Video Transcript:

Hey, it’s Anthony Selm with The Modern Insurance Store, and in this video, we’re going to talk about the difference between Medicare Supplements and Medicare Advantage.

You, as a senior, probably get overwhelmed with options. You could be seeing twenty to thirty different Medicare Advantage plans, dozens of insurance companies offering Medicare Supplements, ten or twenty or more Part D drug plans, so it’s easy to get bogged down.

We are going to go through the fundamental differences which will hopefully help you streamline the decision-making process based on what’s important for you. Let’s dive in…

What You Need to Know if You Are New to Medicare

If you’re new to Medicare then one of the first things that you will want to cover, that I cover with all of my clients, is the two options that you have on ways to receive your healthcare benefits while you are eligible for Medicare during retirement.

1. Option one is going to be the traditional route. That would be considered the gold standard, which is what most people do when they can afford it, which is having Original Medicare with a Medicare Supplement and a standalone Part D prescription plan.
2. Then option two would be opting into a privatized Medicare Advantage plan, Medicare Part C, and let the insurance company administer all of those benefits.

So what are the differences?

Well, let’s start back with option one.

Original Medicare and Medicare Supplement Plans

First, understand that with Original Medicare Part A and B administering those primary benefits, that gets you to access to any healthcare provider nationwide that accepts Medicare.

Original Medicare and Medicare Supplement Plans Give Freedom and Flexibility

That’s one of the big pros with option one, the freedom and flexibility, and lower out-of-pocket costs when you go to the doctor or if you’re in the hospital, without any network restrictions. So there’s really not any network in a traditional sense. The doctor accepts Medicare, you can go to them, it doesn’t matter what state they’re located in or what state you are located in.

Medicare Supplement Plans Can be Customized to the Benefits You Want

Then with the Medicare Supplement plans, you can customize that based on the type of benefits you’re looking for and filling in those gaps that are left over by Original Medicare.

Most of those plans fill all or most of the gaps, at least the popular plans do, so they’re going to have a monthly premium in addition to your premiums for Medicare, but you’re not going to have many out-of-pocket costs, if any, at the doctor or hospital.

If you have major surgery, knee replacements, heart surgery, cancer treatments, it’s all going to be paid for. You’re going to pay those higher monthly premiums for the Medicare Supplement insurance but not really have to worry about any other additional costs out-of-pocket. It creates more of a stable year-to-year, whether it’s a good or bad year.

You Can Customize Part D to Cover Your Medications

Then for your drug coverage, in option one you can custom tailor that based on the medications you’re taking. The Part D prescription coverage would be a standalone plan so you can look at your drug list and see how that matches up to the plans that are available in your area.

In most areas, you’re going to see at least 15-20 different drug plans so you can really dive down into the details of those and custom tailor that piece to your life.

Medicare Advantage Plans

On the other side with Medicare Advantage, think of it as the equivalent to Original Medicare but privatized, so it’s administered by a private insurance company.

Medicare Advantage is Also Called Medicare Replacement Insurance

This means you no longer receive your benefits from the government from Original Medicare when you opt into a Medicare Advantage plan. They also call it Medicare replacement insurance.

You have to abide by the rules set by the insurance companies. So if it’s an HMO network or a PPO network, typically those are the most popular. There’s also cost plans, PFFS plans, many different options with Medicare Advantage, but for the most part, HMO and PPO are the two popular options.

Medicare Advantage Plans Give Access to Local Healthcare Providers

Knowing that you’re not going to have access to all the providers nationwide that accept medicare, you’ll still have access to healthcare providers in your area.

HMO Plans Usually Offer Zero Premiums

With HMO plans, usually, they can offer that at zero premium. So you still are going to pay your premium for Medicare Part B, but some of these Medicare Advantage plans can offer zero premiums, those are typically the HMO style network.

Medicare HMO Plans Do Not Cover Out of Network Healthcare Providers

If you see a healthcare provider out of network on an HMO plan, you’re on your own. Unless it’s an emergency, you’re going to foot the bill for the entire cost and the insurance company doesn’t have to cover anything if you’re out of the network.

So Medicare Advantage still gets good coverage, you just have to know the limitations and know what you’re getting into so that you don’t end up with surprises later on.

