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May 19, 2022
Medicare Advantage vs. Medicare Supplements: How Do You Choose?

Medicare Advantage vs. Medicare Supplements: How Do You Choose?

Medigap vs. Medicare Advantage. It’s one of the most common debates for those questioning their Medicare health plan choices. Every day, we have clients asking us questions like:  

  • What's the difference between Medigap and Medicare Advantage plans?
  • Can I change from a Medicare Advantage plan to a Medicare Supplement plan?
  • Do I need Medigap if I have Medicare Advantage?
  • Is a Medicare Supplement better than Medicare Advantage?

These are all great questions, and they deserve some answers. As experts on Medicare, we are ready to help you navigate this and any other health coverage decision by demystifying the difference between the two main options. We’d like to clear up the confusion and help you make an informed decision.

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If you’re totally unfamiliar with Medicare Advantage, here are some resources to read first:

And here are some resources about Medigap plans (also called Medicare Supplements):

What Is the Difference Between Medicare Supplements and Medicare Advantage Plans?

The core difference between Medicare Supplements and Medicare Advantage is who is offering the plan.

Medicare Supplements are regulated by the government to fill in any gaps in your traditional Medicare coverage. It’s why they’re also called Medigap plans. Because they’re governmentally regulated, there’s only a finite number of options available. These are categorized by letters of the alphabet, with Plan G currently being a popular choice.  

Medicare Advantage plans, on the other hand, are offered by private insurance companies that replace traditional Medicare coverage. This private regulation means MA plans can be more divisive in their offerings to create a competitive edge. MA plans will often include additional coverage for things like dental, vision and prescription drug plans (which are purchased separately for Medicare Supplement enrollees).

The easiest way to understand the main differences between Original Medicare with a Medigap plan vs. a traditional Medicare Advantage plan is by seeing their key differences side by side.

  Medicare + Medicare Supplement Medicare Advantage
Who regulates the plan? The government Private insurance companies
Deductibles and copays $233 for the year (Medicare Part B deductible in 2022) Can be as high as $7,550
Doctor network No network; you can go to any doctor that accepts Medicare Have networks; may have to travel to find a doctor in network
Plan benefits Stays the same Can change each year
Monthly premium Ranges, but can be in the $100-$200 range Very low or $0
Ability to switch plans Can change plans each year May be difficult to switch to Medigap later
Extra benefits None; Can add a DVH plan Can include vision, hearing, or dental benefits  
Prescription drug coverage None; Must enroll in a Part D plan Most plans include drug coverage
Medicare care while you travel outside of the U.S. Yes No
Out-of-pocket limit N/A - Plan G pays for everything except for the Medicare Part B deductible Average is $3,000-$4,000 (Maximum is $7,550)

Is it better to have Medicare Advantage or a Medicare Supplement?

You probably guessed it — it’s not that simple. Medicare Advantage and Medicare Supplement plans are so different that it’s hard to compare them fairly. Some people are better suited for Medicare Advantage while others prefer Medicare Supplement plans.  

There are a few main differences that we’ll go over that’ll help you decide which is better for you:

  1. Cost
  1. Networks
  1. Who controls the plan
  1. Extra benefits

Cost Difference of Medigap vs. Medicare Advantage Plans

For most individuals, a Medigap plan is their top choice because the cost is known upfront. You know exactly how much you’ll pay each year, and it’s predictable. That’s really appealing to a lot of us.

But a growing number of people prefer to “pay as they go,” which is the main appeal of a Medicare Advantage plan. These plans often have low or even $0 monthly premiums, but you pay each time you need care. For example, you have copays when you see the doctor, you have coinsurance when you go to the hospital, and there are typically higher deductibles you have to meet.  

Essentially, there’s a chance you might pay less with a Medicare Advantage plan, especially if you’re healthy, but there’s also a chance that you’d end up paying more because of high out-of-pocket maximum amounts. That’s a gamble that some are willing to take, while others prefer the predictability of a Medigap plan.

Network Difference of Medigap vs. Medicare Advantage Plans

Beyond just the cost comparison of these two options, there are some other factors to consider, such as networks.

Medicare Advantage plans have networks, similar to what you may have been used to with employer group health insurance plans. However, these networks can be limited in rural areas.

That’s why we always recommend that you review the plan you’re interested in before you purchase it to make sure your doctor, hospital, and preferred pharmacy are in network before enrolling in a new plan.

An alternative here is a Medicare Medical Savings Account (MSA). This is technically a kind of Medicare Advantage plan, but it’s built very differently. With an MSA, you can see any Medicare-participating provider, so networks aren’t an issue. With MSAs and Medigap plans, you can see any doctor who accepts Medicare, which is about 97% of all doctors.

Learn more: How Do Medicare MSA Plans Work, and Do I Need One?

Government vs. Private Insurance Companies

Medicare Advantage isn’t Medicare — it’s a Medicare replacement.

Medicare Advantage isn’t fully regulated by the government, which means the insurance companies have more control. In summary, a private company takes over your traditional Medicare. That can mean more variation in coverage, network, and benefits.

Note: Medicare Advantage plans are required to cover the same things as Original Medicare, at a minimum. However, these plans can offer additional coverage that Medicare does not. Your costs with a Medicare Advantage plan will vary depending on your specific plan details.

Medicare Supplements are regulated by the federal government. That means your coverage is consistent and held to specific rules for what your plan covers and what benefits they’ll include. This can be an important factor for those who are worried about year-to-year coverage changes.

Extra Benefits of Medicare Advantage Plans

Medicare Advantage plans often come with “extra” benefits, like free dental cleanings, hearing exams, and eye exams. You could also get a benefit that includes free gym memberships.

While these are nice perks, the dental, vision and hearing benefits are very limited (usually with a yearly benefit maximum of around $500), and the gyms included may not necessarily include the gym you want to visit.

Choosing a healthcare plan based on the bonus items included in the plan is never the smartest way to select a plan. First, you’ll want to find a plan that meets your needs and if it comes with extra benefits, it’ll be a happy bonus.  

These benefits are best treated as “nice to have” features, and they shouldn’t be the deciding factor as to which plan you choose. After all, these are health insurance plans, and their merits should be based on how well they cover your health expenditures.

Is a Medicare Supplement better than Medicare Advantage?

Neither Medicare Supplement nor Medicare Advantage is “better” than the other. Ultimately, it is a matter of personal preference and coverage needs.

Many seniors opt for a Medicare Supplement plan because they know exactly how much they’ll spend each year, they can see their favorite doctors and physicians, and it’s predictable.

However, a growing number of individuals like the lower premium and supplemental benefits that come with many Medicare Advantage options.

The only way to know for sure what is best for you is to compare your options and make an informed decision. That’s where we come in! Our team of experts can help you explore what plans are available in your county and find out what type of coverage would work best for your individual circumstances.  

Reach out today to find out more about your Medicare possibilities, and let us help find the right coverage option for you!

Luke Hockaday
By
Luke Hockaday
Luke Hockaday is a Customer Success Rep here at Medicare Allies. Luke has been helping Medicare-eligible clients with their insurance and retirement-planning needs since 2011. Luke is passionate about 3 things, and 3 things only: senior insurance, football, and food!

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