What Is the Difference Between Medicare Advantage and Medicare Supplement Insurance?

Learn about the differences between Medicare Advantage and Medicare Supplement Insurance (Medigap) and find out which plan is right for your needs.

When it’s time to sign up for Medicare, you will have to consider a few options. Original Medicare (Part A and Part B) covers many basic health costs, including hospital visits, doctor appointments, and medical procedures. Unfortunately, Original Medicare does not cover all health expenses. If you only have this type of plan, you’ll have to pay additional costs—like prescription drugs and vision and dental care—out of pocket. 

There are two ways to cover these costs: opting for Medicare Advantage or enrolling in a Medicare Supplement insurance policy (also known as Medigap).

What are Medicare Advantage plans?

Medicare Advantage plans, also known as Medicare Part C plans, are private health insurance plans approved by Medicare. These plans replace your Original Medicare coverage and must offer at least all the same benefits. Most Medicare Advantage plans also offer additional benefits, such as prescription drug coverage, as well as vision, dental, and hearing services. 

You're still participating in the Medicare program when you use a Medicare Advantage plan. Medicare will simply pay your private insurance company to administer your new plan instead.

The benefits you receive from a Medicare Advantage plan will vary depending on your insurance company and the plan you select. 

What is Medicare Supplement Insurance (Medigap?)

Like Medicare Advantage plans, Medicare Supplement (Medigap) plans are also provided by a private insurance company. However, Medigap is different from Medicare Advantage in that it works alongside your Original Medicare plan rather than replacing it. 

If you choose a Medigap plan, the majority of your health expenses will still be covered by your Original Medicare plan (Part A and Part B). Your Medigap plan will simply provide additional coverage to help pay your deductibles, copayments, and coinsurance.

It’s important to note that Medigap plans no longer offer prescription drug benefits, so you will want to consider enrolling in a Medicare Part D Prescription Drug Plan to cover these costs. Additionally, if you enroll in a Medicare Supplement policy after your Initial Enrollment Period, you may be subject to a medical underwriting coverage contingency.

Choosing between Medicare Advantage and Medicare Supplement Insurance

Once you know the difference between Medicare Advantage and Medicare Supplement Insurance, you will need to decide which one is better for you. Cost is a major determinant, and it’s important to note that there are two types of costs associated with any insurance coverage:

  • Annual premiums: Both Medicare Advantage and Medigap plans have monthly premiums, but many plans offer $0 premium Medicare Advantage plans to entice enrollees. On average, Medigap premiums range from $50 to $250 per month.

  • Deductibles: As of 2020, Medigap plans have Part B deductibles. Medicare Advantage plans can have an annual deductible, but most people can choose a plan with a $0 medical deductible.

The trade-off between Medicare Advantage plans and Medigap plans is that Medicare Advantage plans have more out-of-pocket costs while Medigap plans have higher monthly premiums.

You’ll have to compare your specific costs with both plans to choose the one that will save you more money on health expenses. 

Why Choose Medigap?

A Medicare Supplement plan is best for people who want generally predictable health expenses and enjoy standardized benefits. Those on Medigap plans can select their own doctors and hospitals without network restrictions or mandatory referrals because they are generally accepted anywhere Original Medicare is.

Why Choose Medicare Advantage?

People who use Medicare Advantage enjoy Parts A and B of Original Medicare. Since these plans come from private insurers, enrollees also have access to additional health benefits, like dental, vision, and prescription drug coverage, in addition to low monthly premiums. There are hundreds of different Medicare Advantage plan options, which means there’s a plan to suit almost any need. 

These plans are best for people who prefer paying a low monthly premium and are willing to pay out of pocket for doctor visits and hospital stays. These plans can also be good options if you live in an area with a large provider network.

When to Choose Your Plan

There are a few ways to enroll in any type of Medicare plan once you’re eligible. You’ll have an initial enrollment period, an open enrollment period, and a Medicare Advantage open enrollment period.

To avoid gaps in coverage or penalties, sign up for Original Medicare during your initial enrollment period. This is the window that spans three months before your 65th birthday, the month of, and the three months after. You can also use this time to find a Medigap plan.

The Medicare Annual Enrollment Period runs from October 15 to December 7, and you can enroll in a new plan, switch between different plans, or drop your coverage. The changes will be effective January 1 of the following year.

The Medicare Advantage open enrollment period runs from January 1 to March 31 each year. If you have a Medicare Advantage Plan you have the opportunity to switch to another Medicare Advantage Plan or Original Medicare one time during this enrollment period.

Please consult with your Medicare advisor to make sure your questions are answered and to get more information about the trade-offs between Medicare Supplement and Medicare Advantage.

Whether you’re approaching your initial enrollment period or planning ahead for open enrollment, it’s always a good time to discuss your options with a reliable Medicare advisor. Call or text (888) 443-5336 (TTY: 711) and learn more about why our licensed agents are passionate about connecting people with the right healthcare plans for their needs.

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