Supplemental Medicare Plans


Supplemental Medicare Plans: Medicare Advantage Plans (MAs) and Medicare Advantage Plans with Prescription Drug Coverage (MA-PDs)

Medicare Advantage Plans, also known as Supplemental Medicare plans, are health plans approved by Medicare and provided by private insurance companies. Medicare sets the rules for Supplemental Medicare Plans and regulates the private companies that operate these plans.

These plans are  are sometimes called Medicare Health Plans, Medicare Part C Plans, or MAs/MA-PDs.

A Medicare Advantage Plan combines Medicare Part A and Medicare Part B into one Health Plan that provides the same services as Original Medicare. Some Medicare Advantage Plans also offer Prescription Drug Coverage (or Medicare Part A and Medicare Part B, plus Medicare Part D) at no additional cost and are called MA-PDs (Medicare Advantage-Prescription Drug Plans).

Medicare Supplement Insurance Plans

Original Medicare pays for many, but not all, health care services and supplies. Medicare Supplement Insurance Plans, sold by private insurance companies, can help pay some of the health care costs (“gaps”) that Original Medicare doesn’t cover. These are costs like copayments, coinsurance, and deductibles.

If you have Original Medicare and you buy a Medicare Supplement Insurance Plan, Medicare will pay its share of the Medicare-approved amount for covered health care costs.

Then your Medicare Supplement Insurance Plan pays its share. Medicare doesn’t pay any of the premiums for a Medicare Supplement Insurance Plan.

Every Medicare Supplement Insurance Plan must follow Federal and state laws designed to protect the consumer, and it must be clearly identified as “Medicare Supplement Insurance.” Medicare Supplement insurance companies can sell you only a “standardized” policy identified in most states by letters. All plans offer the same basic benefits but some offer additional benefits, so you can choose which one meets your needs.

Note: In Massachusetts, Minnesota, and Wisconsin, Medicare Supplement Insurance Plans are regulated to be standardized according to state law.

Medicare Part D Prescription Drug Plan

Medicare Part D prescription drug coverage, also known as Part D, is an optional benefit offered to everyone who has Medicare. Part D can be purchased as a Stand-Alone Prescription Drug Plan (PDP) by those with both Part A and Part B. As discussed above, Part D can also be purchased as a combined benefit, as part of a Medicare Advantage Prescription Drug Plan (MA-PD).

All Part D plans are purchased through private insurers and handle drug formularies, tier levels, and your out of pocket costs differently. It is important to understand these elements, even when purchasing a combined MA-PD plan.

Although Medicare Part D prescription drug coverage is optional, failing to get it as either as a stand-alone plan or as part of a Medicare Advantage plan can create significant financial penalties when buying a plan later on.

Those who fail to enroll at the designated time are subject to the “Late Enrollment Penalty”. The Late Enrollment Penalty is designed to incentivize enrollment into PDP plans by charging 1% of the national average PDP cost per month, for every month without creditable coverage. In other words, if you skip buying a PDP, you will be charged for the time you didn’t have one when you should have.

Not all Medicare beneficiaries need to select a PDP when they become eligible. If you still have employer coverage (you still have healthcare from your job), government or VA drug benefits, you are considered to have creditable coverage in force, protecting you from an LEP if/when you ever choose to elect Part D coverage in the future.

JM Medicare Advisors
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