Monday, September 24, 2012

Medicare Supplement versus Medicare Advantage

Which one is better? The short answer is it depends on your needs. You should consider if you have medical issues that require expensive treatment. Second, you should consider how often you travel or if you plan to move soon. Thirdly, you need to weigh your options from an income basis. Do you want unhindered access to medical care, or are you willing to spend some time shopping your options to save money?
Before you enroll in a Medicare Supplement or Medicare Advantage plan you must be enrolled in Medicare Part A (hospital coverage) and Medicare Part B (physician coverage) through the government. You may be charged a premium for Part B coverage. Once you are enrolled in Part A and B, you qualify for enrollment in a supplement or medigap plan.

Which Type of Coverage is More Comprehensive?

Medicare Supplement plans may have more comprehensive coverage than Medicare Advantage plans. Supplement plans cover gaps in the Part A (hospital) and Part B (doctor's office) benefits offered through Medicare. Supplement plans that cover more gaps usually are more expensive. Medicare Supplement plans do not offer prescription coverage, so this type of coverage would have to be secured separately. Stand alone Rx coverage is called Part D. It is important to secure prescription coverage even if you don't need it immediately because there may be penalties for enrolling in Part D after your initial open enrollment period expires. Medicare Advantage plans assign the Part A and Part B benefits offered by Medicare, to the Advantage plan. Medicare Advantage policy holders will still need to pay their Part B premium to the government. Many Medicare Advantage plans have copays for doctors office visits, specialist visits and hospital visits. They also may have prescription benefits built into the plan. Overall, Medicare Supplement plans can have higher benefits, but can also be more expensive than Medicare Advantage plans. A Medicare Supplement plan may be better for a person who has medical issues that could cause large expenses or for someone who does not want to worry about staying in a network. Medicare Advantage plans may be better for an individual who is in good health and would just need coverage for unexpected accident or illness.

How do Medicare Supplements and Medicare Advantage plans pay for treatment?

Medicare Supplement plans pay for specific gaps in Part A and Part B coverage (offered by the government) as defined by the policy. For example, Part B has a physician deductible that must be met, but a Medicare Supplement policy can pay for this gap if it is a benefit of the policy. Medicare Advantage plans operate on a copay system for physicians, specialists, and emergency care. The amount of copays paid will be dependent on the frequency of medical care provided. Copays would have to be paid until the maximum out of pocket for that specific policy is reached, at which time the plan pays for coverage thereafter.

How do Medicare Supplement and Medicare Advantage networks function?

Medicare Supplement policies must be accepted by any provider who accepts Medicare as long as they are accepting new patients. So, with this type of policy there is greater freedom in where coverage may be found. Medicare Advantage plans use HMO or PPO networks to provide coverage, so if this type of policy is purchased it is important to ensure that your preferred doctors and hospitals are in your network.

Is Medicare Supplement or Medicare Advantage the better value?

Medicare Supplement plans offer more flexibility and higher benefits whereas Medicare Advantage plans offer lower premiums with copays and can include prescription coverage. Medicare Supplement plans don't use a network, so they are accepted by any provider who accepts Medicare. This allows greater freedom when visiting providers in and out of state or when traveling. Medicare Advantage plans use networks, in many cases either an HMO or a PPO. HMOs again are usually less expensive than PPOs, but offer very little benefits out of network. PPO plans tend to offer benefits in and out of network for more freedom, but have lower benefits outside their network. This makes a Medicare Advantage PPO plan a nice compromise between premium savings and network freedom.

So, there is not a policy that is clearly better for every person. The choice of which plan to choose is dependent on your specific needs and behavior. It is worthwhile to be educated on the generalities of policy types available through Medicare, but ultimately it is important to seek the assistance of an insurance agent who offers both policy types and can help explain and compare the policy strengths and weaknesses within the context of your needs.

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