Retire as Planned

An Advantage Plan is not a Medicare supplement

This bears repeating because so many people refer to their Advantage plan as a supplemental plan. An Advantage Plan is not a Medicare supplement! Recall the definition of an Advantage Plan:

Medicare Advantage Plans are health plan options (like an HMO or PPO) approved by Medicare and offered by private companies. These plans are part of Medicare and are sometimes called “Part C” or “MA Plans.” Medicare pays a fixed amount for your care every month to the companies offering Medicare Advantage Plans. These companies must follow rules set by Medicare.

Official definition of a Medigap policy, also known as a Medicare supplement

A Medigap policy is health insurance sold by private insurance companies to fill gaps in Original Medicare coverage. Medigap policies don’t work with any other type of health insurance, including Medicare Advantage Plans, employer/union group coverage, Veterans Administration (VA) benefit ts, or TRICARE. Medigap policies help pay your share (coinsurance, co-payments, or deductibles) of the costs of Medicare-covered services. Some Medigap policies cover certain costs not covered by Original Medicare.
Keeping it simple: When you are enrolled in an Advantage plan, a private insurance company administers your Medicare. When you receive care you are showing your Advantage Plan membership card. Your Part D drug coverage may be included in your plan and you are subject to the rules governing your type of plan.
You may have a plan that doesn’t require a monthly premium or the premium may be nominal. You generally will have additional coverage beyond original Medicare such as dental, vision, hearing, etc.. You will share in the costs of your care through deductibles, co-payments and co-insurance. With an Advantage Plan, you will generally be accepted unless you have end-stage renal disease at the time of your application.

When you have a Medicare Supplement, you have original Medicare and have purchased a supplemental policy from a private insurance company to fill in the gaps that Medicare does not pay for covered services. When you receive care you will show your red, white, and blue Medicare card and your supplemental insurance card. If you purchase a supplement, you will need to also purchase a stand-alone Part D prescription drug plan. Some policies purchased prior to January 1, 2006 included drug coverage, but this is no longer the case.

A supplemental policy allows you to choose your providers just as though you had only original Medicare. Choose any provider that accepts Medicare assignment (some supplements have networks, known as Select plans). Plans are standardized and generally speaking you may have little or no out-of pocket expense. A supplement has certain open enrollment periods and guaranteed issue periods, but in other circumstances you may have to qualify medically.

Pay me now or pay me later

From a strictly financial point of view, you could say that buying a supplement resembles the pay me now scenario. Pay a fixed premium and have little or no exposure should you require care. The Advantage Plan is the pay me later option. You may have a small premium, but you are not laying out a larger premium payment that you may never have the reason to use. 

Both a Medicare supplement and an Advantage Plan are viable options to get the coverage you deserve. To learn more, please visit our Medicare Advantage Plans website to learn more about Advantage Plans.