When you are considering your options to cover the gaps in Medicare, i.e. deductibles, copays and coinsurance (yes, Medicare has all those), you might be looking at Supplemental or Advantage plans. There is a lot of confusion about how these types of plans differ and how they cover what Medicare doesn’t.

First, let’s take a look at Medicare Supplemental plans. These plans work similar to a PPO. With a regular PPO plan you can go to doctors in or out of network, but you generally pay more if you go out of network. Medicare Supplemental plans work a little differently because there are no networks. The only stipulation is that you must go to doctors that take Medicare whether they are primary care doctors or specialists. You can go to any doctor throughout the United States, including specialists, and be covered under your Supplemental plan. Supplemental plans are standardized, which means they have the same coverage regardless of carrier or region and are offered by private insurance companies. Premiums are determined by age and geographic location. You don’t need referrals from your primary care doctor to see a specialist. Supplemental plans do not include prescription drug coverage so you would have to purchase a separate Part D drug plan to cover your prescription medications.

Advantage Plans are also called Medicare Part C. Most Advantage plans work like an HMO. You must go to network doctors or you won’t be covered. They are specific to a certain geographic location, usually by county, and, in most cases, you must get a referral from your primary care doctor to see a specialist. Advantage plans are offered through private insurance companies and combine your Medicare Parts A, B and D (prescription drug coverage) into one plan. There are some plans that don’t have the Part D added if you have other drug coverage like Veteran’s Benefits. When you sign up for an Advantage Plan, you opt out of Original Medicare and the plan administers all your benefits. These plans may offer extra coverage like vision, hearing, and transportation to and from medical facilities, although some Supplemental plans are beginning to add these benefits as well. Advantage Plans include Special Needs Plans for people with certain chronic conditions like diabetes or heart disease and those that are eligible for both Medicare and Medi-Cal.

Balance Billing is a common problem when you go to out-of-network doctors not covered or partially covered by your health insurance. The consumer is charged for these costs in bills that could come weeks or months after the initial visit or procedure.

There are steps you can take, however, to mitigate these surprise medical bills.  First, be sure to check your Explanation of Benefits (EOB) which usually comes with the bill.  Check the dates to make sure the service you are being billed for is accurate and which services were actually performed by out-of-network providers.  Be prepared.  Get an itemized copy of your bill and know what the “usual” charge is for the procedure.  Sites like FAIR Health can help you determine what costs are common for medical procedures in your area.  Call the provider and ask to speak to someone in billing who can assist you with the bill.  You can also write to your insurer and request that they cover a portion or all of the balance billing.

Ultimately, one of the best ways to avoid balance billing is to make sure you go to network providers.  Call your insurer in advance, if possible, to make certain all your care is being handled by in-network doctors, from the surgeon to the anesthesiologist.  Make sure all lab work and tests needed in preparation for the surgery is covered as well.  

IRMAA stands for Income-Related Monthly Adjustment Amount, and what it means is that you are being charged more on your Medicare Part B premium and your Medicare Part D Drug Plan premium based on your income. If your Modified Adjusted Gross Income, or MAGI, is over $87,000 as a single person or over $174,000 as a couple, you will have this surcharge added to your monthly premiums. It goes up incrementally as your income rises to an additional $347.00 on Part B and $76.40 for Part D if you are in the highest brackets (above $500,000 for individuals or $750,000 for couples). The amount is added to the standard premium which is $144.60 for 2020. The good news is that it doesn’t affect what you pay for a supplemental or advantage plan. 


Only about 5% of people on Medicare pay the extra charge which was implemented on Part B in 2003 and on Part D in 2011 as a way to save the federal government money on the burgeoning cost of the Medicare program.  What can be even more frustrating is that Medicare looks at income tax records from two years prior. That means if you sign up for Medicare in 2020, your IRMAA will be based on your 2018 tax records.  Most people are making less money once they retire and go on Medicare, so what can you do if you are in this situation?  You can appeal the extra charges to Medicare directly. By filing form SSA-44, Medicare may adjust the amount you owe to reflect your current income levels.  If you don’t appeal, your income is re-evaluated yearly, so you won’t be paying the higher premiums forever if your income does decrease.  

In a continuing effort to lower health-care expenses for Californians, Governor Newsom is proposing that the state manufacture generic drugs, leveraging the huge market of its residents to increase competition and lower pricing.  Along with asking the drug manufacturers to make rebates more available and establishing a health-care affordability office, Newsom maintains that the reforms would “put consumers back in the driver seat.”   

According to the Kaiser Family Foundation, six in ten Americans take a prescription medication and nearly 80% worry about the cost.  Also, three in ten don’t take their medications because they are too expensive.  Amid allegations of price-fixing by big pharma, Newsom signed a bill in 2019 to deter “pay-to-delay” agreements between drug companies and competing manufacturers of generic drugs that serve to delay release of the cheaper off-brands.  According to a study by the Federal Trade Commission, these deals to stifle competition cost consumers as much as $3.5 billion in higher drug costs every year.

If you’re approaching Medicare eligibility, it is important to know the various times to sign up for this important milestone.  Below are the enrollment periods that will help you determine what your eligibility is or whether you need to sign up for Medicare at all:

Annual Enrollment Period – Period every year between October 15 and December 7 when you can change your Medicare Advantage Plan or Prescription Drug Plan.

Open Enrollment Period – Additional period of time from January 1 through March 31 when you can change your Medicare Advantage Plan.  You can also return to Original Medicare with or without a drug plan.

Retirement/Loss of Group Health Insurance – Period of time once you retire or lose creditable group coverage to sign up for Medicare and a Supplemental, Advantage  Plan and/or Part D Drug plan.

Supplemental Plan Birthday Rule – Period that allows you to change your Supplemental plan that begins 30 days before your birthday up to 60 days after your birthday.

Special Enrollment Period – Period of time to change your Medicare Advantage plan or Part D drug plan because of a life event, i.e., moving out of service area, qualifying for Low Income Subsidy.    If you are still actively working and have a creditable (as good as Medicare) group employee health insurance plan, you may be able to keep the plan until you retire and delay signing up for Medicare without incurring penalties.  Check with your benefit’s administrator to see if this is a viable option for you.

While most peoples’ health insurance costs go down when they sign up for Medicare, many are surprised that Medicare doesn’t pay 100% of their medical expenses.  There are deductibles, copays, and coinsurance which can add up to hundreds, if not thousands, of dollars per year of out-of-pocket costs if you have Medicare alone.

How can you bridge the gaps and keep more money in your pocket?  There are basically two ways you can go.  Below is an explanation of each:

Medicare Supplemental Plans – You remain in Original Medicare and can go to any doctor who takes Medicare throughout the United States.  Your plan travels with you, and you do not have to get a new plan if you move out of state. You don’t need to get referrals to see a specialist.  If you want prescription drug coverage, you would have to purchase a stand-alone Part D plan to go with your Supplemental Plan since none of these plans cover prescription drugs.

Medicare Advantage Plans – You opt out of Original Medicare and go with a private company that combines Parts A, B and D into one plan (which is also called Medicare Part C).  Most plans require you to see network doctors and get referrals to see a specialist.  Some plans exclude Part D if you have other drug coverage such as VA benefits.  Advantage Plans include Special Needs Plans for people with certain chronic conditions and Medi-Medi plans for those who qualify for both Medicare and MediCal.