When you turn 65, you’ll learn there are many options regarding your Medicare coverage. During your open enrollment period, when you enroll in Original Medicare (Medicare Parts A and B) you can also enroll in a Medicare Supplement plan to complete your coverage. Conversely, instead of enrolling in a Medicare supplement plan, you can enroll in Medicare Part C. Medicare Part C is also known as Medicare Advantage.
You cannot get a Medicare supplement plan when you enroll in Medicare Advantage. To ensure you get the perfect amount of coverage for your situation, it is imperative you know the difference between a Medicare Advantage plan and a Medicare supplement plan.
Medicare Advantage Plans
The federal government requires Medicare Advantage plans to offer the same amount of coverage as Original Medicare. This means that your Medicare Advantage plan will provide coverage for hospital inpatient services and medical outpatient services. A Medicare Advantage plan works by offering Part A and Part B benefits through a private health plan.
You will continue paying your Part B premium with a Medicare Advantage plan. These plans come with copayments and deductibles but have an annual out-of-pocket limit. Once you meet this limit, your plan will pay 100% of your medical expenses. The premium for a Medicare Advantage plan usually ranges from $0 to more than $100 a month. Most Medicare Advantage plans include prescription drug coverage.
While low premiums and prescription drug coverage is attractive, we recommend a second option: a Medicare supplement plan.
Medicare Supplement Plans
If you choose to enroll in a Medicare supplement (Medigap) plan, you will still receive your main coverage under Original Medicare. Medigap plans fill the gaps in Original Medicare. There are ten different Medigap plans available. Each plan provides a variety of coverage, but some plans offer more coverage than others.
These plans cover most, if not all of your out-of-pocket costs associated with Medicare. You can enroll in a Medigap plan in the first six months after you enroll in Part B. Part D prescription drug coverage is not included. As far as the rest of the costs, Medigap plans have an average premium of about $150 to $200 a month. Age, health, and location can affect your premium.
Which One Is Right for Me?
While both Medicare Advantage and Medigap plans have their advantages, we recommend a Medigap plan. The lower cost premiums of a Medicare Advantage plan might look attractive, but it comes with a few sacrifices. With a Medicare Advantage plan, you cannot choose any doctor that you want. If you choose an HMO plan, you can only see plan providers. If you choose a PPO, you can see any provider, but out-of-network providers cost more. This makes for a much lower number of health care professionals you can see, and your preferred doctor might be out-of-network.
However, with a Medigap plan, you can visit any doctor that participates in Medicare. This allows for a wide range of health care providers at your fingertips. Additionally, there are little to no out-of-pocket costs associated with a Medigap plan, whereas you would have to pay deductibles and copays of up to $3,400 to $6,700 a year with a Medicare Advantage plan.
Finally, while Medigap plans do not come with prescription drug coverage, most Part D plans are affordable, with plans as low as $34 in 2018. This plan, in addition to your Medigap plan, would provide you with complete coverage for all your medical needs.