Medicare Supplement Vs Medicare Advantage, what are the differences? If you’re like most people who are on or will soon be on Medicare, you are on the lookout for the best way to ensure that you get reasonable health care without breaking the bank.
The primary difference between a Medicare Supplement and Medicare Advantage is that the Medicare Supplement works with Original Medicare by filling in the coverage gaps resulting from deductibles, coinsurance, and copay requirements whereas Medicare Advantage (Part C) replaces Original Medicare Part A and Part B and in many cases, Part D.
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Medicare gap vs advantage can be frustrating to understand so if you would like to have a one-on-one conversation, please call us at 844-528-8688 and we would be happy to discuss what plan is right for you.
You may have heard of Medicare supplements (also known as Medigap) as well as Medicare Advantage Plans (or Medicare Part C). These are two common options for Medicare recipients to maximize their benefits, but figuring them out can be a real headache. And deciding which one is best for you is even more challenging.
So in this guide, we want to offer you straightforward answers to the most important questions about Medicare Supplement vs Medicare Advantage. We’ll explain what each option is and help you decide the best choice for your needs.
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What is the difference between Medicare Advantage and Medicare Supplement?
We’ll deep dive into the important distinctions later in this guide. But to get started, the most important thing you should understand is this:
A Medicare Advantage Plan is a replacement for your traditional Medicare Parts A and B. It is new insurance provided by a private company. With a Medicare Supplement, on the other hand, you are keeping your Original Medicare Parts A and B and simply adding on additional coverage.
What this means is that you cannot have both Medicare Advantage and Medicare Supplement. So you need to choose the right option for you from the start.
Important Terms to Understand
Before we compare your two options, let’s get a few difficult terms out of the way. Understanding these now will help you better grasp the difference between Medigap and Medicare Advantage.
Deductible: A deductible is the amount of out-of-pocket cash you will need to pay before your Medicare benefits kick in. For example, the Medicare Part A deductible for inpatient hospital care is around $1400. This means that if you required inpatient services, you would have to pay the first $1400 in expenses before Medicare would start paying anything.
Benefit Period: This is the period of time that must pass before your deductible resets and you have to pay it again. It can get complicated, but a simple way to understand it is that after paying your deductible, you won’t have to pay it again until 60 days have passed without you requiring the same sort of medical care.
Premium: Insurance premiums are monthly fees that you need to pay in order to maintain coverage. For example, the standard monthly premium to stay on Medicare Part B was $164.90 in 2023.
Coinsurance: A percentage of medical costs that you are responsible for paying, even after you have met your deductible. Medicare Part B, for example, requires 20% coinsurance on most services. So if you required $1000 worth of medical care, you would pay $200.
Copayment: Like coinsurance, it is a fixed dollar amount rather than a percentage. With Medicare, this mostly applies to prescription drugs (covered by Part D).
What Is Medicare Supplement?
As we mentioned before Medicare Supplement is also known as Medigap. And this name actually provides a very accurate description of what these plans are. In essence, they fill in the “gap” that many people find unsatisfying in Original Medicare.
For example, many Medicare recipients find that the deductibles are too high. If you were admitted to a skilled nursing facility, you would have to pay about $1400 before your benefits kick in. That can be an enormous financial burden for someone on a very limited income.
Many Medigap plans eliminate this deductible completely, so you don’t have to worry about a single medical incident emptying your bank account or putting you into debt. Of course, Medigap plans come with an additional monthly premium. But most people find that the peace of mind they offer is more than worth the additional costs.
When you enroll in a Medicare Supplement plan, you still have your Original Medicare. You are just adding on additional coverage that is provided by another company. After Medicare pays its share of the bill, any remaining charges that you have covered will be paid by your Medigap provider. Here are the most common “gaps” that people turn to Medicare Supplement plans to cover:
- Part A coinsurance for hospitalization, hospice, or skilled nursing facilities
- Part B coinsurance and copayments
- Blood costs (up to 3 pints)
- Part A deductible
- Part B deductible
- Part B excess charges (when your doctor charges more than Medicare’s limit)
- Medical expenses during foreign travel
There is a very wide range of Medicare Supplement plans that mix and match these benefits. There is a plan for everybody, and you can read our complete overview here. But if you are having trouble deciding which one is best for you, don’t hesitate to reach out to our Medigap specialists at 844-528-8688.
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What Is Medicare Advantage?
Unlike Medigap, when you choose a Medicare Advantage Plan, you are opting out of Original Medicare. Instead, you are choosing a third-party insurance provider to handle all of your health care.
