Comparing Medicare Advantage Plans vs. Medicare Supplement Plans

Pamela Cannaday by Pamela Cannaday | Licensed since 2011
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This article was updated on: 08/02/2018

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Perhaps you’ve heard about Medicare Advantage plans and Medicare Supplement plans, and you’re wondering how they’re different.

  • Both types of plans are available from private insurance companies.
  • With most Medicare Supplement plans, you can see any doctor who accepts Medicare assignment.
  • Some Medicare Supplement plans may cover emergency medical care when you’re out of the country.
  • Medicare Advantage plans can include prescription drug coverage, while Medicare Supplement plans sold today can’t.
  • You might learn some other surprising differences.

First, let’s start with a brief description of the Medicare Advantage program (Medicare Part C) vs. Medicare Supplement (also called Medigap) insurance.

Medicare Advantage

Unlike Medicare Supplement plans, Medicare Advantage plans give you a way to get your Medicare Part A and Part B benefits through a private insurance company that contracts with Medicare. (Hospice benefits are still covered under Part A.) Medicare Advantage plans often provide coverage beyond that of Original Medicare –most of them include prescription drug benefits, and some include extra benefits such as routine dental services or membership in fitness programs.

Some Medicare Advantage plans have premiums as low as $0 per month. However, regardless of the plan premium amount, you still must continue paying your Medicare Part B monthly premium.

When you’re enrolled in a Medicare Advantage plan, you’re still in the Medicare program. In fact, you must have Medicare Part A and Part B in order to sign up for a Medicare Advantage plan.

Medicare Supplement

Unlike Medicare Advantage plans, Medicare Supplement plans may cover some of your Medicare Part A and Part B out-of-pocket costs, like coinsurance, copayments, and deductibles. You must be enrolled in Part A and Part B to be eligible for a Medicare Supplement plan, but you’re still getting those benefits directly through the Medicare program (compared with Medicare Advantage, which provides Part A and Part B benefits through a private, Medicare-approved insurance company).

Medicare Supplement plans are standardized with lettered in many states, such as Plan A, Plan B, and so on up to Plan N. There are 10 plans available in most states (Plans E, H, I, and J are no longer sold). Wisconsin, Minnesota, and Massachusetts have their own standardized plans.

Once you’re enrolled in Medicare Part A and Part B, you can apply for a Medicare Supplement plan anytime you want. However, your acceptance into a plan isn’t always guaranteed.

Perhaps the best time to buy a Medicare Supplement plan is during your Medicare Supplement Open Enrollment Period, which starts the month that you’re both 65 or more years old and enrolled in Medicare Part B. During this six-month timespan, an insurance company can’t turn you down or charge you more due to a health problem (however, the company can impose a waiting period). There may be other situations where you have guaranteed issue rights to buy a Medicare Supplement plan.

Although you generally can’t buy a new Medicare Supplement plan that includes prescription drug coverage, you can enroll in a stand-alone Medicare Part D Prescription Drug Plan. This optional coverage is available from private insurance companies approved by Medicare.

Comparing Medicare Advantage and Medicare Supplement plans

Medicare Advantage and Medicare Supplement insurance are not the same. But each type of insurance may have features you might like, as well as some you might not. This table lists the main differences between these types of plans.

Medicare Supplement Medicare Advantage
May cover Medicare’s out-of-pocket costs, such as deductibles and coinsurance Yes (different plans may cover different portions of certain out-of-pocket costs).[1] Plans set their own coinsurance and deductible amounts
Lets you see any doctor you choose who accepts Medicare assignment Yes, with most plans Many plans have provider networks you must use or else pay higher out-of-pocket costs for your medical services
Includes prescription drug coverage No (unless you still have a previously purchased plan that included this coverage) Yes, with most plans
Includes additional coverage, such as routine dental or vision services Standard benefits don’t include this coverage, although some insurance companies may offer additional benefits. Yes, with some plans
Standardized in most states, so that a plan of the same name carries the same benefits Yes No
Availability to everyone who has Medicare Part A Part B who live within the plan’s service area, without regard to age or health conditions, except for end-stage renal disease in most cases Not guaranteed, unless you buy the plan during your Medicare Supplement Open Enrollment Period or in another “guaranteed issue” period Yes
Includes emergency medical coverage out of the country Yes, with some plans (80% up to plan limits) Not in most cases, with some exceptions
Requires enrollment in Part A and Part B Yes Yes
Has an out-of-pocket maximum amount that may prevent your costs from going over a specified amount each year. Yes, with certain plans Yes, with all plans

 

Requires a referral to see a specialist No, with most plans Yes, with some plans

 

It’s important to understand that Medicare Advantage delivers your Medicare Part A and Part B benefits through a private, Medicare-approved insurance company – while Medicare Supplement works alongside Part A and Part B, and may cover the federal program’s out-of-pocket costs. So, as you can see, they’re different types of insurance.

How do you decide which type of plan may fit your needs?

Only you can make that decision, but it might help you to take a look at your health-care spending over the past year or so, and think about your health situation. If you’re new to Medicare or will be eligible soon, and you have frequent doctor visits and/or hospitalizations, a Medicare Supplement plan might save you money by helping you with those costs – especially if you make sure to purchase the plan as soon as you’re eligible so your acceptance is guaranteed. On the other hand, if you don’t have frequent doctor visits, and you prefer to have one Medicare plan that includes Part A, Part B, and prescription drug coverage, you might consider enrolling in a Medicare Advantage plan.

It’s worth noting that:

  • You cannot use your Medigap plan to pay for the out-of-pocket costs from your Medicare Advantage plan. The two types of plans are not designed to work together.
  • Plan costs such as premiums, as well as availability, may vary among plans.

As you can see, there is much to consider when researching which type of Medicare plan option might suit your needs. I’d be happy to talk with you about the various types of Medicare coverage. Here are a few options for you:

  • Use the other links down below to schedule a phone call or have me email you to get started.
  • Begin by searching for plans in your service area by clicking the Compare Plans button on this page.

The product and service descriptions, if any, provided on these Medicare.com Web pages are not intended to constitute offers to sell or solicitations in connection with any product or service. All products are not available in all areas and are subject to applicable laws, rules, and regulations.

[1] Some plans don’t cover Medicare deductibles.

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