During Medicare’s Annual Enrollment Period (“AEP”) from October 15 - December 7, you may be wondering – what’s the difference between Medicare supplement and Medicare Advantage?
While both Medicare supplement and Medicare Advantage require you to be enrolled in Medicare Parts A and B, these plans are very different, and have varying impacts on your healthcare coverage. Since navigating the differences can be tricky, it’s important to carefully consider each before deciding if one is right for you.
Medicare Supplement / Medigap
Medicare supplement is frequently referred to as “Medigap” because the purpose of Medicare Supplement is to close the financial gaps such as the deductible, coinsurance, copays, and travel outside of the US from Medicare Parts A and Parts B (“Original Medicare”). Medigap plans do not provide additional benefits like prescription, dental or vision coverage; instead, they are designed to help you meet out of pocket costs from benefits covered by Original Medicare.
There are a variety of Medigap plans available that offer different amounts of coverage. When considering whether a Medigap is the right plan for you, remember to consider your budget and any savings you may have so that you can decide which Medigap plan may be best for you.
Unlike Original Medicare, which is administered by the federal government, Medicare supplement is administered by private insurance companies, and as a result, your claims will be paid first by Medicare and second by your Medigap plan. Because Medigap is private insurance, your Medigap monthly premiums are paid directly to the insurance company and not to the federal government. The availability of Medigap plans varies by states so make sure to check the plans that are available in your area.
Since Medicare supplement does not cover prescription drugs, dental, vision, or hearing services, if you need any of these services, you may want to consider additional coverage.
Medicare Advantage / Part C
Medicare Advantage plans are sometimes referred to as “Medicare Part C” and are offered by private health insurance companies that are approved by Medicare and follow Medicare’s rules. Many Medicare Advantage plans are zero premium so that there are no premium costs in addition to the cost of Medicare Part B. Medicare Advantage plans will vary by state and county.
To be eligible for a Medicare Advantage Plan, you must have Original Medicare. Unlike Medigap which closes the financial gaps of Original Medicare, Medicare Advantage plans are health insurance plans that may include a variety of additional benefits.
Medicare Advantage plans set limits on annual out of pocket costs and may offer out of network coverage, at a higher cost. Medicare Advantage plans have networks of doctors and providers that you must use to receive maximum coverage for your claims. For example, using an in-network doctor will save you money, and out of network doctors may not be covered, or you may pay more. If you require a specialist, with a Medicare Advantage plan, you will need a referral.
In addition to the services available through Original Medicare, Medicare Advantage plans typically cover prescription medications, dental, vision, hearing, gym memberships, and some other surprising benefits. As an example of surprising benefits, Medicare Advantage plans can offer such as acupuncture, nutrition therapy, mental health benefits, opioid use disorder therapy, and tablets to help monitor diabetes.
During AEP, you have the opportunity to consider which Medicare plan best suits your needs. You may be interested in a Medigap plan that covers the gaps from Original Medicare; or you may feel that a Medicare Advantage plan, which offers out of pocket limits and additional benefits is the right plan for you.
Jan Dubauskas is a healthcare expert, enthusiastic insurance pro, attorney and mom serving as vice president of healthinsurance.com.
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