It is difficult to turn on the television today and not see an ad for Medicare Advantage which replaces traditional Medicare and includes prescription benefits plus other supplemental benefits such as dental, hearing and vision. The other alternative to just traditional Medicare is adding a Medicare Supplemental plan plus a Prescription Drug Plan. Which is the better choice?

For brevity, let’s call a Medicare Advantage Plan an Advantage plan. Let’s call Traditional Medicare, plus a supplement plan and a prescription drug plan a Medigap plan.

There is a famous expression, “There is no such thing as a free lunch!” Meaning you have to pay for the lunch one way or the other. You pay for these types of plans very differently. Using a Medigap Plan G for example, you pay a monthly premium that usually will start at over $100 a month and go up annually to several hundreds of dollars a month. However, your expenses for seeing a doctor or using a hospital are usually covered completely by the Medigap plan.

A very typical premium for an Advantage plan is $0. Depending on the plan, the $0 premium includes insurance benefits for medical, prescription drugs, dental, hearing, fitness, etc. Generally, when you visit a primary care doctor, there is no co-payment. That means you do not pay for the doctor’s time. If you visit a specialist, there can be a co-payment of $30 or more. So, if you visited a specialist three or more times a month, your co-payments could exceed the premium of a Medigap plan. There are other co-payments. For example, if you have to stay in a hospital, there usually is something like a $300 a day co-payment for the first six days.

To start to answer the “which is better” question, If you see no more than two or three specialists a quarter and you stay out of hospitals, an Advantage plan can be much more cost effective.

BUT, there are other factors in addition to premiums and co-payments. A Medigap plan covers the cost of visiting any practitioner or hospital that accepts Medicare. Whereas an Advantage plan usually requires that you use a practitioner that is in the plan’s network. 

There are two styles of Advantage plans. An HMO style Advantage plan almost always requires the use of an in-network practitioner or facility, The HMO style plan also requires a referral from your primary care provider to see a specialist. 

A PPO style plan will let you go out of network, though you may pay more. Referrals are not needed to see a specialist. Some national companies let you use any of their providers anywhere in the US without an increase in co-payment. In general, HMO plans cost less than PPO plans.

Does that mean that if you switch to an Advantage plan, you have to change doctors? Usually not. Part of my job as your Medicare agent is to confirm that all of the doctors that are important to you are in the network of the plan proposed to you. 

One advantage of selecting a large national insurance company to provide your Advantage plan is that the large carrier will have a large network of providers. If you decide to change practitioners, you will have a larger selection.

Your Medicare agent needs to know all of the doctors you wish to work with and all of the prescriptions you require. The plans presented by your agent need to include benefits for all your needs. If it is not possible to cover everything that you regularly need, you should be made well aware of what is not covered.

If you decide to change to a different Medigap plan after you make your initial plan selection, you will find that in most cases the new plan will be underwritten and you run the risk of not qualifying depending on your health status. That is, you will have to answer a series of health history questions. Your answers can influence the new plan’s premium. Advantage plans are guaranteed issue. There are no health questions.

So in Summary

 If you are not concerned about paying well over $100 a month in premiums, go with a Medigap plan. Pretty much every medical cost is covered. Just add separate plans to cover prescription drugs, dental, vision and hearing. If costs are a concern and you make limited use of specialists and hospitals, go with an Advantage plan.