Do You Know the Difference Between Medigap and Medicare Advantage?

Both “Medigap” and Medicare Advantage plans are often referred to as “supplemental insurance” plans in Medicare articles and literature.  This language is confusing and somewhat misleading. Do you understand the difference?

Nicknamed “Medigap,” it is technically the only real “supplemental insurance”; its formal name is Medicare Supplemental Insurance. Only people enrolled in traditional Medicare can use a supplemental insurance plan.

Medigap is NOT a government run plan. Medigap is private insurance. You can buy it to defray some or most of your out-of-pocket costs. These might include:

• The hospital deductible for Part A, which is currently $1,100 for each hospital benefit period.
• Part B costs such as the percentage you pay for doctor’s visits and outpatient services.
• The costs of emergencies up to plan limits you incur when traveling overseas.
• Other costs as defined by the plan.

There are 10 types of medigap policies, and they are legally standardized, which means that the benefits you get are the same, regardless of who sells them to you.

However, that does not mean you will receive the same price from each insurer so it’s a good idea to check around. To compare the benefits in each Medigap plan, enter your zip code at Medicare Solutions.com to get started.

Medicare Advantage is an umbrella name for a VARIETY of private health plans which include HMOs, PPOs, PFFS (Private Fee For Service plan.)

Medicare Advantage, called “Medicare Part C” is an alternative to the traditional Medicare program. Those who enroll in Medicare Advantage may NOT purchase a Medigap plan or a stand-alone prescription drug plan.

Each Medicare Advantage plan covers all the same benefits as traditional Medicare (called “Part A” and “Part B”), but the plans operate on the copayment system and may offer extra benefits. Sometimes the copayments are lower than traditional Medicare, and sometimes not. Each plan is different.

For example, some plans may include vision and hearing services, and include prescription drug coverage at no additional cost. However, most plans will require you to go to in-network doctors, or to pay high co-pays if you go out of network.

To compare Medicare Advantage plans, go to Medicare Solutions.com and enter your zip code to begin.

Medicare Part D Prescription Drug Coverage plan offers coverage for brand name and generic prescriptions drugs to anyone eligible for Medicare and is provided through private insurance plans. In order to be eligible for Medicare Part D, you must be entitled to Medicare benefits under Part A and/or enrolled in Part B. You must also be a resident in the prescription plan’s service area and not be enrolled in more than one Medicare Part D plan at a time. You usually pay a monthly premium and may pay a yearly deductible. Depending on the plan you select, you will also have co-pays or coinsurance for your prescriptions.

Since plans and premiums are changing, experts advise existing Medicare beneficiaries to review their current plans. Lists of covered drugs are changing and so are restrictions and costs so the plan you had for 2008 may not work for 2009. Also, new beneficiaries should look at a variety of plans to see what is best for them and their health needs. Make sure you talk to an expert and learn everything you need to know about the plan you have or are choosing because after Jan. 1, everyone is locked into their plan, with a few exceptions. The few exceptions include people who get low-income subsidies and people who have Medicare HMO or Medicare PPO private health plans.

The premiums of most plans are going up and prescription drugs that were covered last year may not be covered this upcoming year. The Centers for Medicare & Medicaid Services stated that initial deductibles for the standard benefit plan rose from $275 in 2008 to $295 in 2009. Also, beware of the donut hole. This term refers to a “coverage gap.” Within this gap, the beneficiary pays 100% of the cost of prescription drugs before catastrophic coverage kicks in. The initial coverage period covers up to $2,510 worth of prescription drugs. After the initial coverage period ends, the donut hole comes in. The donut hole lasts until you have spent $4,050 out of pocket on co-pays and drug costs. The catastrophic period is when the insurance company pays 95% of additional drug costs once you’re through the donut hole.

There are many people who can help seniors decide what to do when it comes to the Medicare part D Prescription Drug plan. For extra help and more information on Part D, you can visit the Medicare website (www.medicare.gov), call 1-800-MEDICARE, or call your local area agency. There is also a lot of information on the internet to help you in deciding on a plan.