You will continue to pay your Part B premium, and may also have an additional monthly premium from the insurance company. However, all Medicare Advantage providers are required to offer at least the same level of coverage as Original Medicare.
A Medicare Advantage Plan is similar to shopping around for insurance before you had Medicare. You get to compare companies, plans, coverage, and costs and choose the best option for you.
At the same time, you’ll be tied to the healthcare providers that are in your plan’s network, a restriction that doesn’t come with Original Medicare. However, many Advantage Plans also cover prescriptions, dental, vision, and hearing—so they appeal to many.
What is the biggest disadvantage of Medicare Advantage?
One of the biggest disadvantages of Medicare Advantage plans is the restrictions on the choice of healthcare providers. These plans typically have a network of doctors, hospitals, and other healthcare providers, and beneficiaries may need to choose a provider within the network to receive the full benefits of the plan. Out-of-network care may be covered at a higher cost or may not be covered at all unless it is for emergency care.
Another potential disadvantage of Medicare Advantage plans is that they may require prior authorization for certain services or procedures, which can be time-consuming and may delay necessary medical care.
Additionally, while Medicare Advantage plans may have lower out-of-pocket costs than Original Medicare, they often have annual limits on out-of-pocket costs. This means that if a beneficiary has high medical expenses in a given year, they may end up paying more out-of-pocket with a Medicare Advantage plan than with a Medicare Supplement plan.
Medicare Supplement versus Advantage Plan
There is no one size fits all answer to the question of Medicare Advantage vs Medicare Supplement. Instead, you have to consider your specific needs in order to find which is best for you.
So let’s compare these two Medicare options across some of the most important elements of your healthcare.
Healthcare Provider / Network
Since Medigap is simply an addition to your Original Medicare, your benefits will apply to any doctor or hospital that accepts Medicare. This means you’ll have a wide range of providers to choose from and won’t be tied down to a specific network.
With Medicare Advantage, however, you will be restricted to the hospitals and providers that are within the network of your insurance company. So if you would like more freedom to choose your doctors, Medigap is a better choice for you. If you are interested in a Medicare Advantage plan but want to keep seeing your current providers, you should make sure they are in-network before adopting a plan.
Specialist Referrals
With Original Medicare (and thus Medigap), you will not need a referral for specialists. Many Advantage Plans, on the other hand, require a referral from your primary care provider in order for a specialist visit to be covered. If you see a specialist without this referral, you may have to pay all of the costs out-of-pocket.
So, if you want a free range of choices when to see a specialist, Medigap is probably the way to go.
Costs
Here’s where it gets a little tricky to compare. The exact costs are going to vary a lot based on exactly what coverage you opt for. For both Medicare Supplement and Medicare Advantage, you’ll continue to pay the Part B monthly premium. Beyond that, here is what you can expect:
- Medigap: If you choose your plan right, you will see very few out-of-pocket expenses for services, and most plans eliminate the deductible. However, your monthly premium will increase. In essence, you are choosing a fixed monthly cost over big surprise medical bills.
- Medicare Advantage: Your monthly costs will usually be lower than with Medigap. However, you will have a copayment or coinsurance for most medical services. A deductible may apply as well.
Prescription Drugs
Medicare Supplements do not include prescription drug coverage. If you choose Medigap, you would also need to enroll in Medicare Part D in order to receive coverage for prescriptions.
Most Medicare Advantage Plans do include prescription drug coverage. If you are trying to decide what is best for you, you should weigh the costs of the Advantage Plan against the cost of adding Part D on top of your Original Medicare.
Other Healthcare
Medicare Supplements do not include coverage for dental, hearing, or vision care. Many Advantage Plans do cover some or all of these services. You’ll have to shop around to find the plan that includes what you need, but if you hope to avoid large out-of-pocket expenses for these types of care, a Medicare Advantage Plan may be best for you.
Enrollment Period
Medigap has relatively loose rules about when you can enroll compared to Medicare Advantage. Basically, any time after you turn 65 and are enrolled in Part B, you can add a Medicare Supplement.
Medicare Advantage Plans, however, operate more like a traditional health insurance plan with an open enrollment period. This is going to vary from one insurance company to the next, so you may need to shop around a bit if you are on a strict time schedule.
Is Medicare Advantage Better than Medicare Supplement Plans?
Determining whether Medicare Advantage is better than Medicare Supplement, also known as Medigap, depends on individual healthcare needs and preferences. Medicare Advantage plans, or Medicare Part C, offer all the benefits of Original Medicare (Part A and Part B) as well as additional benefits such as prescription drug coverage, dental, vision, and hearing services.
