The Differences Between Medicare Supplement and Medicare Advantage

During the busiest time of the year for Medicare – Open Enrollment – confusion ensues and questions abound. DeWayne Long – the National Sales Director for Empower Brokerage – answers one of the most common questions regarding Medicare: What’s the difference between Medicare Supplement and Medicare Advantage? Check out the video below!

Medicare Supplement

To start, there are four parts to Medicare:

  • Hospital – Part A
  • Medical – Part B
  • Medicare Advantage – Part C
  • Prescription Drug Coverage – Part D

In regards to Part A, you qualify to earn hospital benefits only after working 40 quarters or 10 years of documented employment. As for Part B, the Medical involves doctor’s offices, outpatient surgery, etc.

Part B, unlike Part A, is not free. With Part B, there is a cost, that comes out of your social security, and it’s over $100/month. Essentially, the government deducts the Part B premium from the security checks of everybody who has Medicare, who’s over 65, or early-disability.

Once you have that Part A Hospital and Part B Medical, which is required, you now qualify to get what is called a “supplement.” With both Part A and Part B, you have unlimited financial exposure with no caps on how much you can have out-of-pocket. Many people, who face financial exposure, get a supplement.

After qualifying for both Part A and Part B, there are two options. The first involves keeping original Medicare Part A and B and purchasing a “traditional” Medicare supplement. The government constructs these plans, which include Plan A, C, F, G, etc. Insurance companies provide coverage based on the selected plan, and then they charge a premium. Additionally, these plans do not include drug coverage. As a result, you’d have to purchase a stand-alone prescription drug plan to accommodate your prescription drug needs. Though these plans vary in what they cover, they all limit your liability. Furthermore, hospitals and doctors – for the most part – will accept supplements as long as Medicare approves the expense. Once approved, the Medicare Supplement pays the balance of what would be left over so it caps your liability.

Medicare Advantage

Medicare Advantage, which falls under Part C, is the second option. So once you have Part A and Part B, you can, instead of getting a Medicare Supplement, elect to have Medicare Advantage. Many of the Medicare Advantage plans, unlike Medicare Supplement, which doesn’t cover prescription drugs, may offer drug coverage. This type of plan is called an MAPD (Medicare Advantage Prescription Drug Coverage).

Ultimately, the biggest difference between a Medicare Supplement and a Medicare Advantage plan is that the government outsources the administration under Part C to a specific insurance company. The specific carrier provides a plan of benefits like a supplement. However, with Medicare Advantage, there are lower premiums – anywhere from $0 to $80 per month. Whereas with traditional Medicare Supplement, the costs for someone 65 years old would be around $135 to $150 per month in addition to what would be deducted from the social security check.

While Medicare Advantage has lower premiums compared to a Medicare Supplement, there’s more exposure to out-of-pocket expenses. There may be a $300/day payment obligation to stay in a hospital with a Medicare Advantage plan, but not so with a Medicare Supplement.

If you were to ask me which is best – a Medicare Advantage plan or a Medicare Supplement? Well, it depends. To determine which is best for you, we’d have to conduct what we call a “needs assessment” so that you can make an informed decision.

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We hope that this information on the differences between Medicare Supplement and Medicare Advantage is useful to you.

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