Now you’re signed up for Original Medicare Parts A and B – Great! BUT, while Medicare offers an excellent benefit for the comparatively very low premiums charged, it is very important to note that Medicare Parts A (Hospital) and B (Outpatient) cover only 80% of Medicare allowed charges.
This means that YOU are responsible for the other 20% of charges!
This is why it is critical to have a “supplement”, a small, inexpensive policy that covers that “gap” (the 20% that Medicare doesn’t pay.) It can even cover some benefits Medicare doesn’t pay at all. There are two basic ways of bridging the cost of what Medicare pays and what You pay: the Traditional Medicare Supplement and Medicare Advantage.
Traditional Medicare Supplement
- You would first enroll in Medicare Parts “A”, “B” and “D”.
- The policy is automatically billed after Medicare is billed for all covered services.
- The policy picks up the remaining 20% of charges that go unpaid by Medicare.
Advantages of the Traditional Medicare Supplement
- Any provider (doctor or hospital) that accepts Medicare automatically accept your this kind of supplement.
- No “managed care” element beyond original Medicare’s own policies.
Disadvantages of the Traditional Medicare Supplement
- More expensive than most Medicare Advantage plans
Note: Traditional supplement plans occasionally run promotions (at their discretion) allowing those coming off of Medicare Advantage plans to enroll.
Medicare Advantage
Medicare Advantage is a fundamentally different means of enrolling in Medicare. While it still does involve enrolling in Parts “A” and “B” as a prerequisite, a Medicare Advantage policy requires that you “assign” your Medicare benefit to a private insurance carrier- for what can be an undetermined length of time. In turn, the private carrier manages your benefits and creates a schedule of co-pays for covered services.
Advantages of Medicare Advantage
- Often charges the lowest possible premiums for a supplement
- In some cases premiums may be as low as $0. Yes, zero dollars!
- Can include an integrated Part D (Rx) Plan.
Disadvantages of Medicare Advantage
- Limits your access to providers within a local medical group.
- For plans that include Part D coverage, one-size-fits-all Rx coverage may not be optimized for your situation
- Can be restrictive about authorizing certain items, particularly expensive durable medical equipment and certain elective procedures.
- Once enrolled, you cannot assume you may enter a traditional supplement during Annual Enrollment Period.
What to Do Next?
For answers all of your Traditional Medicare and Medicare Advantage questions, please be in touch. You may call Lucent Insurance Services directly at 408-348-8930. Or drop us an email via our Contact Page.