These plans often have lower monthly premiums than Medigap policies and may have lower out-of-pocket costs, but may have more restrictions on the choice of healthcare providers and require prior authorization for certain services. It is important to note that Medicare Advantage plans have an annual limit on out-of-pocket costs, while Medigap policies do not.
Medicare Supplement plans, on the other hand, work alongside Original Medicare to cover out-of-pocket costs such as deductibles, coinsurance, and copayments. They provide a broader choice of doctors and hospitals than Medicare Advantage plans but do not typically include prescription drug coverage or additional benefits like dental and vision care. Medigap policies may have higher monthly premiums than Medicare Advantage plans, but do not require prior authorization for services or have network restrictions.
Ultimately, the decision between Medicare Advantage and Medicare Supplement depends on individual healthcare needs and budget. Those who prioritize additional benefits and lower out-of-pocket costs may prefer Medicare Advantage, while those who prioritize a broad choice of healthcare providers and are willing to pay higher monthly premiums may prefer Medigap policies. It is important to compare the coverage and costs of both options to make an informed decision.
2 Important Considerations to Guide Your Decision
So far, we’ve covered the basic differences between Medigap and Medicare Advantage. By this point, you might be leaning towards one over the other. Before you make your final decision, however, there are a few important points you need to keep in mind.
#1 You get what you pay for.
Just like everything in life, better Medicare coverage is going to cost more. This is why we always recommend that you choose some sort of addition to your Original Medicare, whether that’s Medigap or a Medicare Advantage Plan.
The real decision is whether you want predictable payments or not. Medigap will offer you predictable monthly payments so that you don’t have to fork up surprise cash in an emergency. Medicare Advantage may require you to plan ahead a little bit more and have some money in savings for surprise healthcare costs, but there will not be as much monthly overhead.
#2 You can’t just switch plans any time you want
Unfortunately, you can’t game the system by opting for the cheapest options now and then switching plans when your healthcare needs change.
You are allowed a 12-month trial period for Medicare Advantage. If you leave it within that time frame, you can return to Medigap without restriction.
While there are some other exceptions, the general rule is that if you have Medigap and drop it, you may not be able to re-enroll in it again. If you do, you will be subject to medical underwriting, which means you may be denied coverage or charged higher premiums due to pre-existing health conditions.
Long story short: Your best option is to do your research and make an informed decision about the best plan for you so that you don’t have to deal with the risk of changing down the road.
Frequently Asked Questions
Prescription drug coverage is usually included in Medicare Advantage plans, also known as Medicare Part C, but it is not included in Medicare Supplement plans
The decision of whether Medicare Advantage or Medicare Supplement is better for you depends on your individual needs and budget. Medicare Advantage plans, also known as Medicare Part C, offer all the benefits of Original Medicare (Part A and Part B) as well as additional benefits such as prescription drug coverage, dental, vision, and hearing services. These plans may have lower out-of-pocket costs than Original Medicare but may have limited networks of healthcare providers and require prior authorization for certain services.
On the other hand, Medicare Supplement plans, also known as Medigap, help cover some of the out-of-pocket costs of Original Medicare, such as deductibles, coinsurance, and copayments. These plans work alongside Original Medicare and generally allow you to see any healthcare provider that accepts Medicare. However, these plans typically do not cover prescription drugs and may have higher monthly premiums than Medicare Advantage plans.
Comparing Medicare Supplement and Replacement Medicare, also known as Medicare Advantage plans, is dependent on individual healthcare needs and preferences. Medicare Supplement plans, or Medigap, work alongside Original Medicare (Part A and Part B) and help cover out-of-pocket costs such as deductibles, coinsurance, and copayments. They provide a broader choice of doctors and hospitals, but do not typically include prescription drug coverage or additional benefits like dental and vision care. On the other hand, Medicare Advantage plans offer all the benefits of Original Medicare with additional benefits like prescription drug coverage, dental, vision, and hearing services.
When comparing Medicare Advantage and Plan G, it is important to consider the coverage and costs of each option. Medicare Advantage plans, also known as Medicare Part C, are offered by private insurance companies and include all the benefits of Original Medicare (Part A and Part B) as well as additional benefits such as prescription drug coverage, dental, vision, and hearing services. These plans typically have lower monthly premiums than Medigap policies but may have more restrictions on the choice of healthcare providers and require prior authorization for certain services.
