The Medicare Annual Enrollment Period (AEP) begins on October 15 and runs through December 7. Will you be ready? The first step is knowing which Medicare Health Plan you have.
There are two major types:
- Medicare Supplement
- Medicare Advantage
These plans are quite different when it comes to how they work and the benefits they provide. Below, you can see how they compare.
Medicare Supplement Plans
For those who aren’t familiar with Medicare supplement plans, here’s what you need to know:
- Work in unison with and as a secondary form of coverage to Traditional Medicare Parts A & B. A supplement policy pays most, if not all, of what Medicare does not.
- Don’t have networks. Because they aren’t HMO or PPO plans, you have your choice of any doctor or hospital that accepts Medicare.
- Are funded entirely by policyholder premiums. This allows companies to keep benefits the same every year.
- Travel with you in all 50 states. Your plan works the same out-of-state as it does in your home state.
Medicare Advantage Plans
Medicare Advantage plans do all of the following:
- Replace Traditional Medicare Parts A & B. An advantage plan works as your primary insurance instead of Medicare. You must pay all your deductibles, copays, coinsurance and your Medicare Part B premium.
- Are network plans. Since they are HMO and PPO plans, there may be restrictions on which doctors and hospitals you can use.
- Funded by government subsidies and policyholder premiums. This is critical because as government appropriations get cut, premiums will increase as benefits decrease.
- May not cover you in other states (except in emergencies). Many Advantage Plans only cover out-of-state treatment in the event of an emergency.
- The biggest advantage is the lower premiums. Unfortunately, as government subsidies have been reduced, this benefit has been greatly diminished. For example, in 2007 a Medicare Advantage PPO Plan didn’t have a monthly premium and your maximum annual out-of-pocket expense was $2,000. In 2014, that same plan has a $50/month premium and an annual out-of-pocket cost of $5,100.