When you reach the age of 65 and are no longer covered by a group health care plan, you become eligible for Medicare. Medicare was never intended to reduce 100% of all health care costs, and typically accounts for 70% to 80% of all medical expenses. The remaining 20% to 30% is your responsibility and most people choose a Medigap insurance plan. Medigap programs are of two types, the Medicare Supplemental Program, which has been in place since 1965, and the Medicare Advantage programs, also known as Medicare Part C, which took place around 2006. Supplemental insurance plans are similar to traditional group insurance. Rendered services incur out-of-pocket costs from deductibles and coops. Medicare Advantage plans are network plans that provide coverage based on agreements with hospitals and doctors about pricing. These plans are private fees for health maintenance organizations, preferred provider organizations and service fees.
The first real difference between plans is that Medicare Advantage plans are contracted to provide Medicare parts A and B. Medicare pays an insurance company to handle all your health care needs. This means that you will not deal with Medicare at all, you will only deal with the network provider. Now all Advantage plans are required to offer at least the same amount as regular Medicare so that there is no difference in the amount of coverage, the difference is in how costs and expenses are controlled.
Advantage plans offer lower monthly premiums but higher out-of-pocket costs. This means that if you do not fall ill or do not need to see a doctor you will come forward. Out-of-pocket costs are also capped for each year. Supplemental plans have a higher premium, but cost little or no out-of-pocket.
Advantage plans usually come with a prescription drug plan and save money by using larger group sizes to achieve better prices. Supplement plans do not have a prescription plan, so you usually get a different plan that can be met to meet your prescription needs.
The benefit plan uses local networks to control costs and benefits can change annually, but no less than Parts A and B cover. Supplement plans are standardized, meaning that Medicare sets what each supplement will cover and they are guaranteed to be accepted anywhere in the United States that Medicare accepts.
The final major difference is that when you sign up for an Advantage plan, you have to stay with that program for a full year, and if you want to change providers, you only have 15 October to 7 for the next year May do so by December. You can change a supplement at any time of the year.