Medicare Advantage vs. Medicare Supplement (Medigap) insurance plans
Medicare Supplement insurance plans work with Original Medicare, Part A and Part B, and may help pay for certain costs that Original Medicare doesn’t cover. These plans don’t provide stand-alone coverage; you need to remain enrolled in Part A and Part B for your hospital and medical coverage. If you need prescription drug coverage, you’d need to enroll in a stand-alone Medicare Prescription Drug Plan.
When you buy a Medicare Supplement insurance plan, you are still enrolled in Original Medicare, Part A and Part B. Medicare pays for your health-care bills primarily, while the Medigap plan simply covers certain cost-sharing expenses required by Medicare, such as copayments or deductibles. In addition, Medigap insurance plans may help with other costs that Original Medicare doesn’t cover, such as Medicare Part B excess charges or emergency medical coverage when you’re traveling outside of the country. Keep in mind that Medicare Supplement insurance plans can only be used to pay for Original Medicare costs; they can’t be used with Medicare Advantage plans.
In contrast, Medicare Advantage plans are an alternative to Original Medicare. If you enroll in a Medicare Advantage plan, you’re still in the Medicare program. However, you’ll get your Medicare benefits through your Medicare Advantage plan, instead of through the federally administered program, and the Medicare Advantage plan replaces your Original Medicare coverage.
To enroll in a Medicare Advantage plan, you must:
- Have Original Medicare, Part A and Part B.
- Live in the service area of the Medicare Advantage plan you’re considering.
- Not have end-stage renal disease (with some exceptions).
Medicare Advantage plans must provide the same level of coverage as Original Medicare, with the exception of hospice care (which is still covered by Part A). Some plans may also cover additional benefits that Original Medicare doesn’t cover, such as routine vision and/or dental, health wellness programs, and prescription drugs.
Medicare Supplement insurance plan benefits
There are 10 Medigap insurance plans available in most states, and each plan type is designed by a different letter (for example, Plan A). Coverage is standardized across each plan letter, which means you’ll get the same basic benefits for Medicare Supplement coverage within the same letter category, no matter which insurance company you purchase from. However, even if basic benefits are the same across plans of the same letter category, premium costs 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 from the rest of the country.
Medigap plans cover out-of-pocket costs not covered by Original Medicare, such as copayments, coinsurance, and deductibles. Some plans may help pay for other benefits Original Medicare doesn’t cover, such as emergency health coverage outside of the country or the first three pints of blood. Medigap plans don’t include prescription drug benefits. If you don’t already have creditable prescription drug coverage (coverage that is at least as good as the Part D benefit), you should consider buying a separate stand-alone Medicare Part D Prescription Drug Plan to cover the costs of your prescription medications. Also, Medicare Supplement insurance plans generally don’t offer extra benefits like routine dental, vision, or hearing coverage beyond what’s already covered by Medicare.
Medicare Advantage Plan Benefits
Private insurance companies have a bit more flexibility in designing Medicare Advantage plans, so you’ll find more differences between plans. This means you need to be more careful comparing plan options to make sure you don’t overlook anything.
As mentioned, Medicare Advantage plans give you the opportunity to get coverage for benefits beyond Original Medicare. This may include routine vision and dental, hearing, and health wellness programs. Normally, under Original Medicare, you’d pay for these services out of pocket unless you have other insurance.
Another benefit of Medicare Part C is that many of these plans also include Medicare Part D prescription drug coverage as part of the plan coverage. Also known as Medicare Advantage Prescription Drug plans, these plans give you the convenience of having all of your Medicare benefits administered through a single plan.
If you enroll in a Medicare Advantage Prescription Drug plan, you will not need to enroll in an additional Medicare Prescription Drug Plan. In fact, if you are enrolled in a Medicare Advantage plan that includes prescription coverage and also enroll in a stand-alone Medicare Prescription Drug Plan, you could be automatically disenrolled from your Medicare Advantage plan.
Finding Medicare providers
Medicare Supplement plans are accepted by any medical provider that accepts Medicare. In contrast, Medicare Advantage plans may have more restricted networks, depending on the plan. For example, some Medicare Advantage plans, like Health Maintenance Organization (HMO) plans, use a provider network that you must use to be covered, meaning you can only see doctors and hospitals that are contracted with your Medicare Advantage plan and part of its provider network. Other plans may use a preferred provider network that lets you see both in-network and out-of-network providers; however, you may pay higher copayments and coinsurance when using non-network providers.
Every person’s situation is different, and it’s important to consider both your Medigap insurance and Medicare Advantage plan options to find the coverage that fits your needs.
Medicare Advantage vs Medicare Supplement comparison chart
|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|
|Copayments and coinsurance||Usually has copayments and coinsurance||May cover all copayments and coinsurance|