A non-government website

To speak to a Licensed Insurance Agent

(TTY 711)

Mon - Fri, 9 AM - 6 PM EST

Medicare Advantage vs. Medicare Supplement Plans: benefits and coverage

medicare advantage vs medicare supplement

If you are searching for the difference between Medicare Advantage vs. Medicare Supplement plan, you are right here. We made an in-depth outline and gathered the updated information so that you can compare the Medicare Advantage vs. Medicare Supplement and may decide which policy should purchase that will cover all your health care costs.

Medicare Part A and Medicare Part B (Original) cover many healthcare costs but do not cover everything. Even with covered healthcare services, beneficiaries are still responsible for copayments and deductibles, which can quickly add up. Moreover, Medicare Part A and Part B do not cover certain benefits, such as routine vision and dental, prescription drugs, or foreign emergency health coverage. If you have an original Medicare plan, you will have to pay these costs out of pocket.

As a result, many senior citizens with Medicare enroll in two types of plans to cover these gaps in coverage. Two options are commonly used to replace or supplement Original Medicare. An alternative, called a Medicare Advantage plan, is an alternative way to get original Medicare. Another option, Medicare Supplement (or Medigap) plans, work apace with original Medicare coverage. Medicare and Medigap significantly differ in costs, benefits, and how they work. Understanding these differences is essential when reviewing your Medicare coverage options.

Summary

  • You may purchase either a Medicare Advantage or a Medicare Supplement plan. You have both options to choose from.
  • Medicare Advantage plans include Medicare Part D and other extra benefits.
  • Medicare supplement plans cannot be used to pay your Part D prescription drug costs.
  • Most popular Medicare supplement plans pay 100% of your out-of-pocket costs with Part A and Part B, except for the Part B deductible.
  • All Medicare Advantage plans to cap your annual out-of-pocket costs.

 

What Is Medicare Advantage Plan?

Usually, private health insurance companies offer Medicare Advantage plans. These plans ensure the role of primary medical coverage for senior citizens. Medicare does pay these private insurance companies to take the risk.

These plans may also come with a regional network of doctors and hospitals, meaning the plan’s coverage won’t work when you are traveling. Additionally, your current doctor may not take the plan as free treatment coverage.

These plans must provide the same benefits you get from original Medicare Part A and B and may include many additional benefits. However, these other benefits may vary by policy. When you enroll in a Medicare Advantage plan, you commit to paying more out-of-pocket costs through cost-sharing in exchange for lower monthly premiums.

Often, Medicare Advantage plans may cover prescription drug coverage. Although not all plans offer drug coverage, most Medicare Advantage HMO and PPO plans include this additional benefit.

What Is Medicare Supplement Plan?

Medicare supplement insurance known as Medigap is offered by private health insurance companies that add to original Medicare (Parts A and B). It helps pay about 20% of Medicare costs that Original Medicare doesn’t cover.

Medicare supplement insurance helps cover certain costs not covered by original Medicare Parts A and B. These plans help pay your Part A (hospital care) and Part B (medical care) as well as copays, coinsurance, and deductibles for extra out-of-pocket expenses, out-of-pocket expenses for hospitalization, doctor’s services, home healthcare, lab expenses, durable medical equipment and more.

Some Medigap policies also cover healthcare services that Original Medicare doesn’t protect, like medical care when you travel outside the U.S. If you have an Original Medicare Plan and you purchase a Medigap plan, here’s what happens:

  • Medicare will pay its share of the Medicare-Approved Amount for covered health care costs.
  • Then, your Medigap insurance company pays its share.

 

A wide range of Medicare supplement plans varies in coverage and cost, from basic to comprehensive.

 

medicare advantage vs medicare supplement

 

Medicare Advantage vs. Medicare Supplement Plans: what’s being covered?

Medicare Advantage plans cover Original Medicare Part A and Medicare Part B. When you purchase a Medicare Advantage plan, the insurance company, not Medicare, provides all your health coverage. You will not lose any benefits. Literally, most Medicare Advantage plans include additional benefits for routine dental and vision care. Almost all have Medicare Part D prescription drug coverage.

