What Are Medicare Supplements & Advantage Plans?
Medicare Supplement Insurance policies (sometimes known as Medigap) are sold by private companies and can help pay some of the health care costs that Original Medicare doesn’t cover, like co-payments, coinsurance, and deductibles.
Medicare Advantage Plans may offer extra coverage, like vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug coverage (Part D). In addition to your Part B premium, you usually pay a monthly premium for the Medicare Advantage Plan, although some plans have $0 premium.
Why Do I Need Medicare Supplements & Advantage Plans?
Medicare Part A (Hospitalization) has a $1,340 calendar year deductible that will be your responsibility for hospital expenses. Medicare A is provided at no cost to you. Medicare Part B has a $183 calendar year Deductible for Medical Expenses such as doctor visits, surgery, ambulance costs, mental health needs, and diagnostic tests. After you have met your deductible, Part B will pay 80% of medically necessary costs. You are responsible for the other 20%. The Medicare Part B premium for 2018 is $134 per month.
Medicare supplement plans generally cover the “gaps” in your base Medicare coverage. Most people will enroll in a Plan C supplement product, but other plans are available that would not cover all of your potential expenses.
Medicare A and B does not provide any prescription benefits. Separate Part D Drug plans are available to cover some of your costs for medications. Generally, these plans might have a deductible and then co-payments. Since Part D insurers can change their formulary (list of covered medications) each year it is important to review your drug coverage every fall during open enrollment to make sure your meds are covered.
Advantage Plans or Medicare Health Plans are administered by insurance companies with strong oversight by the Centers for Medicare and Medicaid Services. A Medicare Health Plan will take the place of Medicare and generally will include prescription benefits and may also offer some coverage for dental and vision care, and for fitness center memberships. A Medicare Health Plan might have deductibles for medical costs and/or prescriptions and will have co-pays for all services. For 2018, the maximum out-of-pocket expense (total co-pays) for these plans, in network, will be $6,700.
Important: If you are still working full time for an employer with 20 or more employees after reaching age 65 and have access to active employment-based coverage you do not have to apply for Medicare B until you lose that active employment coverage. You should apply for Medicare A at age 65 because it does not have a premium and can be used as a secondary plan for your group benefits.
If you are not working for an employer with 20 or more employees when you reach age 65 and you do not enroll in Part B and/or a Part D Drug plan when you are first eligible you will pay premium penalties permanently for those two plans.
