Medicare Advantage Plans and Supplement Insurance
Aging seniors and their families are often confounded by the complexity of issues facing the elderly (including declining income, increased debt, poor investment returns, declining health, medical crises, complex insurance programs, long term care challenges, etc...). This book (published in 2014) takes a comprehensive approach to address these challenges and provide solutions.
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by Thomas Day
Medicare Advantage Plans
Over 300 private insurance companies provide Advantage Plans funded by Medicare but designed and administered by the private companies. Plans look less like traditional Medicare and more like modern group insurance. Most of these plans also incorporate the new Medicare prescription drug coverage. Medicare Advantage along with the new Medicare drug plan was created by the Medicare Modernization Act of 2003.
Congress' intent in introducing new Advantage Plans was to modernize Medicare coverage and make it look like existing catastrophic plans; but, at the same time provide lower out-of-pocket cost for traditional Medicare beneficiaries who are buying Medicare supplement policies. The Advantage Plan, for a lower premium, or perhaps no premium at all, would replace the more expensive combination of traditional Medicare and supplement plans.
Seniors who are not healthy are probably better off under traditional Medicare with the supplement insurance plan. This is because they are paying the costs of 100% coverage spread out, at a fixed cost, on a monthly basis through supplement premiums. This is contrasted with a $1,500 to $3,000 one-time, out-of-pocket co-pay per year for receiving services through an Advantage Plan. Some seniors just don't have very large sums of money in their savings and prepaying care through monthly premiums for Medicare supplement is a way to buy expensive health services on an installment plan.
Advantage Plans generally cover nursing home care differently from traditional Medicare. Traditional Medicare pays the first 20 days of nursing home services free of charge and the next 80 days of care requires a co-payment. On the other hand, most advantage plans require an up front co-payment and then will cover the nursing home at 100% thereafter.
Home care services are also covered differently. Traditional Medicare will provide funding for up to 60 days of care. Most Advantage plans will only approve care on a day to day basis. Evidence is mounting that these plans only cover about 20% of the home care normally covered by traditional Medicare.
Medicare Supplement Insurance
Medicare supplement insurance or Medi-Gap plans are not government insurance policies. There are many private insurance companies that sell medicare supplement policies. These policies are designed specifically to cover the deductible, coinsurance and co-pay amounts not covered by Original Medicare. They do not cover any other insurance needs. When Original Medicare stops paying, this policy also stops paying. As of 2006 they can offer no prescription drug coverage.
A Medicare supplement (Medigap) insurance, sold by private companies, can help pay some of the health care costs that Original Medicare doesn't cover, like copayments, coinsurance, and deductibles. Some Medigap policies also offer coverage for services that Original Medicare doesn't cover, like medical care when you travel outside the U.S. If you have Original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then your Medigap policy pays its share. There are 10 different Medigap plans that cover an increasingly larger amount of deductibles, coinsurance and co-pays. Each plan is designated by a letter starting with “Plan A” and ending with “Plan N.” Each plan covers different aspects of deductibles and co-pays. The more that is covered the more the plan costs.
A Medigap policy is different from a Medicare Advantage Plan. Those plans are ways to get Medicare benefits , while a Medigap policy only supplements your Original Medicare benefits. If you have a Medigap policy with prescription drug coverage, this means you chose not to join a Medicare drug plan.
If your Medigap policy covers prescription drugs, you must tell your Medigap insurance company if you join a Medicare Prescription Drug Plan so it can remove the prescription drug coverage from your Medigap policy and adjust your premium. Once the drug coverage is removed, you can't get that coverage back even though you didn't change Medigap policies.
Your Medigap carrier must send you a notice each year telling you if the prescription drug coverage in your Medigap policy is creditable. You should keep these notices in case you decide later to join a Medicare drug plan.