Medicare Supplement Plan G, on the other hand, is a Medigap policy that works alongside Original Medicare to cover out-of-pocket costs such as deductibles, coinsurance, and copayments. It does not include prescription drug coverage or additional benefits like dental and vision care but provides a broader choice of healthcare providers than Medicare Advantage plans. Plan G has become increasingly popular among Medicare beneficiaries due to its comprehensive coverage and competitive pricing.
The main difference between Medicare Supplement plans and Medicare Advantage plans is how they provide healthcare coverage. Medicare Supplement plans, also known as Medigap, work alongside Original Medicare (Part A and Part B) to cover out-of-pocket costs such as deductibles, coinsurance, and copayments. They do not include prescription drug coverage or additional benefits like dental and vision care but provide a broader choice of doctors and hospitals.
Medicare Advantage plans, on the other hand, are offered by private insurance companies and provide all the benefits of Original Medicare as well as additional benefits such as prescription drug coverage, dental, vision, and hearing services.
Determining whether Medicare Supplement or Medicare Advantage plans are better depends on individual healthcare needs and budget. Medicare Supplement plans, also known as Medigap, work alongside Original Medicare (Part A and Part B) to cover out-of-pocket costs such as deductibles, coinsurance, and copayments. They provide a broader choice of doctors and hospitals but do not typically include prescription drug coverage or additional benefits like dental and vision care.
Medicare Advantage plans, on the other hand, provide all the benefits of Original Medicare as well as additional benefits such as prescription drug coverage, dental, vision, and hearing services. These plans may have lower out-of-pocket costs than Original Medicare but may have more restrictions on the choice of healthcare providers and require prior authorization for certain services.
Whether it is worth switching to a Medicare Advantage plan depends on individual healthcare needs and preferences. Medicare Advantage plans, also known as Medicare Part C, provide all the benefits of Original Medicare (Part A and Part B) as well as additional benefits such as prescription drug coverage, dental, vision, and hearing services. These plans may have lower out-of-pocket costs than Original Medicare but may have more restrictions on the choice of healthcare providers and require prior authorization for certain services.
Before switching to a Medicare Advantage plan, it is important to review and compare the coverage and costs of both options. Consider factors such as your healthcare needs, preferred doctors and hospitals, prescription drug coverage, and out-of-pocket costs.
The main difference between Medicare Supplement plans and Medicare Advantage plans is how they provide healthcare coverage. Medicare Supplement plans, also known as Medigap, work alongside Original Medicare (Part A and Part B) to cover out-of-pocket costs such as deductibles, coinsurance, and copayments. They do not include prescription drug coverage or additional benefits like dental and vision care but provide a broader choice of doctors and hospitals.
Medicare Advantage plans, on the other hand, are offered by private insurance companies and provide all the benefits of Original Medicare as well as additional benefits such as prescription drug coverage, dental, vision, and hearing services.
It is important to note that Medicare Supplement plans cannot be used in conjunction with Medicare Advantage plans. If you enroll in a Medicare Advantage plan, you cannot also enroll in a Medicare Supplement plan. However, if you have a Medicare Advantage plan and you decide to switch back to Original Medicare, you may be eligible to enroll in a Medicare Supplement plan to help cover out-of-pocket costs.
Yes, you can switch from Medicare Supplement to Medicare Advantage during certain enrollment periods. The Annual Enrollment Period (AEP), which occurs from October 15 to December 7 each year, allows you to switch from Medicare Supplement to Medicare Advantage or from one Medicare Advantage plan to another.
You can also switch from Medicare Supplement to Medicare Advantage during the Medicare Advantage Open Enrollment Period (OEP), which occurs from January 1 to March 31 each year, although this change only allows you to switch to another Medicare Advantage plan or back to Original Medicare.
The popularity of each option varies by state and region, and it ultimately depends on individual healthcare needs and preferences. Medicare Supplement plans are typically more popular among those who prioritize a broad choice of healthcare providers and are willing to pay higher monthly premiums for comprehensive coverage. Medicare Advantage plans are often preferred by those who prioritize additional benefits and lower out-of-pocket costs, even if it means accepting a more restricted network of healthcare providers.
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Need Help Making The Right Decision?
We hope this has been an informative guide. But we also know that even with unlimited information at your disposal, it can still be very hard to make the best decision for you.
But that’s exactly what we are here for. Our team of Medicare experts can listen to your needs, examine your budget, and compare plans to help you get healthcare that is affordable and sufficient.
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We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-Medicare to get information on all of your options.