Medicare Advantage vs. Medicare Supplement Insurance

Once you have Original Medicare Parts A & Part B you have two choices on how you can fill in the gaps in your Medicare coverage.  Option 1 is adding a Medicare Supplement plan, also called a Medigap plan to your existing Medicare A & B. Option 2 is to choose a Medicare Advantage plan, also called a part C plan.

It’s important to understand that these two coverage types do not work together, so you cannot have them both at the same time.  You’ll need to choose one or the other.  You will also need to continue to pay your monthly Part B premium to keep either of these coverages current. 

For more details on Advantage vs. Supplement please watch our video.

Medicare Supplement Insurance – How it works. 

Medicare supplement insurance pays after Medicare first pays its share.  When you go to your doctor for treatment, the office bills Medicare.  Medicare processes the bill, and if it approves the service, it pays what it’s supposed to.  It then sends the remainder of the charges to your Med Sup plan.  The insurance company processes the bill and pays its share. Then depending on your plan, if there is any remaining amount, it is passed on to you.  It’s important to understand that Medicare decides if the claim is paid.  If Medicare approves the bill your Med Sup plan must pay its share of your deductibles, co-pays, and coinsurance.

The level of coverage varies. There are standardized plans that cover all of your Medicare deductibles, copayments and coinsurance, while others leave some costs for you to pay on your own.

Medicare Supplement Insurance has many unique benefits

  1. Nationwide coverage. They allow you to see any provider anywhere in the US that accepts Medicare.
  2. You have a 6-month open enrollment period in which you do not not to prove your insurability. The enrollment period begins once you enroll in Medicare Part B.
  3. You don’t have to choose a primary care provider.
  4. They are standardized by the federal government. This makes the plans very easy to compare.  Each is labeled with a letter.  Every plan with the same letter offers the same benefits, no matter what state it is offered in or by which insurance company.

Medicare Supplement Insurance – Cost 

In general, Med Sup plans have higher premiums than Medicare Advantage plans, but cover most if not nearly all of your medical service costs so your expenses are very predictable.  

For example, if you enroll in a plan G, the only cost you will have is your Part B annual deductible which is $203 in 2021, so you will pay the first $203 of your care costs but after that all other costs are covered.  

You will not have any copays, no out of pocket expenses other than your monthly Med Sup, Part B & Part D premiums. So it’s very easy to predict what your health care costs are going to be.

In our experience Med Sup plans work very best for the following:

  • People who want the freedom to choose any provider they want to. 
  • People who travel within the US because they can see providers anywhere who accept Medicare.
  • People who just don’t want to deal with the hassle of networks.
  • They also work great for individuals entering Medicare with a chronic health condition which Medicare Advantage Plans don’t have a specific plan for.  
  • A person who expects regular and numerous medical services. Instead of frequent co-pays and deductibles, your monthly premium, say for the plan G, is the majority of your healthcare budget since most of all additional medical services will be covered by the plan.

Medicare Supplement Insurance – What’s not Included 

  • Drug coverage – However it is easy to pick up an inexpensive Part D drug plan to go along with your original Medicare and your Med Sup plan. But it is another card to carry around in your wallet and another company to deal with when it comes to billing.
  • Dental 
  • Vision
  • Hearing
  • Gym membership

A few companies have begun to offer Med Sups with a few ancillary benefits but these plans carry a higher premium than their traditional offerings.

Medicare Advantage (Part C) is another way to get your Medicare benefits.

Now option #2 to fill the gaps of traditional Medicare is to go with a Medicare Advantage Plan. It’s an alternative to Original Medicare and offers another way to get your benefits. 

These plans were introduced in the late 90s. They are a form of coverage that you can enroll in to get your benefits from a private insurance company instead of from Medicare/Federal Government.  Advantage Plans by law cover the same services as original Medicare, but your cost sharing for each service will be different because it’s set by the plan instead of by Medicare.

How Medicare Advantage Plans Work.

  • You are required to have a Primary Care Physician.
  • Plans have a local network of providers.
    • Plans have a network of providers in your local area.  Unlike Med Sups, Medicare Advantage plans are offered by county, region and in some instances by state. But they are not available everywhere.  If you live in a rural area there is a chance one may not be available where you live.
  • The most popular of these is the Medicare HMO.  
    • These act similar to the plans you received from your employer, you have an insurance company, and you see doctors within that company’s network.  There is no coverage outside the network except in emergencies.  

Just like with the plan you received from your employer you will need to choose a primary care provider, and you will most likely need to get a referral from your primary in order to see a specialist. 

  • Medicare PPO plans are also available and offer more flexibility.  
    • In these plans you can get treatment outside the network but usually at a higher cost, and only if the out of network provider is willing to bill the plan.

Medicare Advantage Plans have many unique benefits

  • You can enroll in a MA plan that includes a part D Drug Plan.
    • This allows you to get your Medicare Part A, B, and D services from the same insurance company. Using one ID Card for all 3 services and removing the need for an additional premium.
  • Premiums for MA plans are lower than Med Sup plans.
    • In some areas, you can find Medicare advantage plans with a zero premium.  This means that the plan does not charge you anything to be a member.
    • You must still however be enrolled in both Medicare Parts A & B and you will continue paying your Part B premium, but you won’t have an additional plan premium on top of that. This does not mean the insurance is free.  The Insurance company is paid by Medicare to administer your care, so Medicare no longer has to.
  • Medicare Advantage plans offer ancillary benefits.
    • This means they can include additional health related services like comprehensive dental, vision or hearing services.  Some plans offer gym memberships as well.  
    • Recent legislation also allows advantage plans to include things like home modifications for mobility, transportation to and from doctor appointments, acupuncture, chiropractic care, podiatry services, meals, personal emergency response systems, diabetic supplies, funds to pay for over the counter health care supplies, pest control, pet services, companion care and more.  
    • Not all carriers or plans offer the same extra benefits so it pays to compare.