How to choose between Medicare Supplements and Medicare Advantage plans
Confused on how to choose what’s best for you between Original Medicare + Supplement vs. enrolling in a Medicare Advantage plan?
Don't worry! You're not alone and we can help. First of all, if you just want to talk it through give us a call at 1-866-486-6551.
If you’ve read a bit on Medicare by now and are still wondering which path might be better for you between Original Medicare + Supplement or a Medicare Advantage plans here’s some help with some basic differences and pros vs. cons of each path to help you decide.
Take a quick look at the Anthem Blue Cross of California's map:
It's a good example of how an insurance carrier may view the market, territory, and coverage zones.
Anthem offers HMO plans, for example, in populous areas only where it maintains its strongest Provider contracts.
Think about it from an operational point of view.
The health insurance carriers need certain resources to offer a Medicare Advantage plan, just like they do an HMO plan. This is why HMO plans are not available in rural areas:
There are not enough consumers, doctors, hospitals, specialists, emergency rooms, etc.. to support the HMO or Medicare Advantage plan in RURAL areas.✕
Here is an example of the Blue Shield of CA county list for Medicare Advantage coverage areas.
To deliver on a Medicare Advantage contract with Federal CMS, an insurance carrier must get local doctors, hospitals, medical groups, outpatient surgery centers, and medical providers of all flavors to contract and deliver medical care across the board without gaps in treatment areas.
What good would the Medicare Advantage HMO/PPO plan be if it didn’t include a doctor to treat dialysis patients, or a cardiologist to treat heart attacks?
Medicare Advantage Plans must utilize local county population, provider service type availability, and contracted Hospital status to comply with the medical service requirements from CMS.
For example, let's say an insurance carrier wants to open a Medicare Advantage HMO plan in Palm Springs, CA. The insurance carrier must show that a basic minimum level of medical expertise and facilities locally are contracted with the plan to treat conditions such as cancer, heart conditions, orthopedics, diabetes, etc.
It wouldn’t make any sense to have a Medicare Advantage plan available in your county, but not have access to a contracted hospital for emergencies and surgeries or Oncologists to treat cancer patients.
Many Medicare Advantage plans, however, offer PPO coverage within a county and full access to the carrier PPO provider directory.
The insurance carrier in the meantime is evaluating whether or not there is enough local county population to enroll in the plan to bring the doctors and hospitals enough patients to keep the plan financially viable.
Medicare Supplement PPO
This plan coverage is not tied to a coverage zone or county. These plans use the national Medicare provider network. So, you only need to find out if the provider accepts Medicare.
Find out what plans are available in your area here:
Need access to a wide variety of specific hospitals, doctors, or medical groups? Or, are you one of the lucky super healthy folks, and willing to just visit a single medical group and contracted hospital to pay less monthly in premiums?
For doctor access the Medicare Advantage HMO plans will give you either access to the single medical group + local contracted hospital, or if it’s a Medicare Advantage PPO it will allow you to utilize the insurance carrier PPO network.
The Medicare Supplement path gives you access to the national Medicare Provider Network which is the largest contracted medical provider network in the nation. It includes roughly 97% of the doctors and 98% of the Hospitals in the nation.
What if you want to change plans later? Can you switch at any time?
With Medicare Advantage plans you can request a plan switch to another Medicare Advantage plan at the annual open enrollment, which falls each year Oct. 15th to Dec. 7th.
You can even switch out of Medicare Advantage (Part C) entirely to Original Medicare + PPO Supplement if it’s within the first 12 months after your initial enrollment in Medicare (turning 65, or retiring from Employer Sponsored group coverage after).
Original Medicare + Supplement PPO
With these plans there’s two methods to switching.
First is Medical Underwriting: You can submit a ‘medically underwritten’ application any month of the year for any plan. You could be declined for the plan change if you have major medical issues and are trying to upgrade coverage.
Second is Birthday Rule: in California each year on your birthday month you can change to another Medicare Supplement plan at equal or lower plan level, guaranteed regardless of your medical condition or history.
What about coverage limitations? What are the gotchas? We realize there’s so much Medicare information out there your mailbox is stuffed full!
First, just try and take a deep breath and relax. Realize if you choose a plan and don’t like the option within the first 12 months of original eligibility you can make a plan and Medicare insurance carrier change in California.
This takes the pressure off!
Some of the main limitations or drawbacks we hear most frequently of Original Medicare PPO vs. Medicare Advantage plans:
Medicare Advantage Limiations
My doctor is out of network! On the Medicare Advantage plans if the doctor does not contract specifically with the health carrier you cannot seek services and get coverage from them. But, the notion of ‘managed care’ does exist so the HMO will control your treatments within the medical group.
Medicare Advantage HMO plans will limit your coverage to the contracted insurance carrier medical group, primary care doctor, and Hospital only. Medicare Advantage PPO plans will limit your coverage to the insurance carrier contracted PPO plan network.
Original Medicare + Supplement PPO Limitations
Original Medicare + Supplement will pay on a covered expense when a provider is contracted with Medicare, and Original Medicare pays (supplement plan then automatically will pay after to cover the gap). With Medicare, the doctor only has to contract with Medicare, not each health plan itself.
Medicare Advantage plans in California usually cost in the range between $0- $100 per month depending on the richness of the plan coverage and the cost of the contracted local provider Hospital.
This is in addition to the cost of Medicare Part B. You will typically see out of pocket for medical expenses, however, on these plans rising up to the $5,000- $7,000 range.
Because with Medicare Advantage plans the insurance carrier privatizes Medicare Parts A+B, it tries to balance cost of claims vs. Federal funds reimbursement, leveraging of the lower contracted provider rates, and managed cost of care into a profit.
Original Medicare + Supplement coverage might average $125-$155 range for an entry level F plan turning 65 roughly in California, plus the cost of Medicare Part B premiums to the Federal Government.
But, once these premiums are paid your risk out of pocket is very little to zero as the supplements can cover the deductibles and coinsurance for you.