Comparison: Medicare Advantage vs. Medicare Supplement

When first enrolling in Medicare, one of the key choices you’ll need to make is whether to get a Medicare Supplement (Medigap) Plan or a Medicare Advantage Plan. Understanding the core differences between these two options can help you select the type of Medicare coverage that best fits your needs.

How Medicare Supplement Insurance Works

A Medicare Supplement insurance plan is designed to help fill gaps in Original Medicare coverage. Medicare Supplement Plans, also called Medigap Plans, are offered by private insurance companies and help pay some of the out-of-pocket costs of Medicare Parts A and B like deductibles, copays and coinsurance.

With a Medicare Supplement Plan, you’ll retain all that’s covered by Original Medicare. The Medicare Supplement Plan pays secondary to cover additional costs not paid by Medicare. This helps limit your out-of-pocket expenses when you receive medical care covered under Medicare Parts A and B.

There are 10 standardized Medicare Supplement Plans (Plans A, B, C, D, F, G, K, L, M, and N). Each offers a different combination of basic and extra benefits to choose from. Plan F offers the most comprehensive coverage.

How Medicare Advantage Works

Medicare Advantage Plans are an alternative way to receive your Medicare benefits from private insurers approved by Medicare. Medicare Advantage Plans include HMOs, PPOs, and PFFS plans.

When you join a Medicare Advantage Plan, you’re still enrolled in Medicare but your coverage is administered through the Medicare Advantage Plan rather than Original Medicare. The plan must cover all Medicare Part A and Part B services, but can do so with different rules, costs and provider networks.

Many Medicare Advantage health insurance plans also include Part D prescription drug coverage along with extra benefits not covered by Medicare like vision, dental and wellness programs. This expanded coverage is a key advantage of Medicare Advantage Plans for many enrollees.

Key Differences Between Medicare Advantage and Medicare Supplement

Here is a quick look at some of the main differences between Medicare Supplement and Medicare Advantage Plans:

Medicare Supplement

Works with Original Medicare
Offered by private insurers
Helps pay Medicare out-of-pocket costs
Use any provider accepting Medicare
Premium costs vary by plan

Medicare Advantage

Administered by private insurers
Includes Medicare Parts A and B
Often includes Part D drug coverage
Usually have provider network
Out-of-pocket costs vary by plan
Offer extra benefits not covered by Medicare

Medicare Supplement Pros and Cons

Pros

Freedom to see any provider accepting Medicare
Predictable copays for services
Standardized plan benefits
Works seamlessly with Original Medicare

Cons

Doesn’t include prescription drug coverage
No extra benefits beyond Medicare
Monthly premiums can be expensive
You still pay deductibles and coinsurance

Medicare Advantage Pros and Cons

Pros

Often has $0 monthly premium
Includes prescription drug coverage
Offers extra benefits and lower copays
Out-of-pocket maximum limits costs

Cons

More limited provider network
Uses plan rules for services and referrals
Annual out-of-pocket costs can vary
Plans change costs and coverage annually

Choosing Between Medicare Supplement or Medicare Advantage

There are a few key factors to consider when deciding between enrolling in a Medicare Supplement Plan vs a Medicare Advantage Plan:

Your budget – Do you want predictable costs of Medicare Supplement or lower premiums of Medicare Advantage?
Providers – Do you want access to any Medicare provider or are you comfortable using a plan network?
Prescriptions – Do you need integrated Part D drug coverage?
Benefits – Do you want basic Medicare coverage or extra benefits included?
Travel – Do you want national coverage or plan service areas?

Take time to understand your healthcare and coverage priorities to determine if Original Medicare plus a Supplement or an integrated Medicare Advantage Plan is a better option for you.

As a Medicare beneficiary, you can switch between Medicare Supplement and Medicare Advantage at different points if your needs change. But comparing the core differences upfront can set you up with the right Medicare Plan initially.

Can I Have Both Medicare Supplement and Medicare Advantage?

In most cases, you can only be enrolled in one or the other – not both a Medicare Supplement and a Medicare Advantage Plan at the same time.

The key exception is that some Medicare Supplement Plans provide coverage for out-of-pocket costs not paid by your Medicare Advantage Plan. For example, you may use a Medicare Supplement Plan N to cover Medicare Advantage copays and deductibles or to provide nationwide coverage when traveling.

But in general, you need to choose whether to enroll in Original Medicare plus a Supplement or join a Medicare Advantage Plan when initially signing up for Medicare. You can’t use a Medicare Supplement Plan solely to cover costs under a Medicare Advantage Plan.

Changing from Medicare Supplement to Medicare Advantage

You can switch from a Medicare Supplement to a Medicare Advantage Plan, or vice versa, at various designated enrollment periods during the year if you decide to change your Medicare coverage option.

The best time for Medicare Supplement policyholders to enroll in a Medicare Advantage Plan is during the annual Medicare open enrollment period from October 15 to December 7. Your coverage would switch to Medicare Advantage starting January 1.

To go from Medicare Advantage to Medicare Supplement, the optimal enrollment window is during Medicare Advantage open enrollment from January 1 to March 31 each year. Coverage would begin the first of the following month.

