Medicare Advantage and Medicare Supplement Plans both allow you to fill coverage gaps in Original Medicare. However, they differ in costs, coverage, and provider networks. It’s important to compare these options to choose the best combination for your situation.
Overview of Medicare Advantage and Medicare Supplement
Medicare Advantage Plans are offered by private insurance companies and provide an alternative way to get your Medicare benefits. Medicare Advantage Plans include Parts A and B coverage and often add extra benefits like prescription drug coverage, dental, vision, hearing, and more.
Medicare Supplement insurance, also called Medigap, is sold by private insurance companies to help fill gaps in Original Medicare coverage (Parts A and B). Medigap Plans cover deductibles, copayments, and coinsurance amounts for covered medical services.
With Medicare Advantage, you generally pay lower monthly premiums, but you’ll pay deductibles, copayments, and coinsurance for services, similar to having other health insurance.
With Medigap, your premiums are higher, but most of your out-of-pocket costs for Part A and Part B services are covered. You can add a separate Part D prescription drug plan to get medication coverage.
Cost Differences Between Medicare Advantage and Medicare Supplement
One of the biggest considerations when choosing between Medicare Advantage or Medigap is cost. Here are some key differences:
- Medicare Advantage: Premiums tend to be lower, often $0-$100 per month. However, plans with extra benefits like dental or vision coverage may have higher premiums.
- Medigap: Premiums are generally higher, averaging $$150-$350 per month depending on your location and plan type. Premiums are set by private insurers.
- Medicare Advantage: You’ll pay deductibles, copays, and coinsurance when you receive medical services, which varies by plan. Total out-of-pocket spending for Part A and Part B services is capped annually (no more than $8,300 in 2023).
- Medigap: Most Medigap Plans cover some or all of your Medicare deductibles, copays, and coinsurance amounts, providing lower out-of-pocket costs. But there is no annual limit on your spending.
- Medicare Advantage: Prescription drug coverage is included in most Medicare Advantage Plans. You’ll pay copays or coinsurance for medications.
- Medigap: When you buy a Medigap policy, plans do not cover prescription drugs. You must enroll in Medicare Part D Plan, with monthly premiums averaging $30-$90 per month.
- Medicare Advantage: Networks are limited to doctors and facilities who accept the plan’s terms. Out-of-network care coverage varies. HMO plans offer the lowest costs but have the smallest provider network.
- Medigap: Medigap allows you to see any healthcare provider in the U.S. that accepts Medicare. There are no provider network restrictions.
Medicare Advantage vs Medigap Coverage Differences
In addition to cost differences, Medicare Advantage and Medigap also differ in their coverage:
- Covers Medicare Part A and Part B
- Often includes Part D drug coverage
- May include dental, vision, hearing, gym memberships
- Copays and deductibles for services
- Out-of-pocket limit annually
- Restricted provider network
- Covers Medicare deductibles, copays, coinsurance
- Must buy separate Part D Plan for drugs
- No extra benefits like dental or vision
- Minimal out-of-pocket costs in most plans
- No annual limit on out-of-pocket spending
- Use any provider who accepts Medicare
While when you enroll in a Medicare Advantage, Plans offers more benefits, you will have copays and deductibles that add up. Advantage Plans also restrict which doctors and hospitals you can use due to network limitations.
Medigap provides less coverage overall, but minimizes how much you pay out-of-pocket for Part A and Part B-covered services. You can see any Medicare provider in the U.S. without network restrictions.
Is Medigap More Expensive Than Medicare Advantage?
Whether Medigap or Medicare Advantage costs more depends primarily on your healthcare utilization and needs:
- For those with few doctor visits and prescription needs, Medicare Advantage Insurance Plan will likely cost less overall.
- If you need extensive medical services, specialists, or specific providers, Medigap may provide better coverage despite higher premiums.
Let’s compare two hypothetical scenarios:
Example 1: In Good Health
John is a 70-year old in relatively good health who sees his primary care doctor 3 times a year and takes 2 prescription medications for high blood pressure.
- With an Advantage HMO plan, John would pay a $0 premium and have copays of $10 to see his doctor and $20 for prescriptions. His total costs for the year would be about $190.
- With Plan G Medigap and Part D drug coverage, John would pay $350 per month for both plans, totaling $4,200 for the year.
For healthy seniors like John, Medicare Advantage provides comprehensive coverage for less.
Example 2: Frequent Medical Needs
Mary is a 72-year old with chronic conditions like diabetes and COPD requiring specialist visits, tests, and daily medications.
- With an Advantage PPO Plan, Mary has a $100 monthly premium. Her many copays and 20% coinsurance for medical services reaches the plan’s $8,300 out-of-pocket limit. Her total annual costs are $8,700.
