Medigap or Medicare Supplement vs Medicare Advantage: How Do They Compare?

When you first enroll in Medicare at age 65, you have a choice between sticking with original Medicare or signing up for additional coverage through a Medicare Advantage or Medicare Supplement plan. But what exactly is the difference between these two options, and do they share any similarities?

Medicare Supplement insurance (also called Medigap) and Medicare Advantage plans both offer enhanced benefits beyond original Medicare. However, they take different approaches. Understanding how these two additional types of Medicare coverage compare can help you choose the right plan for your needs.

Original Medicare Gaps

Before diving into Medicare Advantage and Supplements, it’s useful to understand what original Medicare does and does not cover. Original Medicare consists of Part A (hospital coverage) and Part B (outpatient and doctor visit coverage).

While original Medicare covers a wide range of medically necessary healthcare services, it does not pay for everything. Some common gaps include:

Deductibles for Part A and Part B
Coinsurance for Part A and Part B services
Most prescription drugs (Part D must be purchased separately)
Routine dental, vision, or hearing care

These coverage gaps leave beneficiaries exposed to significant out-of-pocket costs under original Medicare. This is where Medicare Advantage and Supplement insurance come in.

What is Medicare Supplement Insurance?

Medicare Supplement insurance, also called Medigap, is sold by private insurance companies. It is designed to supplement original Medicare by filling in some coverage gaps.

Here are key facts about Medigap plans:

Pays for certain original Medicare out-of-pocket costs like copays, coinsurance, and deductibles
Works alongside your original Medicare benefits
Does not cover prescription drugs
Standardized plans labeled Plan A, Plan B, Plan C, etc. offered in most states
May also cover some extra services original Medicare does not
Monthly premium required, in addition to your Part B premium

Medigap helps limit unexpected medical costs not paid by original Medicare. These plans do not restrict you to certain networks of providers – you can see any doctor accepting Medicare nationwide.

What is Medicare Advantage?

Medicare Advantage plans are also sold by private insurers. But unlike Supplements, Medicare Advantage plans replace your original Medicare coverage.

Here’s an overview:

Bundle Medicare Part A, Part B, and often Part D prescription drug coverage
Provide all original Medicare benefits but often restrict provider networks
May offer extra benefits like dental, vision, hearing aids
Monthly premium required, in addition to your Part B premium
Out-of-pocket limits provide financial protection

Medicare Advantage plans manage your full Medicare benefits. Many offer extra coverage but networks are generally more limited outside of emergencies.

Comparing Medicare Supplement vs Medicare Advantage

When choosing between Medicare Supplement and Medicare Advantage, there are several key differences:

Provider networks

Medicare Supplement – Use any provider accepting Medicare. No networks.
Medicare Advantage – Restricted networks, except for emergencies.

Prescription drugs

Medicare Supplement – Does not include Part D drug coverage.
Medicare Advantage – Usually includes integrated Part D coverage.

Out-of-pocket costs

Medicare Supplement – Caps your share of costs for Medicare-covered services.
Medicare Advantage – Plans have out-of-pocket spending limits.

Coverage range

Medicare Supplement – Covers only services covered by original Medicare.
Medicare Advantage – Often covers some extra services and benefits.

Travel coverage

Medicare Supplement – Full coverage anywhere Original Medicare is accepted.
Medicare Advantage – Emergencies covered, otherwise limited out of network.

As you can see, these two plan types take very different approaches to rounding out original Medicare. Neither is necessarily “better” – it depends on your priorities and needs.

Advantages of Medicare Supplement Insurance

Medicare Supplement insurance offers some unique benefits:

Freedom of choice – See any provider in the country that accepts Medicare. No need to worry about network limitations.

Lower out-of-pocket costs – Copays, coinsurance, and deductibles for Medicare services are covered, providing financial protection.

Travel coverage – Full coverage anywhere in the U.S. as long as the provider takes Medicare.

Flexible add-on coverage – Can pair a Supplement with a stand-alone Part D plan you select.

Guaranteed renewable – Plans are automatically renewed as long as you pay premiums on time.

If you want robust coverage with original Medicare’s flexibility, a Supplement may be the right option.

Advantages of Medicare Advantage

Medicare Advantage plans also offer unique perks:

Lower premiums – Premiums are often $0 or very low cost, depending on plan type and coverage.

Extra benefits – Many plans include dental, vision, hearing, fitness benefits, and more.

Out-of-pocket caps – Set limits on how much you’ll spend for covered medical care.

Part D drug coverage – Prescription drug benefits fully integrated into plan.

Coordinated care – HMOs and PPOs feature networks and assigned primary doctors.

Plan maximums – Catastrophic coverage caps that provide financial certainty.

If you want extra coverage and can work within a network, Medicare Advantage offers comprehensive benefits.

Key Points of Comparison

When weighing Medicare Supplement vs Medicare Advantage, some key points of comparison include:

With Supplements, you keep original Medicare. With Medicare Advantage, the plan replaces original Medicare.
Supplements allow you to see any Medicare provider nationwide. Advantage plans have provider networks.
Supplements cover Medicare out-of-pocket costs only. Advantage plans include some extra benefits.
If you want prescription drugs, Supplements require a separate Part D plan. Drugs are usually included with Advantage.

The right option depends on your preferences and healthcare needs. Understanding the differences can help you select the type of coverage that’s best for you.

Can You Have Both Medicare Advantage and Supplement?

In most cases, you can enroll in only one or the other – not both a Medicare Advantage plan and a Medicare Supplement plan at the same time.

Here are a few scenarios where you may use both coverages:

You have a Medicare Advantage plan but switch back to original Medicare and Supplement during Medicare open enrollment or a special enrollment period.
You drop your Medicare Advantage plan mid-year to enroll in original Medicare plus a Supplement. This requires a special election period.
You have original Medicare with a Supplement but join a Medicare Advantage plan during open enrollment which replaces your other coverage.

Aside from transitioning between coverage types, holding both an Advantage plan and Supplement policy simultaneously is generally not allowed since they sometimes overlap in what they cover.

Choosing the Right Plan for You

When deciding between Medicare Advantage vs a Medicare Supplement during open enrollment, think about these key questions:

Do you prefer more coverage options and lower costs or a lower premium and extra benefits?
Does being limited to network providers bother you?
Will you need comprehensive drug coverage?
How often do you expect to travel outside your plan’s service area?

Also consider your expected healthcare needs, budget, and priorities. Doing your homework can help you find the plan that’s right for your situation.

Conclusion

While Medicare Advantage and Supplement plans take different approaches, they both aim to enhance your original Medicare coverage. Supplements preserve Medicare flexibility with lower out-of-pocket costs while Advantage plans offer integrated benefits with network tradeoffs. Understanding the key differences and comparing plan options can help you make an informed Medicare decision.

Meta Title: Medicare Supplement vs Medicare Advantage: How Do They Compare?

Meta Description: Medicare Supplement and Medicare Advantage plans supplement original Medicare but have key differences. Compare coverage, costs, provider access, and more to choose the best policy.

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