Medicare Advantage vs. Medicare Supplement Insurance Plans — Which Is Right for You?

When you turn 65, and if you satisfy certain prerequisites, you are eligible to receive Medicare coverage. Many people start with Original Medicare, which includes Part A and Part B. However, this coverage, provided by the federal government, could leave you with out-of-pocket expenses. That’s because Medicare Parts A and B were designed to generally cover only 80 percent of your medical costs.

You can get additional health benefits outside of the coverage Original Medicare offers. Other types of plans, like Medicare Advantage and Medicare supplement insurance, also known as Medigap, can help cover some costs that Original Medicare does not. Both Medicare Advantage and Medicare supplement insurance plans are provided by private insurance companies that are approved by Medicare. They may help reduce your out-of-pocket costs when you receive care.

So, what’s the difference between a Medicare Advantage plan and a Medicare Supplement insurance plan? We’ve laid it out in this helpful chart below:

Medicare Advantage vs Medicare Supplement Insurance

Medicare Advantage Plans

Also known as Medicare Part C, Medicare Advantage plans include all of the benefits of Part A and Part B. Some plans also include dental, vision, and/or prescription drug coverage.

Things to keep in mind:

• You must pay your Part B premium in addition to your Medicare Advantage premium. In some cases, you can find a $0 Medicare Advantage plan, but you still pay your Part B premium.
• People with end-stage renal disease (ESRD) or other specific severe chronic conditions may not qualify for a Medicare Advantage plan. If this applies to you, you can look into purchasing a Special Needs Plan.
• Most Medicare Advantage plans include prescription drug coverage, so verify that the drugs you take are covered by the plan you select.
• With Medicare Advantage, you are limited to a network of doctors and hospitals. Using a healthcare provider outside of the network – and when you travel – may cost you more.

Medicare Supplement Insurance Plans

Medicare supplement insurance plans, also known as Medigap plans, can help take care of certain healthcare costs not covered by Original Medicare.

Medicare supplement insurance is added to Part A and Part B coverage and helps cover costs, such as copayments, coinsurance, and deductibles.

Medicare supplement plans are standardized by the federal government. There are 10 different plans offered in 47 states (Massachusetts, Minnesota, and Wisconsin have their own Medicare supplement insurance plans). Each type of Medicare supplement plan varies in terms of coverage and costs.1 Medicare supplement standardized plans are simplified into classes A-N, except in MA, MN and WI. This classification makes it easier to compare several Medicare supplement plan types and select one that best fits your needs. While the basic benefits of each type of Medicare supplement insurance plan are uniform by carrier, premiums can vary between insurance companies.

Things to keep in mind:

• Medicare supplement insurance plans typically come with a steady, predictable bill that you can budget for.
• Medicare supplement insurance plans don’t cover services not offered by Medicare, such as dental care or eyeglasses.
• These plans don’t provide prescription drug coverage. This means you may need to enroll in an independent Medicare prescription drug plan (Part D) for medication coverage.
• With Medicare supplement insurance, you can use any provider who accepts Medicare. You aren’t limited to using a provider network.

Which is Better: Medicare Advantage or Medicare Supplement

When considering Medicare Advantage vs. Medicare supplement insurance plans, it’s important to remember that everyone’s needs are different. When choosing a plan, think about your individual situation. Keep in mind that you can’t enroll in a Medicare Advantage plan if you already have a Medicare supplement insurance plan, and vice versa.

If you decide to apply for a Medicare supplement insurance plan, you can do so when you first enroll in Original Medicare. Penalties may apply if you (a) miss your Medicare supplement open enrollment, or (b) are switching plans.

In other words, your Medicare provider may assess your current health status before approving your application. You can enroll in a Medicare Advantage plan when you first enroll in Original Medicare, or during the annual enrollment period each year.

Factors to consider with Medicare Advantage vs Medicare Supplement:

• How much is the monthly premium?
• What health care and hospital services might you use often and how much will they cost with each type of coverage?
• What kind of restrictions will you have on doctors, hospitals and pharmacies (e.g., does your preferred doctor accept the plan you want)?
• What is the expected cost of the prescription drugs that you need regularly?
• What’s the most you feel comfortable paying out of pocket at one time?
• How much do you want your copay amount to be for certain visits?
• What might your out-of-pocket responsibility be for an unexpected hospital stay or illness?

Learn more about Medicare

Choosing a Medicare plan is an important decision, but we’re here to help. Mutual of Omaha’s Medicare Advice Center can provide a recommendation on what Medicare solution may be right for you when you answer a few simple questions about your specific needs.

But no matter which path you choose, you’re making an excellent choice by helping protect what matters most — your health!

FAQs

Q1. What are the disadvantages of a Medicare Advantage Plan?

While Medicare Advantage plans typically include additional benefits like dental, vision and hearing care, they can also have potential downsides that you should be aware of before you enroll. It’s important to know that Medicare Advantage plans might limit you to a specific network of doctors, hospitals, and other healthcare providers. Some plans can also require you to get a referral from your primary care doctor to see a specialist. Medicare Advantage plans can also change from year to year, so that in-network doctor you’ve been going to may not still be in-network next year.

When it comes to cost, Medicare Advantage plans often have lower monthly premiums, but you may end up making up those costs with higher out-of-pocket costs for things like copayments, coinsurance, and deductibles.

Q2. Why do people choose Medicare supplement over Medicare Advantage?

People often choose Medicare supplement over Medicare Advantage because they typically offer more flexibility and predictable out-of-pocket costs. With Medicare supplement insurance, you aren’t restricted to the healthcare providers you use. You can see any healthcare provider who accepts Medicare, and you don’t need a referral to see a specialist.

Medicare supplement insurance plans tend to have higher monthly premiums than Medicare Advantage plans, but they help cover many of the costs not covered by Original Medicare, like copayments, coinsurance, and deductibles. This can help make healthcare expenses more predictable and manageable.

Q3. Do I still pay for Medicare Part B if I have Medicare Advantage?

Yes, you still have to pay monthly premiums for Medicare Part B coverage even if you have a Medicare Advantage plan. You may also have to pay a monthly premium for Medicare Advantage; however, there are Medicare Advantage plans available with low to $0 premiums.

If you are trying to decide between Medicare Advantage and Medicare supplement, it’s important to note that you can’t avoid paying a Medicare Part B premium with either plan. If you receive Social Security (or Railroad Retirement Board) benefits, your Part B premium is deducted from your benefit automatically. If you don’t, you’ll receive a bill from Medicare directly.

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