- With Plan F Medigap and Part D drug coverage, Mary pays higher premiums totaling $6,000 for the year. But her plan covers nearly all Medicare copays and deductibles, with minimal out-of-pocket spending. Her total costs for the year are about $6,150.
For a senior with extensive healthcare needs like Mary, Medigap provides more complete coverage and savings.
As you can see, there’s no “one size fits all” answer on Medicare Advantage vs Medigap costs. The right option for you depends on your individual health profile and budget.
Choosing Between Medicare Advantage and Medigap
When deciding between Medicare Advantage or Medicare Supplement, here are some helpful tips:
- Compare pricing carefully – premiums, deductibles, copays, and maximums. Make sure to factor in prescription medications.
- Consider your health status and likelihood of needing services like specialists, tests, therapy, etc. Will you potentially max out a plan’s out-of-pocket limit?
- Make sure your doctors are in-network for any Medicare Advantage Plan you consider. Having to change providers can be inconvenient.
- Look ahead at your future medical needs. Your needs at 65 may be very different at 80. Choose coverage that will fit both now and down the road.
- Talk to an insurance agent who can explain these options and provide rate estimates based on your specific situation.
- Review choices annually during Medicare’s Open Enrollment to make sure your coverage suits your healthcare needs and budget.
Navigating Medicare can be confusing. But taking the time to understand Advantage and Medigap benefits and costs can help you find the right fit. Comparing plans thoroughly leads to better choices and savings.
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Is Medicare Supplement more expensive than Medicare Advantage?
The cost of Medicare Supplement and Medicare Advantage Plans can vary depending on various factors, including the specific plan you choose and your location. Generally, Medicare Supplement Plans may have higher monthly premiums than Medicare Advantage Plans, but they often offer more comprehensive coverage and greater flexibility in choosing healthcare providers.
What is a Medicare Supplement Plan?
A Medicare Supplement Plan, also known as Medigap, is a type of private insurance policy that helps cover the gaps in Medicare Part A and Part B coverage. These plans can help pay for out-of-pocket costs such as deductibles, copayments, and coinsurance.
What is the difference between Medicare Supplement insurance and a Medicare Plan?
Medicare Supplement insurance, or Medigap, is a type of supplemental insurance that works alongside traditional Medicare Part A and Part B. It helps cover the out-of-pocket costs that Medicare doesn’t pay for. On the other hand, a Medicare Plan, also known as a Medicare Advantage Plan, is an alternative to Original Medicare that combines Medicare Part A, Part B, and sometimes Part D prescription drug coverage into one plan.
Does Medicare Supplement include prescription drug coverage?
No, Medicare Supplement Plans do not include prescription drug coverage. If you want prescription drug coverage, you will need to enroll in a separate Medicare Part D prescription drug plan.
What is the best Medicare Plan?
The best Medicare Plan for you will depend on your individual healthcare needs and preferences. It’s important to carefully compare the different options available, such as Medicare Supplement Plans and Medicare Advantage Plans, and consider factors such as coverage, cost, and network of healthcare providers.
Can I have both Medicare Advantage and Medicare Supplement Plans?
No, you cannot have both Medicare Advantage and Medicare Supplement Plans at the same time. These are two different types of coverage and are not compatible with each other for Medicare beneficiaries. You will need to choose one or the other.
What are the types of Medicare coverage?
The types of Medicare coverage include Medicare Part A (hospital insurance), Medicare Part B (medical insurance), Medicare Part C (Medicare Advantage Plans), and Medicare Part D (prescription drug coverage). Medicare Supplement Plans, also known as Medigap, are optional plans that can be added to enhance the coverage provided by Original Medicare.
Can I switch from Medicare Advantage to Medicare Supplement?
Yes, you can switch from a Medicare Advantage Plan to a Medicare Supplement Plan, but there are certain enrollment periods and guidelines you need to follow. It’s important to speak with a qualified insurance agent or Medicare representative to understand the specific rules and options available to you.
Are Medicare Advantage Plans an alternative to Original Medicare?
Yes, many Medicare Advantage Plans are an alternative to Original Medicare. These plans are offered by private insurance companies and provide the same coverage as Original Medicare (Part A and Part B), with some additional benefits and services. Medicare Advantage Plans may also include prescription drug coverage.
How do I choose between Medicare Advantage and Medicare Supplement?
Choosing between Medicare Advantage and Medicare Supplement Plans depends on your personal healthcare needs, budget, and preferences. Medicare Advantage Plans offer bundled coverage and often have lower monthly premiums, but you may be limited to a network of healthcare providers. Medicare Supplement Plans provide more flexibility in choosing healthcare providers, but they typically have higher premiums. It’s important to carefully compare the coverage, costs, and network options to determine which plan best meets your needs.