Medicare is federally funded health insurance for the elderly and disabled. Medicare has two parts, Parts A and B. Part A covers hospitalization. Part B covers doctor's visits and durable medical equipment. Both parts cover the majority of medical costs, but also leave significant gaps. Part A's deductible is more than $1000. Part B's deductible is more than $100. The beneficiary pays 20 percent of most services. Medicare Supplements and Medicare Advantage plans help cover those gaps.
Medicare supplements are health insurance policies that are secondary to original Medicare. Also known as Medigap policies, the federal government standardizes all plans so they offer the same benefits no matter what company you purchase the plan from. For example, a Plan E one company sells has exactly the same coverage as a Plan E a different company sells. The difference is in price and the company's quality. Prices vary widely depending on the plan and can increase with your age. Private companies also sell prescription coverage, called part D plans. The Federal government also regulates these plans.
Medicare Advantage Plans
Medicare Advantage plans, like Medicare Supplements, also work with Medicare. Private companies sell these plans, which generally include prescription coverage. They can be Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) or Private Fee-for-Service plans. A Medicare Advantage plan becomes the primary insurance coverage for those who enroll. It does not take away any of your rights as a Medicare beneficiary. Many plans also include additional benefits such as vision or dental benefits or a gym membership. These plans also vary widely in price.
Similarities and Differences
Medicare Advantage plans and Medicare Supplements provide coverage in addition to original Medicare for an additional monthly premium. Medicare Advantage plans generally have lower premiums than Medicare Supplement plans, but may have more out-of-pocket costs. Medicare Advantage plans generally include prescription drug coverage and other benefits original Medicare doesn't normally cover. Medicare Supplements do not cover services original Medicare does not cover. Medicare Supplement plans do not have a provider network. Medicare Advantage plans have provider networks, with additional costs for going out of network. Medicare Supplement plans accept enrollees all year, while Medicare Advantage plans limit enrollment to the few months before and after qualifying for Medicare and between November 15 and December 31 of each year. You must have both parts A and B of Medicare to enroll in either plan. The official Medicare website offers tools to determine which plan is best for you. (see Resources)