You must check your plan’s terms and conditions in exchange for these additional benefits. These terms often include using only approved network providers and getting prior approval for specific tests and procedures.

Medicare supplement plans cover Original Medicare (Part A) and B. These plans cover most out-of-pocket costs with Medicare Part A and Part B. You still grab your medical insurance from Medicare, but your Medicare supplement plan pays your deductible and copayments.

You usually don’t get any extra benefits with a Medicare supplement plan. If Medicare doesn’t cover a service, your Medicare supplement plan won’t either. Some plans offer stand-alone dental and vision plans for an additional monthly premium. Some plans or policies even include extra benefits at no additional cost.

Medicare Supplement plans do not cover your out-of-pocket costs with Part D. If you buy a Part D plan, you are responsible for deductibles and copayments.

Medicare Supplement plans do not have restrictions such as provider networks and prior authorization. You can use your options with any insurance company that accepts Medicare.

 

How Are Medicare Supplement Plans Different?

Medigap is known as Medicare Supplement plans that private insurance companies offer. Still, they must include the same coverage regardless of carrier. Medicare supplement plans share the remaining costs you would generally be responsible for with Original Medicare alone.

Medicare supplement plans provide you the ability to save your healthcare costs. As all plans have the same benefits, you will always know your out-of-pocket limit. When enrolled in a Medigap plan, there is no doctor network that you must adhere to. You can have coverage from any doctor or hospital that takes Original Medicare in all US states and territories.

Moreover, some Medigap plans – such as Medicare Plan G – cover additional charges in states that allow them. If the doctor does not accept a Medicare plan, you will not have to pay extra because your Medigap plan protects you.

Medicare Advantage vs. Medicare Supplement Plans: Cost Differences

Regardless of your type of Medicare plan, you must pay your Part B premiums. If you are one of the persons who pay for Part A, you must also continue to pay that premium.

Premium

You may be charged a different monthly premium for a Medicare supplement plan. The price of your plan depends on the policy you choose, your age, location, gender, and other factors. Premiums typically range from $50 to $250 per month, and prices often go up as you age.

Few Medicare Advantage plans have a monthly premium, but most people choose a $0 premium plan. Among those who pay premiums, the average cost is $25 per month, which usually includes Part D coverage.

Deductible

You don’t have an annual deductible with a Medicare supplement plan unless you accept a high-deductible plan. Most Medicare supplement plans compensate for your Part A deductible, coinsurance, and 100% of your Part B costs after your Part B deductible.

If you take a high-deductible plan, your plan pays 100% of your costs after you spend $2,340 out-of-pocket.

Medicare Advantage plans may have an annual deductible plan, but most people have access to a $0 deductible plan. Some plans have separate deductibles for Part D.

Cost-sharing

There is no cost sharing with most Medicare supplement plans. This means the plans pay 100% of your Part A inpatient and Part B cover. If you choose Plan N, you will pay a small copayment at the time of service. Copays are typical $20 or less for doctor visits and $50 or less for emergency room care.

You typically pay a flat copayment for health care with Medicare Advantage plans. A typical Medicare HMO plan might charge $5 for a primary care visit, $25 for specialist care, and $50 for urgent and emergency care room visits.

Out-of-pocket max

Out-of-pocket limits apply to only two Medicare supplement plans: Plan K and Plan L. These plans pay between 50% and 75% of your Part A and Part B copays until you reach the out-of-pocket maximum. After that, they cover 100% of your expenses. In 2021, the out-of-pocket maximums for Plan K and Plan L were $6,220 and $3,110, respectively.

All Medicare Advantage plans have out-of-pocket limits. Once you reach it, your plan pays 100% of the covered expenses. Medicare sets maximums yearly, but most plans set them below Medicare’s limits. In 2021, the average Medicare Advantage out-of-pocket maximum was about $5,091.

