Medicare Supplement vs Medicare Advantage

When you first enroll in Medicare you will have some choices to make. You will need to decide if Original Medicare (Part A and Part B) is all you need, or will you want additional coverage that will provide prescription drug benefits and limit your annual out of pocket expenses. The image below illustrates the two options you have beyond just Original Medicare. Those options include enrolling in a Medicare Supplement plan or a Medicare Advantage plan.


Option one is Original Medicare (Medicare Part A + Medicare Part B), which is run by the federal government and covers basics like hospital services (Part A) and doctors’ visits (Part B) combined with a Medicare Supplement plan also known as a Medigap plan to cover the cost gaps in Original Medicare


Option two is the Medicare Advantage plan. Medicare Advantage is a privately managed alternative to Original Medicare. A Medicare Advantage plan covers all of the services of Original Medicare, and usually includes Part D (drug coverage) as well. A Medicare Advantage plan may even offer additional services that Original Medicare does not cover, such as dental, hearing or vision coverage.


One way to look at these two choices is the difference between paying for the health services you use versus paying up front for those same services. With a Medicare Advantage plan you may have a $0 monthly premium and only pay for the health services you use. For example each time you go to the doctor’s office you will have a copay, or when you spend the night in the hospital you will have a per day copay for hospitalization. When you have a Medicare Supplement you pay a relatively high monthly premium as compared to a Medicare Advantage plan and very little or nothing when you receive medical services like a doctor visit or hospitalization. Basically, you are paying up front to receive your medical benefits with a Medicare Supplement whether or not you receive any medical services.


Now we will look at some of the advantages and disadvantages of Medicare Supplements and Medicare Advantage plans. Hopefully, this will assist you when deciding what option is best for you. First, let’s take a look at Medicare Supplements.


A Medicare Supplement may be a better fit for individuals with ongoing or chronic medical issues. If you buy a Medicare Supplement policy within 6 months of you Part B effective date at age 65 or older, the insurance carrier cannot turn you down for any reason. If you have a history of cancer or have recently been diagnosed with heart disease, chronic obstructive pulmonary disease (COPD), diabetes, or another chronic condition that will require frequent doctors’ visits, you may want to strongly consider a Medicare Supplement. As we discussed above, this is your pay up front option. You will pay approximately the same amount every month no matter how many times you visit your doctor, so a Medicare Supplement may reduce your total costs. If you are trying to diagnose a new health condition and need to seek a lot of second opinions, this can be especially helpful.


A Medicare Supplement will provide you with more flexibility with your treatment options. With a Medicare Supplement you don’t have to choose a Primary Care Physician, which is a requirement of some Medicare Advantage plans. So you don’t have a “gatekeeper” who control over which providers you see. You can shop around for the care and treatment that you want. You can also choose to see any physician who accepts Medicare. On the other hand, Medicare Advantage plans are more restricted in terms of the provider networks they work with. Individuals in rural and isolated areas may have difficulty finding Medicare Advantage plans that work with their local healthcare services.


Additionally, it’s important to remember that if you choose a Medicare Advantage plan initially, and then try to switch to a Medicare Supplement policy six months or more after your Part B effective date, you may not be able to. Signing up for a Medicare Supplement policy initially gives you some time to see how your health situation is developing. After a few years with no major medical problems, you may feel more comfortable switching to a Medicare Advantage plan.


Now we will discuss some of the advantages of Medicare Advantage plans.


Medicare Advantage plans are generally less expensive. Medicare Supplement plans can be two to three times the cost of a Medicare Advantage plan. Although you pay the Part B premium with both options, additional premiums with a Medicare Advantage plan are less expensive, sometimes $0, than premiums for a Medicare Supplement policy. Additionally, look at the Medicare Advantage plan’s Annual Maximum Out-of-Pocket, which sets a limit on the maximum amount you will have to pay out-of-pocket. These maximum limits vary from plan to plan, but range from about $3,000 to $6,700. Once you’ve spent that maximum amount, you’ll pay nothing for covered services for the remainder of the year. Original Medicare does not offer an out-of-pocket maximum, so your expenses are limitless.


A Medicare Advantage plan requires fewer systems to keep track of. With Original Medicare, a Part D drug plan, and a Medicare Supplement you have three cards to keep track of and two monthly bills to worry about. For those who feel that they are already burdened by too many monthly bills and pieces of paper, this just adds to the pile. Medicare Advantage plans provide their members with one card convenience for doctor visits, hospitals, and pharmacies.


You will have fewer decisions to make when enrolled in a Medicare Advantage plan. Sometimes choices can be a burden. Medicare Advantage plan are supposed to navigate the system for you to contain costs and increase communication. Many people value having a Primary Care Physician, which is common with many Medicare Advantage plans, to take charge of some of the decisions and find the appropriate specialists.


A Medicare Advantage plan generally includes prescription drug coverage (Part D), whereas Medicare Supplements do not include prescription drug coverage, so you’ll need to choose a stand-alone Part D plan. For some beneficiaries, trying to find the right Part D plan is about as fun as a root canal. A Medicare Advantage plan takes care of that for you by already including drug coverage. If you go with a Medicare Advantage plan, remember to make sure that whatever plan you choose will cover your existing prescriptions at an affordable price.


Hopefully this article has provided you with some insight on the advantages and disadvantages of both Medicare Supplements and Medicare Advantage plans. If you still have questions, call one of our agents today at 1-844-680-7855 to get the assistance you need, or get your Medicare Supplement or Medicare Advantage quote now.

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