Medicare Advantage vs. Medicare Supplement Plans

What's the Difference?

There are many differences between the ways in which you can choose to receive your Medicare benefits is that Medicare Advantage contracts operate on a calendar year basis (annually renewable) and Medicare Supplement (Medigap) policies are guaranteed renewable. Guaranteed renewable means that the insurance company cannot change what your Medigap policy covers once it is issued, or terminate your policy, unless you do not pay your premium within the grace period and/or you made a material misrepresentation on your application.

QUESTION	ORIGINAL MEDICARE (Parts A & B)	Medicare Advantage (Part C)	MEDICARE SUPPLEMENT (Medigap)
Who provides the coverage?	Federal Government	Private Insurance Companies	Private Insurance Companies
How is the Plan Funded?	Payroll taxes paid by employees, employers, and self-employed individuals; funds authorized by Congress; and premiums paid by Beneficiaries.	The plan receives a fixed amount per beneficiary per month from Medicare plus the Beneficiary’s Part B premium. It may also charge a premium to the member.	Premiums paid by the policyholder.
Do I continue to pay my Part B premium?	YES	YES	YES
Can my policy be cancelled?	NO, unless changed by an Act of Congress	YES. Contracts operate on an annual basis upon approval by CMS.	NO. Once you purchase a policy, it can only be terminated if you do not pay your premium on time or you made a material misrepresentation on your application.
What does the plan cover?	Part A is Hospital Insurance Part B is Medical Insurance	At least what Original Medicare covers plus additional benefits not covered by Medicare.	Pays eligible expenses (based on the plan you purchased) not paid for by Medicare such as deductibles and/or coinsurance/copayments.
What options are available?	Part A and Part B provides the same coverage for everyone.	The insurance company generally offers a choice of plans with varying copayments and costs. Most plans include prescription drug coverage. Some plans add dental and/or vision coverage.	Effective with policies purchased on and after June 1, 2010, you can choose Plan A, B, C, D, F, G, K, L, M, or N. Plan F also offers a high deductible option. The plans are standardized for all insurance companies.
Can I use my own doctors and hospitals?	YES	NO, you must use providers in your plan’s network unless it is a medical emergency.	YES
Is pre-certification required?	NO	Generally, YES. Penalties may apply if you do not follow the plan’s rules.	NO
What impact does the New Health Care Law have? HEALTH REFORM LAW	The guaranteed Medicare benefits you currently have will remain the same. Beginning in 2011, Part B will cover a free annual physical. You will pay NO deductible or coinsurance for most preventive care services like colorectal cancer screening and mammograms.	Today, Medicare pays Medicare Advantage insurance companies over $1,000 more per person on average than Original Medicare. You still receive guaranteed Medicare benefits, but these overpayments will be gradually eliminated starting in 2012. Beginning in 2014, at least 85% of every dollar these plans receive must be spent on health care, rather than administrative costs and insurance company profits.	NONE. The good news is that once you have a Medicare Supplement policy, it cannot be changed except to coincide with changes to Medicare’s deductibles, coinsurance, and copayments. For example, if your policy pays the Part A deductible, each year as the Part A deductible increases, your policy will pay the increased deductible.
This information has been compiled from www.medicare.gov, www.cms.gov, and the Medicare & You booklet.

For Example: Medigap plans E, H, I, and J are no longer available for sale after May 31, 2010. However, if you purchased one of these plans before June 1, 2010, your insurance company cannot cancel your policy or make you change to another plan as long as you continue to pay your premium within the grace period.

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