 

Medicare Supplement vs. Medicare Advantage: Cost Comparisons

Medicare Supplement
Medicare Advantage
Monthly premiums $50 to $250 Most people pay $0
Deductible $0, but you pay the $198 Part B deductible with most plans. $0 to $500 is typical; you may have a separate deductible of up to $435 for Part D
Cost sharing $0 except with Plan N, which has a small copayment at the time of service Copayments are generally between $5 and $25 for office visits, $50 for urgent care, and $100 per day for the first 5 inpatient days
Out-of-pocket maximum Not applicable, except with Plan K and Plan L $4,900 is average, although it can be as high as $6,700

medicare advantage vs medicare supplement

 

Overall Comparisons of Medicare Advantage vs Medicare Supplement

Medicare Advantage
Medicare Supplement
Can make changes Two open enrollment periods per year One period per lifetime unless there are special circumstances
Monthly premium As low as $0 Usually has a monthly premium
Part B deductible May not have a deductible Must pay unless you got Plan C or F before January 1, 2020
Part B premium Must pay Must pay
Prescription drugs Generally, covers Does not cover
Routine dental, routine hearing, routine vision May cover Does not cover
Networks that restrict providers Yes No
Standardized benefits No Yes
Copayments and coinsurance Usually has copayments and coinsurance May cover all copayments and coinsurance

Medicare Supplement vs. Medicare Advantage Plans: Key Considerations

For most senior citizens, the grabbing between Medicare Supplement and Medicare Advantage comes down to three key factors:

  • Flexibility
  • Predictability
  • Extra benefits.

Flexibility

If you want to travel or spend part of the year in another state, you need the flexibility to get health care wherever you live. Most Medicare Advantage plans necessitate selecting an approved provider, and a Medicare supplement plan permits you to be treated by any provider that takes Medicare.

Predictability

With most popular Medicare supplement plans, you can only deduct your monthly premium and your Part B deductible. Your plan covers 100% of your other out-of-pocket expenses with original Medicare. That means you know how much your health care costs will be each month.

With Medicare Advantage, you pay a flat copayment over time of service. For most outpatient services, these co-payments typically range between $5 and $75. You pay nothing if you choose a $0 premium plan and don’t need health care for some months. You will never be charged extra or more than your plan’s out-of-pocket maximum.

Extra benefits

Most Medicare supplement plans do not include additional benefits, although a few offer SilverSneakers or similar fitness memberships. You may be able to purchase dental and vision coverage for a different monthly premium. Very few plans include vision and dental benefits in the monthly premium.

No Medicare supplement plan includes Part D, although most companies that sell Medigap plans also sell Part D.

Most Medicare Advantage plans include Part D coverage for prescription drugs. Most include silver sneakers and routine vision, dental, and hearing care benefits.

Some plans include newly expanded facilities. The most common are over-the-counter drugs and devices, home food and grocery deliveries, and allowances for non-medical transportation. There is no additional cost for these facilities.

 

Benefits of Medicare Supplement Insurance Plans

There are 10 Medigap insurance plans (Medicare Supplement) available in most states, and a different term designates each plan type. Your coverage is standardized across each plan term, which means you’ll get the same primary benefits for Medicare supplement coverage within the same terms category no matter which insurance company you buy from. However, even if the direct benefits are the same in plans of the same letter category, the premium cost may vary by insurance company and location. If you live in Massachusetts, Minnesota, or Wisconsin, keep in mind that these three states standardize their Medigap plans differently than the rest of the country.

Medigap plans cover out-of-pocket costs not covered by original Medicare, such as copayments, copays, and deductibles. Some plans can help pay for other benefits that original Medicare doesn’t cover, such as out-of-country emergency health coverage or the first three pints of blood. Medigap plans do not include prescription drug benefits. Suppose you don’t already have creditable prescription drug coverage (coverage that’s at least as good as Part D benefits). In that case, you should purchase a stand-alone Medicare Part D prescription drug plan to cover your prescription drug costs. Also, Medicare supplement insurance plans typically do not offer additional benefits beyond Medicare’s already covered, such as routine dental, vision, or hearing coverage.

