Summary: If you’re approaching Medicare eligibility, now’s the time to look into your options to find the right coverage for you. There are basically two Medicare paths:

  • Original Medicare (Part A and Part B) which can be paired with a Medicare Supplement Insurance pPlan and Medicare Part D Prescription Drug pPlan; or
  • A Medicare Advantage plan, which usually includes Part D prescription drug coverage. Medicare Advantage plans cannot be paired with a Medicare Supplement Iinsurance plan..

The best one for you depends on your unique health and financial situation.

How do Medicare Supplement insurance plans work?

Under Original Medicare, you have to pay your Part A and Part B deductibles, as well as coinsurance amounts for most services covered under Part B. You may also have coinsurance under Part A if you are hospitalized for more than 60 days in any particular benefit period. There is no cap on your out-of-pocket expenses under Original Medicare. This means if  you have a serious medical issue, you may face considerable costs.

Medicare Supplement insurance plans, also known as Medigap plans, cover many of your out-of-pocket expenses under Original Medicare.

Medicare Supplement insurance plans offer standardized benefits. You may be able to choose from up to ten different Medicare Supplement insurance plan types. Your costs for covered health services will depend upon the Medicare Supplement insurance plan you choose. Some Medicare Supplement insurance plans will pay nearly all the costs not paid by Medicare. Generally, you can expect to pay a higher premium for this level of coverage than a Medicare Supplement insurance plan that covers basic services, such as Part A (hospital) and Part B (medical) coinsurance.

Keep in mind Medicare Supplement insurance plans don’t cover out-of-pocket costs for prescription drugs.

You can apply for a Medicare Supplement insurance plan anytime as long as you have Medicare Part A and Part B. However, you are guaranteed acceptance by a Medicare Supplement insurance plan insurer when you apply during the six-month period starting when you are at least age 65 and first enroll in Medicare Part B.

How does Medicare Advantage work?

Medicare Advantage plans are provided by private insurance companies contracted with Medicare. They must provide, at a minimum, all the benefits you’d receive under Original Medicare, except for hospice care, which is still covered under Part A.

Most Medicare Advantage plans include additional benefits not covered under Original Medicare. These benefits may include coverage for routine vision and dental care, fitness center membership, and transportation. Most plans also include Medicare Part D prescription drug coverage. All Medicare Advantage plans have a maximum out-of-pocket limit. If you reach this limit, the plan will pay 100% for covered services for the remainder of the year.

Medicare Advantage plans often use networks of participating health providers.  A Medicare Advantage plan may be an HMO, PPO or fee-for-service plan. A Medicare Advantage HMO plan may require you to use network providers and get referrals for specialist care to receive benefits. A Medicare Advantage PPO provides a higher level of coverage when you use network providers and a lower level of coverage when you go outside the network for care.

Most Medicare Advantage plans use a copayment cost-sharing structure. This means you’ll pay a set amount each time you see the doctor. Some Medicare Advantage plans have an annual deductible. Others do not.

You must continue to pay your Medicare Part B premium if you enroll in a Medicare Advantage plan. Some Medicare Advantage plans have an additional Medicare Advantage premium. Others do not.

Is a Medicare Advantage plan or a Medicare Supplement insurance plan right for me?

Only you can decide whether Medicare Advantage or a Medicare Supplement insurance plan is best for you.  It may be helpful to consider a couple of situations as you weigh your options.

If you take prescription drugs on a regular basis, you may save money with a Medicare Advantage Prescription Drug plan. You would have to sign up for a standalone Medicare Part D Prescription Drug pPlan to have coverage because Medicare Supplement insurance plans do not provide this coverage and Original Medicare rarely covers prescription drugs.

If you spend part of the year in a different location from your permanent home, you may save money with a Medicare Supplement plan because usually your coverage is not restricted to a provider network (unless you enroll in a Medicare SELECT plan). In contrast most Medicare Advantage plans require you to get your care from the plan’s local provider network to receive the maximum level of coverage.

 

Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program.

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