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

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

Medigap vs. Medicare Advantage. It’s the ultimate battle when it comes to 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 from Medicare experts like us. 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 also some resources about Medigap plans (also called Medicare Supplements):

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

The 2019 Medicare & You Handbook, which is distributed to you by the government, compares Original Medicare and Medicare Advantage on pages 5, 6, and 7.

When you look over the charts, it’s pretty clear that the Centers for Medicare & Medicaid Services (CMS) has an agenda – they want as many seniors to choose Medicare Advantage as possible. (This ultimately saves CMS money.)

The Medicare Rights Center and The Center for Medicare Advocacy both warn seniors about the bias and inaccuracies in this handbook.

Some of their main points include:

  • The handbook suggests that Medicare Advantage is the less expensive alternative – certainly not always true
  • The handbook fails to explain clearly that Medicare Advantage plans have networks, while those on Original Medicare (and those with a Medigap plan) can see any Medicare-participating doctor
  • The handbook fails to explain that Medicare Advantage plans often have hurdles, such as required prior authorization – instead, the handbook explains this is a “benefit” which is surely is NOT

A letter outlining these inaccuracies and biases was sent to Seema Verma, CMS Administrator, from The Center for Medicare Advocacy, Justice in Aging, and the Medicare Rights Center. The letter says:

“It is critical that the information in the Handbook be fairly and accurately presented… However, when comparing Original Medicare and Medicare Advantage, the 2019 draft Handbook does not meet this standard, distorting and mischaracterizing the facts in serious ways.”

Because of these serious issues, many seniors are left confused, since even Medicare itself can’t fairly provide the pros and cons of each health plan option.

Let’s take a look at the main differences between Original Medicare with a Medigap plan vs. a traditional Medicare Advantage plan. We offer both products and know that each option has its merits depending on your individual needs and preferences.

  Medicare + Medicare Supplement Medicare Advantage
Who regulates the plan? The government Private insurance companies
Deductibles and copays $198 for the year (Medicare Part B deductible) Can be as high as $6,700
Doctor network No network; you can go to any doctor that accepts Medicare Limited networks; may have to travel a long distance to see a doctor
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 Difficult to switch to Medigap later on
Extra benefits None; Can add a DVH plan Can include vision, hearing, or dental benefits but usually limited coverage 
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 $6,700)

Is it better to have Medicare Advantage or Medigap?

You probably guessed it – it’s not that simple. Medicare Advantage and Medigap are so different that it’s really hard to compare them fairly.

Some people are better suited for Medicare Advantage while others prefer Medigap plans. There are a few main differences that we’ll go over that’ll help you decide which is better for you:

  1. Cost
  2. Networks
  3. Who controls the plan
  4. Extra benefits

Cost Difference of Medigap vs. Medicare Advantage Plans

For most individuals, a Medigap plan is their top choice because it’s a sure thing. 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 really 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 higher deductibles you have to meet.

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 a lot more, up to your out of pocket maximum.

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 pretty limited, especially if you live in a smaller city.

We’ve had clients who had to travel 45 minutes just to see a doctor in their network. Also, the doctors in the network might not be your favorite – you’re limited to the ones in your plan.

If you can review the plan you’re interested in before you purchase it to make sure your doctor, hospital, and preferred pharmacy is in-network, then this may not be a concern for you. However, this is a huge deterrent for many seniors we’ve worked with before.

The one exception 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 doctor, so networks aren’t an issue.

Learn more: This New Medical Savings Account is a Compelling Medicare Alternative

With MSAs and Medigap plans, you can see any doctor who accepts Medicare, which is about 97% of all doctors.

You can simply call your doctor before you make an appointment to confirm that they accept Medicare.

Government vs. Private Insurance Companies

Medicare Advantage isn’t Medicare — it’s a Medicare replacement. Medicare Advantage isn’t regulated by the government, which means the insurance companies have the control. In sum, a private company takes over your traditional Medicare. They can choose:

  • What to cover and what not to cover,
  • Which doctors you can go to and which ones you can’t, and
  • Your benefits can change from year to year.

Medicare is backed by the federal government, and the rules are regulated, meaning that every insurance carrier has to follow the rules — no exceptions.

This can be an important factor for those who want to ensure that their plan benefits never change.

Extra Benefits of Medicare Advantage Plans

Medicare Advantage Plans often times 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 go to.

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?

As a general rule of thumb, most seniors prefer 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 $0 premium that comes with many Medicare Advantage options, and they are willing to take the financial risk in exchange for it.

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Our team of dedicated, licensed agents can help you as little or as much as you need. Whether it’s answering a few questions about Medicare or creating a comprehensive Medicare Planner with you, we are your Medicare Allies.

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