Does Medicare Advantage or Medicare Supplement Save Me More Money?

Pamela Cannaday by Pamela Cannaday | Licensed since 2011
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This article was updated on: 10/06/2018

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If you’re approaching Medicare eligibility, now’s the time to look into your options to find the right coverage for you. There are basically two Medicare paths: Original Medicare (Part A and Part B) which can go alongside a Medicare Supplement Insurance Plan and Medicare Part D Prescription Drug Plan, or a Medicare Advantage plan, most of which include Part D coverage for prescription drugs. The best one for you depends on your unique health and financial situation.

How do Medicare Supplement Insurance Plans work?

Under Original Medicare, you may have to pay your Part A and Part B deductibles, as well as coinsurance amounts for most services covered under Part B. You may also have coinsurance under Part A if you are hospitalized for more than 60 days in any particular benefit period. There is no cap on out-of-pocket expenses under Original Medicare, so if you have a serious medical issue, you may face considerable cost-sharing expenses.

Medicare Supplement Insurance Plans, also known as Medigap plans, cover some or all of your out-of-pocket expenses under Original Medicare. Depending on the plan you choose, you can get “first dollar” coverage, which means you generally don’t pay anything out of pocket for your covered expenses.

You do pay an additional monthly premium for your Medicare Supplement Insurance Plan, and it’s important to note that these plans do not cover out-of-pocket costs for prescription drugs, even those covered under Medicare Part D Prescription Drug Plans. If you think you want a Medicare Supplement Insurance Plan, it’s very important to enroll as soon as you are eligible; if you wait, you may be denied coverage depending on your health status.

How does Medicare Advantage work?

Medicare Advantage plans are provided by private insurance companies contracted with Medicare. They must provide, at a minimum, all the benefits you’d receive under Original Medicare, except for hospice care, which is still covered under Part A. However, most plans include additional benefits, such as coverage for routine vision and dental care, not covered under Original Medicare. In addition, most plans also include Part D coverage for prescription drugs.

There is a lot of variety in Medicare Advantage plans. Some may require you to use network providers and get referrals for specialist care; others cover all providers, but cost less out-of-pocket if you use the plan’s preferred providers. Most plans use a copayment cost-sharing structure, which means you’ll pay a set amount, $10 for example, each time you see the doctor. You may or may not have an annual deductible in addition to your copayments. Medicare Advantage plans do have an annual limit on out-of-pocket expenses—your plan pays 100% once you reach that limit. The limit varies from plan to plan, but it can’t exceed the cap set by Medicare each year.

You must continue to pay your Medicare Part B premium plus any additional premium required by your plan if you enroll in Medicare Advantage. You may be able to enroll in a plan premium as low as $0 in your area, which means you pay only your normal Part B premium for your Medicare Advantage plan.

Which Medicare coverage is right for me?

Let’s look at a couple situations as an example to help you determine what’s best for you.

  • If you take a lot of prescription medications on a regular basis, you may save more money with a Medicare Advantage plan, since Medicare Supplement Insurance Plans don’t cover prescription drugs.
  • If you have a serious chronic health condition that requires frequent hospitalization and outpatient therapy, you may save more with a Medicare Supplement Insurance Plan, especially if you have a high deductible Medicare Advantage plan, or one with a high maximum out-of-pocket limit.
  • If you are relatively healthy and want benefits for routine vision and dental care, you may pay less out-of-pocket with a Medicare Advantage plan, since Original Medicare doesn’t cover these services.
  • If you travel a lot, or spend part of the year in a different location from your permanent home, you may save money with a Medicare Supplement Insurance Plan, since some Medicare Advantage plans may require you to get your care from a local provider network.

Need more information about Medicare Supplement Insurance Plans and Medicare Advantage?

I am happy to help you find the information you need; you can schedule a phone call or request an email by clicking on the buttons below. You can also find out about Medicare plan options in your area by clicking the Compare Plans button.

Benefits, premiums and/or copayments/co-insurance may change on January 1 of each year.

The provider network may change at any time. You will receive notice when necessary.

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