Medicare Advantage vs. Medigap: How to Choose

Last Updated : 08/01/20195 min read

There may be some services that Original Medicare generally doesn’t cover, such as routine vision care. You may also have to pay coinsurance amounts, like 20% for most covered doctor services.

To improve options for Medicare coverage, The Centers for Medicare and Medicaid Services (CMS) contracts with private insurance companies to offer Medicare Advantage plans.

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Medicare Supplement insurance plans are also available from private insurance companies.

However, Medicare Advantage and Medicare Supplement insurance plans are mutually exclusive; this means that you will have to choose between Medicare Advantage vs Medicare Supplement. Also, it may be illegal for a private insurer to sell you one plan knowing you have the other.

Medicare Advantage vs Medicare Supplement: the basics

Medicare Supplement insurance plans go alongside Original Medicare and help pay for out-of-pocket costs not typically covered by Original Medicare. Since Original Medicare has no out-of-pocket maximum, a Medicare Supplement plan could give you a safety net against high medical costs if you face a serious health setback.

Neither Original Medicare nor Medicare Supplement insurance plans typically cover the prescription drugs you take at home. If you want coverage for most prescription drugs, you will generally need to combine Original Medicare and a Medicare Supplement insurance plan with a stand-alone Medicare Part D prescription drug plan.

You coverage with a Medicare Supplement insurance plan and a stand-alone Medicare Part D prescription drug plan could look like this:

Medicare medical and hospital insurance (Original Medicare) + Medicare Supplement + stand-alone Medicare Part D prescription drug coverage = comprehensive Medicare coverage

This combination of insurance is quite comprehensive. You still may have some out-of-pocket Medicare costs. You generally pay separate premiums for Medicare Part B, Medicare Supplement insurance, and Medicare prescription drug coverage.

If the above equation seems like too many pieces to put together, you may appreciate the simplicity of a Medicare Advantage plan. A Medicare Advantage covers all the hospital and medical services that Original Medicare covers and usually includes prescription drug benefits as well. Medicare Advantage plans also all have out-of-pocket maximums, so you may be spared from high medical bills.

You coverage with a Medicare Advantage plans could look like this:

Medicare medical and hospital insurance + Medicare prescription drug coverage = comprehensive Medicare coverage

This combination of insurance is fairly comprehensive. You may have to pay deductible and copayment/coinsurance amounts. You generally pay separate premiums for Medicare Part B and for your Medicare Advantage plan, if it charges a premium.

Medicare Advantage vs Medicare Supplement: bonus benefits

Medicare Supplement insurance plans generally only cover out-of-pocket costs, such as copayments, coinsurance, and deductibles, for services that Original Medicare already covers.

For example, a Medicare Supplement insurance plan may cover your Medicare Part B (medical care) coinsurance or copayment and your skilled nursing facility care coinsurance. The only bonus benefit that Medicare Supplement insurance plans generally cover is foreign travel emergencies at 80%, up to plan limits. However, some plans might offer additional benefits.

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When it comes to bonus benefits, Medicare Advantage plans more commonly include them. Medicare Advantage plans may cover the following benefits Medicare Part A and Part B typically don’t cover:

  • Routine vision, including eye glasses, contacts, and eye exams
  • Routine hearing, including hearing aids
  • Routine dental care
  • Prescription drugs and some over the counter medications
  • Fitness classes and gym memberships
  • Meal delivery to your home
  • Transportation to doctor visits
  • Other benefits

Not every Medicare Advantage plan offers all (or any) of these extra benefits.

Medicare Advantage vs Medicare Supplement: plan costs

It may seem obvious that many people would want either a Medicare Advantage plan or a Medicare Supplement insurance plan for the added benefits and the protection from out-of-pocket costs. However, both these types of plans may come with additional costs. You may have to spend money to save money, which is how most types of insurance generally work.

Premiums: A premium is an amount you pay monthly to have insurance, whether or not you use covered services. Some Medicare Advantage plans have premiums as low as $0 a month. However, you still must pay your Medicare Part B premium.

Most Medicare Supplement insurance plans also have monthly premiums. The premium you pay generally depends on the plan you select and your location.

Deductibles: A deductible is an amount you pay before your insurance begins to pay. A higher deductible means you will generally pay more out of pocket before your insurance kicks in. Sometimes insurance plans with lower premiums have higher deductibles.

Medicare Advantage vs Medicare Supplement: exclusions

People with end-stage renal disease are generally not eligible for Medicare Advantage plans, except in certain situations.

Also, Medicare beneficiaries under 65 years old generally have limited access to Medicare Supplement plans, or may not be able to enroll in any Medicare Supplement plan, depending on their state.

Medicare Advantage vs Medicare Supplement: other things to consider

Many types of Medicare Advantage plans, specifically Health Maintenance Organizations (HMOs) and Special Needs Plans (SNPs), have networks of providers. Generally you must get care from an in-network provider in order for your care to be covered. Networks are designed to keep costs low, which could be an advantage to beneficiaries. On the other hand, you may also feel that a network restricts you from getting care from a provider you like.

However, you don’t need to worry about networks in the case of an emergency. Generally Medicare Advantage plans include covered emergency medical care costs.

To start saving with a Medicare Advantage or Medicare Supplement plan in your area, enter your zip code 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.

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