Medicare Supplement or Medicare Advantage: Which is Right for Your Client?

Medicare Open Enrollment is just around the corner (October 15 – December 7), which means Medicare is top of mind for your clients. 

But how do you determine if your clients need to change Medicare plans during the Open Enrollment season? And even outside of Open Enrollment, how can you help them choose the ideal Medicare plan if it’s their first time enrolling? How can you help them determine whether to enroll in Original Medicare with a Medicare Supplement plan or a Medicare Advantage plan? Keep reading to find out! 

In this blog, we’ll break down the difference between Medicare Supplement plans and Medicare Advantage, and what criteria to look at to help clients pick the best Medicare Advantage plan for their needs. For the purposes of this blog, those are the two main areas we’re going to focus on, but it’s important to note that your clients can also modify their Part D coverage (drug coverage).

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Original Medicare with a Medicare Supplemental Plan vs Medicare Advantage

Original Medicare includes parts A, B, and D. Although clients can enroll in just Original Medicare without a Medicare Supplemental (“Medigap”) plan, most shouldn’t. For most people, Original Medicare without a Medicare Supplemental plan is not enough coverage and would potentially cost them thousands in avoidable out-of-pocket costs.

Medicare Advantage is a single, all-in-one plan from a single private insurance company that combines Parts A & B, and oftentimes Part D, with the insurance carrier administering your Medicare benefits on your behalf. 

While Medicare Advantage plans may be simpler to manage, they might not be the right choice for many of your clients. For example, someone who takes a specific medication may find that there isn’t a Medicare Advantage plan that covers their medication and that has the provider they need to see in network. Here are a few other key differences between Medicare Supplemental and Medicare Advantage:

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Providers

• - Medicare Supplemental allows enrollees to go to any provider that accepts Medicare. Enrollees also typically do not need a referral to see specialists.

• - Medicare Advantage plans are plans administered by private insurance companies, so enrollees will only be covered at providers that accept that particular carrier’s network. Depending on the type of Medicare Advantage plan your client gets will also determine whether or not they need a referral to see a specialist.

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Cost

• - With both Medicare Supplemental and Medicare Advantage, clients pay a monthly premium for Medicare Part B, and for out-of-pocket costs, Medicare Parts A and B cover 80% of healthcare costs. Put another way, enrollees have a 20% coinsurance that has no out-of-pocket maximum. Enrollees can enroll in a Medicare Supplemental plan or a Medicare Advantage plan to help cover their 20%. If clients choose a drug plan, they’ll pay a separate monthly premium for that plan.

• - For Medicare Advantage plans, the costs vary greatly depending on the carrier, whether it’s a high or low deductible plan, and other factors. Enrollees pay the monthly Part B premium and may also have to pay the plan’s premium unless the plan has a $0 premium (which is pretty common among Medicare Advantage plans). Most plans include Medicare drug coverage (Part D).

• - Income adjustments (IRMAA) will apply to both Part B and Part D premiums regardless of whether or not your client has a Medicare Advantage plan or a Medicare supplement.

• - It’s also important to understand that clients, no matter whether they choose Original Medicare or Medicare Advantage, will have fixed and variable costs. Fixed costs are their monthly premiums, whereas variable costs are their out-of-pocket costs. For example, if a client pays 20% of a medical service, the cost varies depending on the total cost of the service and the coverage type they select. Another reason it’s important to look at both fixed and variable costs is deductibles. Although a lower monthly premium is appealing, this often means your client may have higher out-of-pocket costs.

Coverage

• - Original Medicare covers most medically necessary services and supplies in hospitals, doctors’ offices, and other healthcare facilities. Specifically, Part A covers facility-based healthcare costs, Part B covers medical services, and Part D covers drug costs.

• - Medicare Advantage plans are required to cover all medically necessary services that Original Medicare covers. Some plans also offer extra benefits that Original Medicare doesn't cover, such as vision, hearing, and dental services. Drug costs are typically included in Medicare Advantage plans.

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When your client enrolls in Medicare, they’re enrolling in parts A and B, no matter what. So deciding how to configure their Medicare coverage comes down to comparing Medicare Supplement and Medicare Advantage plans. If your client chooses a Medicare Supplement plan, the only additional plan they’ll need to pick is a drug plan. 

If your client chooses Medicare Advantage, they have several options to choose from. This next section will help you and your clients determine which Medicare Advantage plans work best for their needs and preferences.

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How to Optimize Medicare Advantage Coverage

As mentioned earlier, Medicare Advantage plans are Medicare-approved plans sold by private health insurance companies. So, although the plans must cover the same services as Original Medicare, other factors (such as costs, where care is in-network, and which prescription drugs are covered) can vary greatly. Every year, the details of these plans can change. 

Below is a list of questions to go through to determine what your clients’ preferences are and ensure their coverage still meets their needs. Schedule time to meet with your clients to go through the questions below with them, or simply email them the list of questions:

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• - Are your current doctors and specialists in the plan’s network?

• - Is your current pharmacy in-network?

• - Are your current prescription medications in-network?

• - What’s your maximum for out-of-pocket expenses?

• - Are you comfortable with needing a referral from my primary care doctor to see a specialist? Or would you rather be able to see a specialist whenever you want to?

• - How much are you willing to pay in monthly premiums?

• - Would you prefer to have a higher monthly premium but a lower cost for individual medical services received, or would you prefer to pay less each month in premiums, but have a higher cost responsibility when you receive medical care? 

• - Do you have any preferences for insurance carriers?

• - Are you expecting any large medical events in the next year? Such as a planned surgery? 

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Final Thoughts

Healthcare costs can either help or hurt your clients’ financial goals, and healthcare costs associated with Medicare are no exception. Even beyond costs, helping clients pick the best health plan for their needs can save them a lot of unnecessary stress and give them peace of mind that their health needs will be taken care of. 

However, choosing a plan can be overwhelming, and it can be easy to get lost in all the terminology. Let this blog serve as a resource to make choosing a plan easier, and be a quick reference when you forget the difference between Part A and Part B, or what the difference is between Medicare Supplement and Medicare Advantage. Go through the list of questions and preferences listed above so you can help clients pick the ideal Medicare plan for their needs, preferences, and financial goals.

Finally, if you’d prefer to have an easy-to-use tool that can provide customized Medicare analyses for your clients and a team of licensed agents to help them enroll (rather than going through Medicare optimization on your own), reach out to Move Health!