Medicare Advantage Plans Offer Built-in Drug Coverage

Also with those plans, the drug coverage is typically built-in so you want to make sure that not only are your doctors in the network but that your prescriptions are covered appropriately with that specific plan.

We find it all the time, where someone finds a plan that they like because it covers their doctors, only to find out that one of the prescriptions isn’t on the formulary so we have to start the search all over again.

Silver Level Medicare Coverage

So, think of it as the silver level coverage, it has some limitations but it’s still good. You also have to check on it every year just to make sure there are no changes that could adversely affect you and your benefits. So when we look at how we’re gonna get those benefits, let’s first take a look at Medicare Supplement insurance.

More About Medicare Supplement (Medigap)

When we think of a Medicare Supplement (Medigap), this is alongside Original Medicare, and it’s designed to fill those gaps, but those again have no network so you can choose any Medicare-participating doctor. Companies can’t single you out for rate increases, unlike your auto or homeowners insurance where a company can raise your rates or drop you. That can’t happen with Medicare Supplements. They can’t single you out because of your health. The benefits are standardized, we’re going to talk about that in just a moment, but just know that really they are apples to apples, it doesn’t matter which company you choose, the benefits are set at the government level.

Medicare Approves Your Claims and the Insurance Company Fills in the Gaps

The claims process is very simple because Medicare is the gatekeeper, so as soon as Medicare approves a claim, the insurance company just fills in that gap automatically, so you don’t have to worry about approval or denial on claims at the insurance company. If Medicare approves it, they have to pay their share.

Medigap and Original Medicare Coverage is Nationwide

Coverage is nationwide, not just in your state. Any Medicare-approved doctor, anywhere in the country, your coverage travels with you if you’re traveling. The coverage is guaranteed renewable. So that means that you can’t be dropped if you end up getting sick and as long as you continue paying the premiums then you’re going to be able to keep that coverage forever. These plans do have rate increases based on age in most states at least, where you’re going to see a small rate increase each year.

How to Identify Insurance Companies That Have Good Histories

You can identify the companies that have a good history when you’re selecting your Medicare Supplement, we try to look at carriers that have had a good past. If there’s one part of this that I want to stick with you is that with Medicare Supplement/Medigap insurance, there isn’t a yearly open enrollment period. With Medicare Supplements there is a one-time open enrollment period, and that’s for the first 6 months you start Medicare Part B or you’re turning 65 or leaving your group insurance.

Get a Medicare Supplement Plan Regardless of Your Health Status

During that first six months, you have a guaranteed insurability period, where companies have to accept you regardless of your health status and you can choose any Medicare Supplement from any carrier you wish. After that six month period is up, they can deny coverage altogether based on the answers to their health questions. Each company is different, don’t let that scare you, but chronic illnesses like COPD, diabetes with insulin use, cancer, heart disease, things like that can prevent someone from being eligible for a Medicare Supplement plan, depending on what state and which insurance companies are offered.

If you are looking at Medicare Supplement insurance or considering, now is the time because you don’t have to answer any health questions, which means the enrollment process is very easy. You can even start the process months ahead of time. Most companies will let you lock in a price as early as six months out. So for example, if today were July 1st, you could theoretically apply for coverage starting January 1st. Companies will let you lock in that price six months ahead of your start date.

Additional Facts About Medicare Supplement Plans

Just a couple of bullet points here,

• If you’re on COBRA and you’re 65, you’ll want to give us a call or talk to a specialist, because those benefits are not considered credible as Medicare. Even though it is group insurance, COBRA is not considered credible so you’ll want to go ahead and get on a phone call so that we can look at that for you.
• Same thing if you’re with a small company with 19 or fewer employees. In most states, you’re usually going to have some penalties if you delay enrolling in Medicare because you’re still going to be covered by that group plan, so you’ll want to go ahead and give us a call if you’re in either of those situations. 

What are the Different Medicare Supplement Plans

Let’s look at the Medicare Supplement plans. I took this chart right out of the government Medicare handbook. These are the ten Medicare Supplement plans, so if there’s one thing here to notice it’s that there are no company names on this page, there are just letters.

