What are some of the differences between Medicare Advantage and Medicare Supplement (AKA Medigap) Plans?

Medicare Advantage plans (also called Part C) are more comprehensive in coverage than Medicare Supplement plans because they may include vision, hearing, dental, and prescription drugs coverage. Medicare Advantage plans also come with ancillary benefits, which include money for utility, gas, food, pest control, dog walker, transportation, acupuncture, and more for 2024. Medicare Advantage plan types are HMO, PPO, Private Fee For Service (PFFS), and Medicare Medical Savings Account plans.

Most HMO plans have zero-dollar premiums and even the ones with a premium are waived for people that qualify for Medicaid and/or Low-Income Subsidy (LIS). Some Medicare Advantage plans have a national network, which means you can live in multiple places in the country and be covered, while others only provide coverage in the area where you permanently reside. Medicare Advantage plans may provide coverage in cases of an emergency no matter where you are in the world.

Unlike Medicare Supplement plans, Medicare Advantage plans are not subject to underwriting approval, and offer Special Need Plans designed to proactively help to manage complex chronic conditions through heightened Primary Care Physician (PCP) and Specialist care.

Medicare Advantage plans are not Guaranteed Renewable and their benefits are subject to change year over year. Medicare Advantage plan users are bound to a network of providers, and going out of network could mean a steep increase in cost for services rendered in non-emergency situations. Healthcare Providers and Medical Groups such as doctors and hospitals that are part of a Medicare Advantage plan can opt to move out of the network offered by that plan, which would force enrollees to switch their Medicare Advantage plan if they want to continue using the same doctors and facilities they're using

By contrast, Medicare Supplement plans are non-comprehensive in their coverage. Although Medicare-covered services are paid in full after the Part A and B deductibles are met, the Medicare Beneficiary is responsible for paying the stand-alone Part D prescription drug plan, as well as hearing and vision. While some Medigap plans cover thePart A deductible, none of the plan cover the Part B deductible, other than plans C and F. However, to get plans C or F, the applicant must have been eligible for Medicare before 2020 Please see the table below for more information).

A table showing Medicare Supplement (Medigap) plan coverage details for year 2023.
Overview of Medicare Supplement Plans and Their Coverage. More information is provided at the end of this article. Credit: United American

Furthermore, Medicare Supplement plans are subject to underwriting requirements, unless the applicant is entitled to a Guaranteed Issue scenario. Medigap plans require a monthly premium and do not include ancillary-rich benefits. On top of having to pay a Part B premium, enrollees are responsible for the Medicare Supplement monthly premium as well as their stand-alone prescription drug plan (PDP), dental, hearing, and vision plans each of which may have to be purchased separately, resulting in a $300-$500 monthly liability. Medigap premiums are rated based on age and area- you can learn more about how Medigap policies are rated by clicking here.

The primary benefit of Medicare Supplement plans is freedom of choice.

Unlike Medicare Advantage plans that are subject to networks, Medicare Supplement plans allow the beneficiary to go to any doctor anywhere in the country as long as the doctor accepts Medicare. In addition, the G plan which is the most comprehensive plan for Medicare beneficiaries, would pay for all Medicare-covered expenses after the Part B deductible of $226 (as of 2023) is paid as the Part A deductible is covered by the plan. Please click here for an overview of Part A and Part B.

▼Medigap Plans F and G offer a high deductible option, which means you need to pay a deductible of $2,700 in 2023 before the plan starts covering your healthcare costs. Once this deductible is met, the plan covers 100% of eligible services for the rest of the year.

■Medigap Plans K and L have an out-of-pocket yearly limit. Plan K has a limit of $6,940, while Plan L has a limit of $3,470 in 2023. Once you reach this annual limit, these plans cover 100% of your covered services for the remainder of the year. It's worth mentioning that the annual limit doesn't include charges from your healthcare provider that exceed Medicare-approved amounts, known as "excess charges." You are responsible for paying these excess charges, and the out-of-pocket annual limit may increase each year due to inflation.

●As for Medigap Plan N, it covers 100% of Medical Expenses (Part B Coinsurance), except for a copayment of up to $20 for certain office visits and up to a $50 copayment for emergency room visits that do not result in an inpatient admission. However, if you are admitted to any hospital after going to the emergency room, then the emergency room visit is covered as a Medicare Part A expense, and the emergency room copayment is waived.

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May 15, 2024