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Differences Between Medicare Supplement & Medicare Advantage

Updated: Aug 5, 2020

What are the differences between Medicare Supplement policies Medicare Advantage policies?


Once you become eligible for Medicare, you will have some choices to make regarding your coverage. Let’s start by defining some basic terms and concepts. Original Medicare has two main parts, Part A and Part B. Part A is known as hospital insurance and covers things like inpatient hospitalization and skilled nursing care. Part B is known as Medical insurance and covers things like services from doctors, other healthcare providers, and outpatient care. In addition to Original Medicare (Part A and Part B), you can choose to purchase a Medicare Supplement policy (sometimes called Medigap). If you do so, you will also want a Part D prescription drug plan as well, since Medicare Supplements and Original Medicare do not cover prescription drugs. In this scenario, you will have three ID cards, one for Original Medicare, one for your Medicare Supplement, and one for your Part D plan. Another option is to choose a Medicare Advantage plan. Medicare Advantage Plans work very differently than Medicare Supplements in that they completely replace Original Medicare, and in most cases, include Part D prescription drug benefits. Choosing a Medicare plan is an extremely personal decision and every person’s situation is different and unique. There is no right or wrong choice, just what’s right for you.

Medicare Supplements are a type of health insurance you buy from a private company. These plans work alongside Original Medicare and help pay health care costs not covered by Original Medicare, things like co-payments and deductibles. Medicare Supplement plans are standardized and labeled A through N. Each of these plans offers different levels of health coverage, but since they are standardized, the benefits provided in a Plan G for example, are the same no matter which insurance company you buy it from. You can find a chart that outlines the benefits of each plan on the Medicare website here.

Some facts and advantages of Medicare Supplement plans:

  • Policyholders can see any provider who accepts Medicare and no referrals are needed like they may be required in a Medicare Advantage plan.

  • Medicare Supplement policies are guaranteed renewable which means even if you have health problems, as long as you pay your premiums on time, the insurance company cannot cancel that policy.

  • With standardized plans, the options can be less confusing. That makes it a whole lot simpler to figure out which plan is best for you.

  • Medicare Supplement policies typically have lower out-of-pocket expenses than a comparable Medicare Advantage plan.

Medicare Advantage plans are also a type of health insurance you buy from a private company. As stated before, they don’t coordinate or supplement Original Medicare, they completely replace it. At a minimum, Medicare Advantage plans must cover the same benefits provided by Original Medicare but in many cases, they also include additional benefits not provided by Original Medicare or Medicare Supplements. These benefits can include things like dental, vision, and hearing as well as things like transportation to doctors’ offices, fitness memberships, coverage of Over-The-Counter (OTC) drugs/products, meals after hospitalization, and more. Most Medicare Advantage Plans are either HMO or PPO models which will require you to go to physicians or hospitals within their defined network or, in the case of PPO’s, pay more out of pocket if you choose to go outside the network.

Some facts and advantages of Medicare Advantage:

  • The convenience of a single plan

  • Many include prescription drug coverage for no additional premium

  • Many offer additional benefits not covered by Original Medicare (e.g. dental, vision, hearing, transportation, and more)

  • Eligibility for enrollment is not affected by your health or financial status.

There are pros and cons to both types of plans, and many factors to consider when deciding what is right for you. Things like premiums, benefits, convenience, out-of-pocket costs like copays, deductibles, coinsurance, and, more. If you need assistance determining which Medicare plan options are right for you, please contact us today.

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