Medicare Supplement Plans (Medigap Plans)
Medicare Supplements are sometimes called Medigap plans, because they were designed to supplement Original Medicare and “fill in the gaps,” paying the deductibles and coinsurance for Medicare-covered services.
There are 10 standard plan designs, and while many insurance companies offer Medicare Supplements, the benefits are required to be the same for each plan design.
Medicare Supplements have a monthly premium, the cost of which varies by plan type and insurance company. Supplement coverage is secondary to Medicare. When a senior uses health care services, the bill goes directly to Medicare. Medicare will pay its portion, then forward the claim to the insurance company to pay the appropriate deductible and coinsurance amount. Generally, the supplement will only cover Medicare-approved services.
These plans do not provide prescription drug coverage, so many individuals pair a stand-alone Prescription Drug Plan (PDP) with their Medicare Supplement to help cover the costs of their prescription drugs.
Medicare Advantage Plans
Medicare Advantage (MA) and Medicare Advantage Prescription Drug (MAPD) plans work differently than Medicare Supplements. While all plans include coverage for Medicare services, these plans generally include deductible and copay cost-sharing features. Retirees who choose to enroll in an MA or an MAPD must be signed up for Part A and Part B. These kinds of plans often have a monthly premium that can vary in price, depending on the plan type and the insurance company. The premiums for Medicare Advantage plans tend to be lower than Medicare Supplements.
They can be classified into two different types: HMOs and PPOs. In an HMO plan, you can only go to health care providers or hospitals in the plan’s network unless it is an emergency. In a PPO plan, you can receive medical care from health care providers in and out of the plan’s network as long as they are contracted with Medicare. However, you will pay less if you use in-network providers. In many cases, Medicare Advantage plans include Part D Prescription Drug coverage, hence the reason they are referred to as Medicare Advantage Prescription Drug plans.
The Centers for Medicare and Medicaid Services approve the plans’ benefits and rates each year.
Part D Prescription Drug Plans
Private insurance companies sell Part D Prescription Drug plans (PDPs). PDPs are available to everyone who has signed up for Medicare Part A and/or Part B. You can pair a stand-alone Prescription Drug Plan with a Medicare Supplement. Another option is to enroll in a Medicare Advantage Prescription Drug plan (MAPD). An MAPD includes both medical and drug coverage. You cannot have a stand-alone PDP and a Medicare Advantage Prescription Drug plan at the same time.
Each Part D plan has a “formulary,” which is a list of prescription drugs. It is extremely important to make sure that your drugs are on your plan’s formulary.
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If you are currently a RetireMEDiQ client and have questions about the Medicare plan types discussed above, you may contact our team of advisors at 1-877-222-1942.