Once you enroll in Original Medicare, you will have to decide how you plan to cover health expenses that Medicare doesn’t pay. Typically, there are two options to consider a Medicare supplement plan or Medicare Advantage plan. With Senior Market Solutions, the two options carry vast differences in how and what they cover.
Why Do I Need EITHER ONE?
MEDICARE doesn’t pay 100% of your health expenses. There are out-of-pocket costs that you must consider, such as deductibles, coinsurance, co-pays and premiums. Part A (hospital insurance) provides some coverage for inpatient services which is subject to an annual deductible of $1,364 and co-pays on hospital stays that can vary from $341-$682 daily. Part B (medical insurance) is subject to an annual deductible of $185 and only covers 80% of Medicare approved outpatient services. It is your responsibility to cover the remaining 20% of those services.
To help keep out-of-pocket costs to a minimum you can choose a Medigap policy like a supplement or advantage plan. You can only have one type of plan and depending on your decision your out-of-pocket costs are handled in different ways.
Medicare Supplement Insurance
This is coverage that you can add to Original Medicare. These plans are labeled letters A-N. Each plan letter has a corresponding set of benefits that are standardized by the federal government. For you as the consumer this makes them very easy to compare and purchase. Plan F for example, by law, offers the exact same coverage, no matter what company you choose to purchase the coverage from. The only difference is cost. (In Massachusetts, Minnesota and Wisconsin, plans are standardized in a different way) Keep in mind, coverage under a Medicare supplement plan is guaranteed for life as long as premiums are paid. There are no doctor or hospital networks or pre-approvals for services your doctor may require you to have. They can even include foreign travel coverage.
Medicare Advantage (Part C)
Medicare Advantage replaces Original Medicare. You obtain your Medicare benefits through a private insurance company. All Medicare Advantage plans include Medicare Part A and Part B benefits. Some plan options offer additional benefits such as dental, vision and prescription coverage.
If you choose a Medicare Advantage plan you will pay deductibles. coinsurance, co-pays, and premiums on all medical services. In 2019, the average out-of-pocket maximum for which you could be responsible is $6,700. These plans limit where and who you can obtain medical services from, using networks and contracts.
How Do I Decide?
Bottom line, ask yourself how much risk are you willing to absorb?
With a Medicare supplement insurance plan, you will pay little to no out-of-pocket costs depending on your plan choice. You can visit any doctor or facility anywhere without prior approval and coverage can never be canceled if the premiums are paid.
A Medicare Advantage plan offers lower monthly premiums but shifts the burden of out-of-pocket costs to you, as a sort of pay as you go agreement. You will have to follow plan rules and coverage is only guaranteed by the calendar year.