Does your calendar have an important date soon approaching? If your 65th birthday is close, it may be time to review your health insurance options and consider how you plan to get medical care moving forward. Choosing a Medicare plan can be a daunting task, however, there are some strategies to use when choosing a plan that will help make the process smoother.
Most Americans are automatically enrolled in Medicare Part A, but that alone may not cover all your necessary healthcare costs. Parts B, C, and D are voluntary programs that provide additional coverage. These Medicare Supplement plans, often referred to as Medigap, are not part of Medicare but play an essential role in helping bridge the gaps in your coverage.
Understanding your options and the differences between plans is vital, including enrollment, access to services, costs, and benefits. This article will cover the differences between Medicare Supplement and Medicare Advantage plans and how you can “stack” them up to build the best coverage.
The Traditional Stack
Once you’re eligible to enroll in Original Medicare Parts A and B, you can also stack on Part D—prescription drug coverage. Unfortunately, this traditional approach could still leave you with out-of-pocket costs such as deductibles, copays, and coinsurance. The way to solve this is by adding a Medical Supplement plan.
This is where a Medicare Supplement or “Medigap” plan comes in. Medicare Supplement plans are sold by private insurance companies, like Blue Cross and Blue Shield of Kansas, and can help to complete your coverage. You can stack coverage with Original Medicare Parts A and B by adding Supplement Insurance (Medigap), coverage from an employer or union, or by enrolling in Medicaid.
There are 10 plan options, and the level of coverage and costs varies with each one. Remember that these plans require you to pay a Part B premium and a separate premium for full Medigap coverage. With a Medigap policy, Medicare first pays its share of your medical expenses, and then your supplemental insurance steps in to pay its share based on your selected Medigap plan.
Medicare Advantage Stack
Medicare Advantage (MA) plans, or Part C, provide Medicare coverage through private health insurance companies. MA plans typically include Part A, Part B, and Part D in their stacks. Enrolling in a MA plan usually includes access to valuable extras like dental, vision, and hearing benefits, and sometimes even gym memberships.
These plans can be Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), or Private Fee-for-Service plans. With these plans, which are often available only in specific areas, you may be limited to using a network of specific providers in order for the plan to cover your care.
You must be enrolled in both Part A and Part B to participate, and MA plan costs vary. Most plans will require you to continue to pay your Part B premium in addition to the Medicare Advantage plan premium. Medicare Advantage plans may have a deductible and charge you copays and coinsurance.
Key Differences Between Stacks
| Medicare Advantage vs. Medicare Supplement Plan Stacks | ||
| Medicare Advantage Plans(HMOs, PPOs, or Private Fee-for-Service) | Medicare Supplement Plan(Original Medicare, Traditional Medicare, a.k.a. Medigap) | |
| Access to Services | A specific network of coverage and networks may changeFor out-of-network providers, you may pay more or all of the costs A referral may be required to see a specialistCovers emergencies | You can go to any provider or medical facility in the US that accepts MedicareReferral generally not required to see a specialistCovers emergencies |
| Costs | MAs generally cost less and cover more servicesYour annual limit on your out-of-pocket expenses will range from $6,700 to $10,000 (2022) | Higher monthly premiumsOut-of-pocket costs tend to be lower than Medicare Advantage costs |
| Premiums | Requires you to pay your Part B premiumIt may have Part D (prescription drug coverage) built-in, so there is no additional premium | Requires you to pay your Part B premiumseparate premium to a private insurer for Medicare Supplement and a separate premium for a Part D planUsually has a higher monthly premium, but lower out-of-pocket expenses |
| Coverage | In most cases, approval for a service or supply isn’t required | Insurance may require approval for a service or supply |
| Benefits | Offers a benefits package with everything Medicare covers and adds in dental, hearing, vision, health club memberships, and other valuable extras | A standard benefits package that covers medically necessary healthcare services plus Part D |
Access to Services
If you have Original Medicare and a Medicare Supplement plan, you can go to any doctor or hospital in the United States that accepts Medicare. A Medicare Advantage plan has a specific network for the plan to cover your care, and networks may change. You can use a provider outside the MA network, but you will likely pay more or all costs except emergencies. MA plans often require a referral to see a specialist.
Costs
Both Original Medicare and Medicare Advantage require you to pay your Part B premium. Using the traditional stack, you’ll pay a separate premium to a private insurer for Medicare Supplement and a separate premium for a Part D plan. If you choose an MA plan, you’ll pay a separate, but likely lower, premium to a private insurer. The MA plan may have Part D built-in, so you would not pay an additional premium for prescription drug coverage.
Medigap usually has a higher monthly premium but could lower out-of-pocket expenses than some Medicare Advantage plans. On the other hand, Medicare Advantage plans generally cost less and cover more services, which can be a better fit for your budget. Since Medigap out-of-pocket costs are typically much lower than Medicare Advantage costs, the higher Medigap premium may be a better deal if you have lots of medical expenses.
Benefits
The traditional stack has a standard benefits package that covers medically necessary healthcare services, plus Part D. Medicare Advantage offers a benefits package with everything Medicare covers and adds in dental, hearing, vision, health club memberships, and other valuable extras.
How to Decide the Best Fit
If you have significant and expensive health problems, Medigap is better for you. The premiums are higher, but the out-of-pocket costs are typically much lower than Medicare Advantage.
If you are in good health and don’t anticipate many medical expenses, the Medicare Advantage plan premium can save you more money. If you have a lot of prescription drugs, the Medicare Advantage plan—which includes Part D—can save you from paying that additional Part D premium.
Frequently Asked Questions – FAQs
What happens if my deductible is used up halfway through the year? Does Medicare Advantage then pick up the costs for the rest of the year?
MA plans have a yearly limit on out-of-pocket costs for all covered Part A and Part B services. Once you reach this limit, Medicare Advantage picks up the costs for the year for Part A and Part B services.
Do Medical Advantage Plans provide overall health benefits like Silver Sneakers for their members?
The answer is yes, sometimes! Speak with one of our customer service representatives to learn more, or visit the Silver Sneakers website to see if your plan covers their program. If your MA plan provides paid-for plans for health overall, like Silver Sneakers, be sure to take advantage of that option for your health and well-being.
What’s the difference between a deductible, coinsurance, copayment, and a maximum out-of-pocket limit?
A deductible is an amount you must pay before your stacked insurance plans begin to pay for health care or prescriptions. Coinsurance is a percentage you pay as your share of the cost of health services after you pay any deductibles, usually around 20%. You may be required to pay a set amount, or copayment, for a medical service or supply—such as doctor’s visits, hospital stays, or prescriptions. Finally, the maximum amount you pay for covered Part A and Part B services in Medicare Advantage plans is your Maximum Out-of-Pocket Limit.
Disclaimer: Blue Cross and Blue Shield of Kansas is not connected with or endorsed by the US Government or Federal Medicare Program.
What happens if the $6,700 deductible is used up half way through the year? Does Medicare Advantage then pick up the costs for the rest of the year? Potentially, is an individual at risk of accumulating a large amount of deductible bills which keep building each year. The $6700 deductible amounts to $558 per month if a person had to set aside money to cover that expense. That amount is much higher than the premiums that would be paid monthly for what I consider to be a better plan with less overall risk.
I wish my BCBS would provide paid plans for our health overall like the Silver Sneakers I would totally take advantage of that if it were to be an option