or classification of the medication.
I hope this helps you this enrollment season.
Eric Wilson is President of I Sell Health, Inc., a Chicago area insurance agency. He can be reached toll free at 888-448-5370 or by email at firstname.lastname@example.org