You’ll see the ten letters A B C D F G K L M N, and there’s a high deductible version of Plan F.

Medicare Supplement Plans are Standardized

Those are the ten standardized plans and in most states except for Minnesota, Wisconsin, a few other states that are unique, these plans are sold by a letter. It doesn’t matter which company you’re with that sells plan F, or G, or N, the benefits are going to be exactly the same, so you know you’re getting an apples to apples comparison when we look at the pricing.

Plan F Covers 100% of the Gaps Left by Medicare

You can see, for example, Plan F, one of the most popular plans now for many years, covers 100% of the gaps left by Medicare. So theoretically, if you have plan F, you have Original Medicare, and any time you go to the doctor it is covered 100%, any time you go to the hospital, surgery, physical therapy, whatever happens, as long as medicare approves that claim, it’s going to be covered 100%.

Plan G and Plan N Make Up for the Cost with Benefits

Plan G, the next step down from F benefit-wise, is only missing one piece which is the Part B deductible. With Plan G, usually the difference in cost more than makes up for the difference in benefits. The Part B deductible, at least as of this recording in 2017, is $183, once per year. Once it’s paid then you have 100% coverage with Medicare Supplement Plan G. With Plan N, the next step down from G, you have some copays for doctors visits, you pay the deductible, and in addition to that, you could pay excess charges, depending on where you live.

Ohio Medicare Supplement Information

Here in Ohio, it’s a MOM (Medicare Overcharge Measure) state, where they don’t allow excess charges. But a lot of states do, so if you’re traveling you’ll want to keep an eye on that so you don’t get surprised with an excess charge.

We Can Help You Look at Different Medicare Prices

We can help you look at the price difference to see whether G or N makes sense, depending on what your budget is. There’s not a one size fits all solution. You’ll want to look at the plans that are going to provide you with the best value in the long run, which is why we look at the comparison of these companies and you see from this chart, they’re an apples to apples comparison.

Next, these are actual prices that I pulled up from here in Ohio, but it’s different from state to state, and the premiums can vary greatly. You can see in this chart below the lowest-priced plan is $106. The most expensive plan is $218. They have the same benefits across the board.

How to Find the Best Medicare Insurance Company

There’s no difference whatsoever other than the brand name of the company and the price that you’re paying each month. Something else to look at is the company rating.

• What is their financial stability?
• What is the rate-increase history?
• How many years have they been operating in your particular state?
• What is their experience there?

We can’t predict the future but we can try to find some carriers that have a stable track record so that we have a little more peace of mind and confidence moving into that company if we are new to Medicare. In the end, the company that you choose when you start medicare could be the company that you’re with forever depending on your health status.

More About Medicare Advantage Plans

Medicare Advantage Benefits Vary Between Companies

Medicare Advantage, on the other hand, we can’t really go into detail on the benefits because the benefits are different from every company. We are comparing, in this case, grapes to strawberries to bananas to oranges to pineapples.

Medicare Advantage Plans provide an Equivalent to what Original Medicare Provides

They’re all going to be different, but they provide equivalents to what Original Medicare would provide. They must have an out-of-pocket limit each year. For most of these plans, it is somewhere between $4000 and $6700. They have different doctor networks, they have different drug formularies, and since those plans are only a year-by-year contract, it can change every year.

Medicare Advantage Plans may Change Doctor Networks or Drop Your Drugs Off Their Formulary

If you’re shopping Medicare Advantage you want to really make sure to keep an eye on it every year because you might be happy with your plan now, but next year if they change the doctor network or maybe one of your drugs drops off of the formulary, you don’t want to end up with a surprise.

Medicare Advantage Plans can be Changed Every Year

Thankfully you can change your Medicare Advantage plans every year if you choose to, during the annual enrollment period each fall.

Let Us Help You With Your Medicare Questions

If you have questions, give us a call or send us an email, you can subscribe to our channel on Youtube or “like” our page on Facebook, or give us a call if you want to look at some pricing or plans in your area, or you have extra questions, you can reach us directly. The toll-free number is listed here on the screen (866)572-9255, I hope this helps and talk to you soon.

The Modern Insurance Store is made up of independent medicare insurance agents ready to help you.