Who is best to choose a supplement and who is best on an Advantage Plan?

Question: Who is best to choose an Advantage Plan and who a Supplement?

This is Part 3 of my "Medicare Reset" series designed to prepare those on Medicare for the Annual Enrollment Period (AEP), the time each year when those on Medicare can make any change to their plan lineup, that starts Oct. 15.

With up to 600,000 people expected to have their current Advantage Plan discontinued, major benefit changes to many Advantage Plans and Part D prescription coverage, as well as the highest increases in Supplement premiums in the past 20 years, more people than ever are going to need or want to change Medicare health and drug plans. If you're in one of these positions, it's going to be vital to educate yourself in order to make a wise decision. This series is written to help you do just that.

You can read the previous editions on our website, GetYourBestPlan.com or our Facebook Group, Ask the Medicare Specialist.

Answer: There are two options, Supplements (aka Medigap) and Advantage Plans, people have to protect themselves from the potentially large costs of what Original Medicare A and B don't pay.

Unfortunately, many people enroll in a plan without the knowledge of how they differ while others were never given the Supplement option by a Medicare insurance agent, an egregious omission often made because Supplements pay much less commission than Advantage Plans. Part 2 of this series focuses on the differences between Advantage Plan and Supplements in detail. If you have not read Part 2 yet, I highly recommend doing so before continuing on with this week's edition of the Medicare Reset series.

Who is best on a Supplement and why?

Those who are more risk adverse and want stability tend to choose Supplements because they're very predictable in what one can be billed for medical services, both now and in the future. With very few exceptions, we recommend only two Supplement plans, G and N, which keep out of pocket medical expenses to a bare minimum. One of the Federal regulations on Supplements is that benefits can never change as long as one remains on the same letter plan. For example, those who have Plan G today can be assured that in 20 years, they will never pay any bill other than the Part B deductible, which is currently $283. Plan N has two small co-pays in addition to the Part B deductible, $20 for a physician's office visit and $50 at the Emergency Room. Those co-pays can never be increased over time, and no new co-pays can be added to Plan N.

Advantage Plans have more risks, the first of which is the possibility of paying thousands of dollars in medical bills each year, up to one's annual Maximum Out of Pocket (MOOP), which can be as high as $9,250 in 2026. Another risk of Advantage Plans is benefits can change from one year to the next, which can include increased co-pays and other out-of-pocket costs. There are going to be very dramatic increases to hospital copays in 2027 on some of the most popular plans here in Western Pennsylvania and elsewhere. For example, in 2026, the majority of the plans that thousands of our clients are currently enrolled in have flat co-pays between $300 and $500 for an inpatient hospitalization, regardless of how long that stay is. But in 2027, some plans are moving to a daily charge of $300 for up to seven days, $2,100 total, an increase of as much as $1,800 for a week or longer hospitalization from one year to the next!

I'm a bit concerned there may be a day when most or all Advantage Plans employ the highest allowable MOOP, more expensive per-day hospital co-pays, and/or increased premiums. If this happens, many people on Advantage Plans will feel they're not nearly the value as they were when they first enrolled and want to move to a Supplement.

However, that may not be possible, which is what I consider the biggest risk of choosing an Advantage Plan. For almost everyone, the only time one can enroll in a Supplement without their current and previous health issues being considered is three months prior to their initial Part B effective date and six months to one year after. Once that period expires, Supplements can discriminate and deny policies to those who had or have COPD, heart disease, diabetes with retinopathy or neuropathy, cancer, stroke, auto immune disorders, and a few other more serious illnesses. It's very common for this never to have been explained to or understood by many who chose Advantage Plans when they first went on Medicare.

It's my opinion that this AEP, people who have been on low cost Advantage Plans for five to ten years, have stayed healthy, and saved $7,000 to $10,000 in premiums during that time, might want to consider "cashing in their chips" so to speak and move to a Supplement to secure those savings. Reaching a MOOP just once can eat most or all of that entire savings up. Enrolling in a Supplement now, while you can pass medical underwriting, also ensures not getting stuck choosing between mediocre HMO's or PPO's if larger out of pocket costs and higher co-pays along with increased premiums become the norm. Then, if the Advantage Plan market stabilizes in the next few years and once again become the excellent value the best plans once were, a move from a Supplement back to Advantage Plan can always be made because those companies must accept anyone regardless of health history.

Who is best to choose an Advantage Plan?

Those who don't mind taking the risks I posed, are free of chronic conditions, and are confident they'll remain relatively healthy, often choose Advantage Plans for the premium savings and extra benefits. Advantage Plans cost as little as $0 and many others have premiums under $40 per month. Those on Advantage Plan who avoid serious health conditions and services that have higher co-pays can literally save $5,000 to $10,000 in premiums over the next five to 10 years versus a Supplement!

In addition, in 2026, many Advantage Plans still offer very generous and valuable ancillary benefits, "extras," such as comprehensive dental coverage, as well as vision, hearing, and Over the Counter (OTC) allowances, along with a free gym membership that Supplements do not provide. There are Advantage Plans today that still supply as much as $3,000 annually in comprehensive dental benefits, almost $400 in OTC allowances, up to $300 a year for eyeglasses, and a free gym membership that are worth as much as $600 per year. Be advised that we haven't seen next year's schedule of ancillary benefits, but we are anticipating some reductions from the 2026 levels. You will want to know what those changes will be in 2027 before making a decision on moving plans or leaving a Supplement for an Advantage Plan.

Other reasons to choose a Supplement or Advantage Plan

There are other reasons people make their choices. Those who spend a lot of time out of state or have second homes, usually choose a Supplement because they provide unrestricted nationwide access to virtually all doctors and every non-VA medical hospital at no additional cost. Some people also value the freedom Supplements provide to receive care at world class facilities such as the Mayo or Cleveland Clinic, John's Hopkins, MD Anderson Cancer Center, etc., in the event they're diagnosed with a rare or hard to treat disease. Advantage Plan HMOs don't allow any care outside of the network with the exception at an Emergency Room. PPOs do provide the potential to access care out of network, however medical providers who aren't in the plan's network are under no obligation to accept a PPO with the exception of an emergency. And even if a doctor or hospital agrees to take someone as a patient who has an out of network PPO, the costs can be dramatically higher. There are a limited number of PPOs that do offer nationwide network coverage, however, we're concerned those will have significantly higher premiums, co-pays, and MOOP in the coming years and possibly no longer be offered. Many companies have already reduced or eliminated their PPO plan choices.

Some veterans and their spouses have excellent VA coverage and use those facilities and doctors almost exclusively. Most in this situation choose a $0 cost Advantage Plan HMO and there are plans specifically designed for veterans that provide a Part B premium rebate of over $100/month which can be extremely valuable for veterans on a fixed income.

Please be advised that the Medicare Reset series and all other columns are not meant as a substitution for a one-on-one meeting with a licensed and experienced agent at The Health Insurance Store. There are still individual details and needs that should be discussed before making a decision, especially for those who are considering a move from a Supplement to Advantage Plan.

If you would like to make an appointment for the upcoming AEP or have questions regarding this column or any other topic related to Medicare, please give us a call, 724-603-3403 or reach out to me personally via email at [email protected].

Next week's edition of the Medicare Reset series will focus on what Advantage Plans and companies are best to choose.