With 20 plus years under my belt in the medicare advantage plans and supplements and health insurance industry, I am pretty confident in my ability to break down this conundrum that every person entering their retirement years unfortunately has to try to figure out. My goal here is to explain to you in the simplest way what the pluses and minuses of medicare advantage plans and supplements are, so you can confidently make the best decision for your situation during open enrollment. I also hope to keep it short and sweet, because you and I both know, no one likes reading or talking about insurance; it’s boring! So, without further ado…….
Medicare Advantage Plans – Free and Pretty Darn Good
Medicare Advantage Plans (Part C) are usually free. And if you choose one of these, they take the place of Medicare so all you need is your ID card the insurance company sends you for all your healthcare needs, including prescriptions. Not only that, they probably have better all around coverage then your group health plan did at your old job you just retired from. Cool right? For most fairly healthy folks 65 and over, heck yeah it’s cool!
The Good Parts
Typically (there’s always exceptions, duh), these no premium plans have copays for most of the traditional “everyday healthcare costs” like doctor visits, prescriptions and urgent care trips. Quite a few even give you copays for big ticket items like surgery, overnight hospital stays, power mobility scooters and chairs. By the way, a copay is just a flat amount you pay for a service, and you’ll usually know it ahead of time; like a $5 copay to see a specialist or a $30 copay for a brand name drug prescription. Most medicare advantage plans are HMOs, because they have a network of doctors, hospitals, etc, that you have to see for your healthcare needs and can’t stray out of (again, there are a few exceptions where you can stray, like the medicare advantage PPO, but those aren’t very common). If the plan has your doctors and prescriptions covered in the network, there isn’t anything wrong with this! Check the plan’s provider list for doctors and it’s formulary for your drugs at medicare.gov. For all the healthy folks entering their medicare years, these plans are almost always the best choice, because they don’t cost you anything for the coverage, other than the Part B premium uncle Sam takes out of your social security check every month ($144.60 for most in 2020, which you gotta pay anyway).
Free? So What’s the Catch?
So you’re probably wondering, how is this free? “When I was growing up, momma always said, you get what you pay for!” Well, I’ll just say, leave it to the government to prove momma wrong here. There’s a couple but they aren’t so bad for most of you. One is you have that network of doctors and hospitals you gotta stay in, and they usually only cover providers in the area near you, like your county or surrounding metro area. The other, which is definitely one you need to investigate if it pertains to you, is that they all have their own prescription drug lists of drugs they cover, and do not have to cover every single drug out there. So make sure to pull those bottles out and look them up on the plan formulary before you commit to one!
Medicare Supplements – The Alphabet Plans You Pay For
Medicare Supplements, sometimes called Medigap, work together with Medicare. The supplements pay all of or most of the 20% that medicare does not pay, for both your doctor expenses (Part B) and all other health and hospital expenses (Part A). You will also need separate a prescription drug card, called Part D, because neither medicare nor the supplements cover drugs. This makes it 3 cards and 2 different bills, on top of your Part B premium the government collects.
4 Big Differences Here
The Medicare Supplements that cover the core benefits of Medicare are named Plan A, B,C,D, F,G,M, and N. There are two other limited coverage plans I wouldn’t recommend. No matter what insurance company issues the coverage, REMEMBER THIS: ALL PLANS WITH THE SAME LETTER HAVE THE EXACT SAME COVERAGE, and the pricing will never vary more than 2% from company to company, no matter what. The 3rd major difference from Medicare Advantage Plans is that Medicare Supplements do not use any doctor networks, so you can see any doctor, hospital or facility you want anywhere in the country, as long a they accept medicare. The only Supplement I recommend is Plan F. This leads me to the last major difference, Plan F pays for everything, period. Doesn’t matter what doctor you see, what surgery or hospitals you go to, or what you bill happens to be, you pay $0 out of pocket!
So Which One Is Better?
Well that depends on you and your personal situation, but in general, people who have serious or on going health issues are usually going to be better off buying a Medicare supplement and Part D drug card. This is because that fixed cost you pay every month will usually turn out to be less than what you may pay in copays using the advantage plan heavily. Another more important factor is the freedom of being able to go to any healthcare facility for treatment and not have to pay a dime outside of their monthly premium.
However, the Medicare Advantage route is usually the best option for those seniors who are really healthy or have only minor issues, because the few copays they will pay for their few doctor visits and prescriptions will usually be considerably less money than it would to buy a supplement and Part D drug card. As long as the doctors and hospitals are acceptable and any prescriptions you may need are covered, then this is the best route for you if your fit in that category.