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Compare Medicare Supplements And Medicare Advantage Plans
If you need to understand medicare health insurance, it is very important to understand the difference between Medicare supplements and Medicare Advantage plans.

The reason is that Medicare supplements and Medicare Advantage plans differ greatly in how they provide coverage. Medicare supplements and Medicare Advantage plans consist of government-paid or government-sponsored coverage that is administered by the physician or the hospital. For an individual, coverage through Medicare supplements can be considered highly effective.

Medicare has a flat deductible and charges a fixed premium for every plan that the beneficiaries enroll into. Depending on the coverage plan, this premium is about $4,140 per year and there are no cost-sharing charges, except for a deductible. Deductibles vary but, generally, the deductible is the same for all plans and the “W” coinsurance for Medicare Advantage plans (also known as Established Prescription Drug Discount Program or Preferred Provider Organization, or PPO, payments) is typically about 2.0% of the total premium.

The deductible and coinsurance are relatively low compared to what is charged through an HSA, such as the ones backed by prepared cash. However, the direct cost relationship between health insurance premiums and health care costs is quite complex. As a result, as the cost of health care spending increases, so does the amount paid out in premiums through the tiers of Medicare benefits. While MA plans have two plan trilogies that include only the Premium Tier (PHP) and the optional Deductible Tier (DP), unlike the plans in Medicare, a Medicare prescription drug coverage (PHP?) plan is typically supplemented with a third plan tier (often called specialty) plan tier.

Here are two illustrations that show the differences between using Medicare supplements vs. using Medicare Advantage. In the first chart, the blue arrows are representing direct and indirect costs. The red lines represent direct health care costs and the blue lines represent indirect costs. DS = Drug Value Packages, DSIP = Drug Value Package Plans (used by Medicare Advantage Plans), NAPOR = New Optionality Payment Option modifies the direct and indirect cost relationships between Medicare and Medicare Advantage. It allows consumers to use 2 (Philips/Sincere) or 4 (philips) discount cards or 10 (Philips/Sincere) or 15 (Philips/Sincere) discount cards by purchasing lower or higher amounts of their prescription medications, provided that the number of prescriptions received is five or more. In this absence of accrual, the direct cost relationship between car insurance premiums and crashes would be much greater than the indirect cost relationship between game insurance and the number of more frequent car crashes.

This direct and indirect cost relationship results in quite large differences in the direct and indirect costs between Medicare plans. If the direct cost relationship remains the same regardless of the number of beneficiaries enrolled in a plan, then the cost-sharing furnished by Medicare is much higher than the cost-sharing furnished by the plans. This is especially true for a lower plan tier (for example $4,140) compared to an equivalent higher plan tier (for example $16,800). If, on the other hand, the number of beneficiaries enrolled in the Medicare 2 levels are increased by 3 or more, the direct cost relationship between Medicare and Medicare Advantage would shift considerably and, most important, the direct cost relationship between Medicare and Advantage becomes much less significant.

In addition to direct the indirect cost relationships, Medicare Advantage plans offer protection against very high out-of-pocket costs using savings on your prescription drug service. In the second table, the red lines represent direct and indirect costs, while the yellow lines represent savings in direct and indirect cost. In the “Direct Excess” case, Medicare Advantage offers health security that is superior to that offered by any other means. Anything over $1568 in total savings on the cost of a brand-name specialty prescription drug is fully insured and paid for by the plan. It is possible for Medicare Advantage plans to provide savings on that same prescription.

These features of Medicare Advantage coverage make them unique. They are somewhat similar to HSA-based health savings accounts (HSAs), such as the ones backed by prepared cash, but, unlike HSAs, Medicare Advantage plans do not fluctuate in terms of the amount of benefits provided. Beneficiaries choose the extent to which they would like to contribute toward the cost of their health. Most subscribers will see partial success in obtaining full coverage as lower deductible premiums means they purchase more prescriptions of the same drugs as they used to.

Another difference across both Medicare accounts and HSA accounts is that Medicare Advantage plans include Flexible Spending Accounts, or FSA, as a component of their medical plan. While some HSA-based plans include this as part of their health insurance plans, the exact participation of these FSA accounts is less clear. Medicare Advantage plans will generally have substantial flexibility in spending limited funds in the FSA for medical care experiences.

Thank you for your interest. If we did not answer your question or you have general questions please call 972-800-6670

List of Medicare Insurance Companies

Accendo Insurance Company

Aetna Health Insurance Company

American Retirement Life Insurance Company

Americo Financial Life and Annuity Insurance Company

Amerigroup Insurance Company

Atlantic Coast Life Insurance Company

Bankers Fidelity Assurance Company

Bankers Fidelity Life Insurance Company

Blue Cross and Blue Shield of Texas, A Division of Health Care Service

Capitol Life Insurance Company, The

Catholic Life Insurance

Central States Health & Life Co. of Omaha

Christian Fidelity Life Insurance Company

Cigna Health and Life Insurance Company

Colonial Penn Life Insurance Company

CompBenefits Insurance Company

Companion Life Insurance Company

CSA Fraternal Life

EPIC Life Insurance Company, The

Everest Reinsurance Company

First Health Life and Health Insurance Company

Garden State Life Insurance Company

Globe Life And Accident Insurance Company

GPM Health and Life Insurance Company

Great Southern Life Insurance Company

Guarantee Trust Life Insurance Company

Heartland National Life Insurance Company

Humana Benefit Plan of Illinois, Inc.

Individual Assurance Company, Life, Health & Accident

Loyal American Life Insurance Company

Lumico Life Insurance Company

Medico Corp Life Insurance Company

Nassau Life Insurance Company of Kansas

National Guardian Life Insurance Company

National Health Insurance Company

Old Surety Life Insurance Company

Omaha Supplemental Insurance Company

Oxford Life Insurance Company

Pan-American Life Insurance Company

Pekin Life Insurance Company

Philadelphia American Life Insurance Company

Physicians Life Insurance Company

Puritan Life Insurance Company of America

Renaissance Life & Health Insurance Company of America

Reserve National Insurance Company

Resource Life Insurance Company

S.USA Life Insurance Company, Inc.

Sentinel Security Life Insurance Company

Shenandoah Life Insurance Company

Southern Guaranty Insurance Company

Standard Life and Casualty Insurance Company

State Farm Mutual Automobile Insurance Company

State Mutual Insurance Company

Thrivent Financial for Lutherans

Transamerica Life Insurance Company

Transamerica Premier Life Insurance Company

Unified Life Insurance Company

Union Security Insurance Company

United American Insurance Company

United Commercial Travelers of America, The Order of

United Insurance Company of America

United National Life Insurance Company of America

United States Fire Insurance Company

UnitedHealthcare Insurance Company (AARP)

Universal Fidelity Life Insurance Company

USAA Life Insurance Company

Western United Life Assurance Company

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