Doing your homework on the differences between Medicare Supplement and Medicare Advantage is key to making an informed enrollment decision you can feel confident in. But you do have flexibility to change your mind and switch plans during Medicare’s open enrollment periods.

Finding the Best Medicare Plan for You

The “best” Medicare Plan is different for each beneficiary based on individual priorities around cost, coverage, doctors, prescription drugs, and convenience.

If paying the lowest out-of-pocket costs is most important to you, a Medicare Advantage Plan may be the better choice. If you prize flexibility and provider choice above all, Original Medicare and a Supplement may be a better fit.

Use Medicare’s Plan Finder tool online or work with an independent broker to compare Medicare Supplement and Medicare Advantage options in your area. Look closely at premiums, benefits, network, drug coverage, and plan ratings to select a Medicare Plan well-matched to your healthcare preferences.

Conclusion

While both provide Medicare coverage, Medicare Supplement and Medicare Advantage work quite differently. Medicare Supplement helps fill gaps in Original Medicare while Medicare Advantage acts as an alternative to Original Medicare. Review the unique pros and cons of each when making your Medicare Plan decision.

FAQS

What is the difference between Medicare Supplement Plans and Medicare Advantage Plans?

Medicare Supplement Plans, also known as Medigap, are private insurance policies that help cover the gaps in Original Medicare (Part A and Part B) coverage, such as coinsurance, deductibles, and copayments. On the other hand, Medicare Advantage Plans, also known as Medicare Part C, are an alternative way to receive Medicare benefits through private insurance companies. These plans provide all the benefits of Medicare Part A and Part B, and often include prescription drug coverage and additional benefits.

Can I have both a Medicare Supplement Plan and a Medicare Advantage Plan?

No, you cannot have both a Medicare Supplement Plan and a Medicare Advantage Plan at the same time. These two types of plans cannot be used together to cover the same healthcare expenses. You must choose one or the other, as they offer different coverage options.

Which plan is better, Medicare Supplement or Medicare Advantage?

The answer to this question depends on your individual healthcare needs and preferences. Medicare Supplement Plans generally offer more comprehensive coverage, but they often come with higher monthly premiums. On the other hand, Medicare Advantage Plans may have lower monthly premiums, but they may require you to use a specific network of healthcare providers. It is essential to consider your budget, coverage needs, and access to healthcare providers when determining which plan is better for you.

Can I switch from a Medicare Advantage Plan to a Medicare Supplement Plan?

Yes, you can switch from a Medicare Advantage Plan to a Medicare Supplement Plan during certain enrollment periods. However, it is crucial to review the eligibility requirements and enrollment deadlines for both types of plans to ensure a seamless transition. Additionally, you may need to undergo medical underwriting depending on your specific circumstances.

Can I switch from a Medicare Supplement Plan to a Medicare Advantage Plan?

Yes, you can switch from a Medicare Supplement Plan to a Medicare Advantage Plan during the Medicare Advantage Open Enrollment Period, which occurs annually from October 15 to December 7. However, it is essential to review the coverage and network of healthcare providers offered by the Medicare Advantage Plan before making the switch to ensure it meets your healthcare needs.

Can I purchase a Medicare Supplement Plan if I have a Medicare Advantage Plan?

Yes, you can purchase a Medicare Supplement Plan if you have a Medicare Advantage Plan. However, you must disenroll from your Medicare Advantage Plan before the Medicare Supplement Plan coverage begins. It is important to note that Medicare Supplement Plans typically have higher monthly premiums compared to Medicare Advantage Plans.

Can I buy a Medigap policy or Medicare Supplement Plan if I am enrolled in Medicaid?

Yes, you can have a Medicare Supplement Plan if you are enrolled in Medicaid. However, Medicaid programs may have different rules and requirements, so it is important to consult with your Medicaid program administrator or a licensed insurance agent to understand how having both types of coverage may impact your healthcare benefits and costs.

Do Medicare Supplement Plans cover prescription drugs?

No, Medicare Supplement Plans do not cover prescription drugs. If you want prescription drug coverage, you will need to enroll in a separate Medicare Part D Plan. Medicare Part D Plans are standalone prescription drug plans that work alongside Original Medicare, Medicare Supplement Plans, and some Medicare Advantage Plans.

Do Medicare Advantage Plans cover prescription drugs?

Many Medicare Advantage Plans include prescription drug coverage, known as Medicare Advantage Prescription Drug (MAPD) plans. These plans combine medical and prescription drug coverage in one comprehensive policy. However, it is important to review the specific details and formulary of the Medicare Advantage Plan to ensure it covers the prescription drugs you need.

Do I have to pay the Medicare Part B premium if I have a Medicare Supplement Plan?

Yes, you are still responsible for paying the Medicare Part B premium if you have a Medicare Supplement Plan. Medicare Part B covers doctor visits, outpatient services, and other medical services. The premium is set by Medicare and is generally deducted from your Social Security benefits or billed directly to you if you are not receiving Social Security benefits.

Medicare Supplement vs Medicare Advantage: Key Differences