 

Benefits of Medicare Advantage Plans

Health insurance companies have more flexibility and options in designing Medicare Advantage plans, so you’ll find more differences between plans. It means you must be more careful when comparing several options to ensure you don’t miss anything.

As mentioned, Medicare Advantage plans allow you to get coverage for benefits outside of original Medicare. These plans include routine vision, dental, hearing, and health wellness programs. Generally, under Original Medicare, you will pay out-of-pocket for these services unless you have other insurance.

Another benefit of Medicare Part C is that many of these plans include Medicare Part D (Medicare Advantage Prescription Drug Plans) coverage. These plans cover you to manage all of your Medicare benefits through a single plan.

If you are enrolled in a Medicare Advantage prescription drug plan, you do not need to enroll in an additional Medicare prescription drug plan. Think you are enrolled in a Medicare Advantage plan that includes prescription coverage and are also registered in a stand-alone Medicare prescription drug plan. In that case, you may be automatically dropped from your Medicare Advantage plan.

 

Medicare Advantage vs. Medicare Supplement plans: How do I choose?

  • Do you want predictable costs, freedom to choose any doctor, avoid referrals, and peace of mind while traveling? If you answered yes, you are looking for a Medicare supplement plan.
  • Are you comfortable with low monthly premiums and additional benefits in exchange for unexpected payments, strict doctor networks, and referrals? If your answer is yes, Medicare Advantage may work for you.
  • The best part of working with agents is that we ensure that whichever option you choose is the best for you. Perhaps you are already considering switching from Medicare Advantage to a Medicare Supplement plan or another way.
  • Dial the number above to know your best plan options today! Or, fill out the quote form to connect with an agent today!

 

Medicare Advantage vs. Medicare Supplement Plans: Pros and Cons

There are a lot of differences between Medicare supplement vs. Medicare Advantage plans. The chart below shows you the pros and cons of Medicare Advantage and Medicare Supplement plans.

Medicare Advantage Plans
Medicare Supplement Plans
Pros Cons Pros Cons
·       Additional benefits (dental, vision, drug, etc.)

·       Low monthly premiums

·       Over 200+ plan options

·       Higher maximum-out-of-pocket costs (up to $10,000)

·       Restrictions to doctors and hospitals

·       Coverage does not travel with you (only covered in the plan’s service area)

·       Most plans require referrals

·       Low to no out-of-pocket costs

·       NO network restrictions

·       NO referrals

·       Foreign travel emergency coverage on most popular plans

·       Coverage travels with you throughout the U.S.

·       Standardized benefits

·       Higher monthly premium

·       Additinal plans for dental, vision, and prescription required

·       12 Plan options available

 

 Final Thought

Medicare supplement plans diverge from other Medicare plans because you are not guaranteed coverage except in limited circumstances. You are guaranteed rights to the issue during your Medigap OEP (Medigap Open Enrollment Period). This means you can purchase any plan sold in your state, and you won’t be turned down or overcharged because of a pre-existing condition.

Out of that time, you can still apply for a plan, but you’ll usually have to pass medical underwriting before you are approved. If you have a severe or chronic condition, the insurance company may turn you down, deal you with a plan with less coverage, or charge you a much higher premium.

In contrast, anyone eligible for Medicare can purchase a Medicare Advantage plan, regardless of health status. Another advantage is that if you choose a plan and don’t like it, you can switch to another one or go back to the original Medicare without penalty.

You can change twice a year, during the fall election and the Medicare Advantage Open Enrollment period. It is significant to note that you do not have Medigap guaranteed issue rights during this period.

If you consider a Medicare supplement plan is the best fit for you, you should take it over when you first become qualified during your Medigap OEP.

If you’re still unsure which plan is right, contact your State Health Insurance Assistance Program (SHIAP) for more advice. Calling and Speaking with a licensed Medicare professional will supply a good source of information about local plans and provider networks. With these resources, you’ll have all the details you need to help you make an informed choice.

Related Posts

Call now to get a Free No Obligation Quote

(TTY 711)

Skip to content