The Big Dilemma: Supplement or Advantage?

One of the leading causes of US bankruptcies among the elderly is healthcare costs. If you’re on Medicare, managing your healthcare spending is critical. So choosing the right plan that aligns with Medicare is key.

Medicare supplement plans

Private insurers sell Medicare supplement plans to help recipients defray some of Medicare’s uncovered costs, such as coinsurance, copays, and deductibles. One upside is that most supplemental plans cover supported benefits at 100%. As well, supplemental plans usually allow you to visit any doctor who accepts Medicare. However, premiums may increase yearly.

Medicare supplement plans have remained stable since their inception, except for the removal of prescription benefits in 2006. Each plan has a letter from A to N (some letters are skipped), and benefits vary by plan. Your insurance agent can help you decide which supplement plan is right for you.

Medicare Advantage plans

Medicare Advantage (MA) plans (also called Part C plans) are popular with many receiving Medicare. If you buy a MA plan, you usually get HMO or PPO health coverage through the insurer’s network. Your MA plan may also offer prescription drug coverage.

You still pay your Medicare Part B premiums, but the plan shares coinsurance costs with the MA insurer. This means you may more easily predict copays. MA plans also offer maximum out-of-pocket limits that cap your costs if a catastrophic illness occurs. Typically, MA plans cost less per month than supplement plans, and you pay only the Part B premiums in some areas.

If you need help

As you approach Medicare age, one of your most important financial decisions involves your health insurance. An insurance agent can guide you toward the right choice for you. Schedule an appointment with your agent at least three months before you turn 65. If you’re already on Medicare, check soon with your agent to see if and when you can switch plans.