Top differences between Medicare Advantage and Medicare supplement plans
According to the Centers for Medicare and Medicaid Services, just over 65 million people are enrolled in Medicare, and while this plan covers a significant part of healthcare expenses, it doesn’t include all of the services you might need. That’s why people turn to options like Medicare Advantage or Medicare supplement plans (also called Medigap or Part C) to fill the gap between what’s covered and what’s charged.
Navigating these plans can be challenging, so a great first step is to understand their differences. Here are some key facts about each that can help you determine which plan may be the best fit for your needs:
- Original Medicare: With a Medicare Advantage plan, your original Medicare (also called Parts A and B) is replaced by an all-in-one coverage package from a private insurer. With a Medicare supplement plan, you’ll keep your original Medicare coverage, and the private insurance will fill the gaps.
- Bundles: Medicare Advantage plans may offer extra benefits such as routine dental, vision, and hearing services. A Medicare supplement isn’t bundled with anything.
- Prescriptions: With a Medicare supplement plan, prescriptions aren’t included, so you’ll need to buy a Part D plan, while prescriptions can be bundled as part of a Medicare Advantage plan.
- Enrollment: There are specific enrollment periods during the year when you can enroll in or switch to a different Medicare Advantage plan. With a Medicare supplement, there’s a six-month period after you have Part B and are over age 65 during which you may enroll — after that period, there may be restrictions.
- Network and referrals: With a Medicare supplement plan, there’s no network, so you can see any healthcare provider in the U.S. who accepts Medicare, and there are no referrals necessary. With Medicare Advantage, you may need referrals to specialists, and the plan network is usually limited to certain providers and geography, except in emergencies.
One of the biggest considerations, as with any type of insurance, is cost. Medicare Advantage has lower premiums but has copays, while Medicare supplement plans have higher premiums but low or no copays.
That means if you have a chronic condition or anticipate having to see a healthcare provider for several types of conditions, you may end up paying more with Medicare Advantage due to the copays. It’s also important to think about how much you’ll need dental, vision, and hearing services — since those are bundled with Medicare Advantage, you may end up with lower costs in the end than with a supplement plan.
Basically, Medicare Advantage is considered an all-in-one healthcare plan with additional benefits, while a Medicare supplement plan is just what it sounds like: a way to supplement original Medicare as a way to control costs.
As the list above shows, there are pros and cons for each type of plan. The key strategy is to consider what type of healthcare needs you may have in the future and see which plan option matches best with those needs.
Whether you’re new to Medicare or considering a move to a Medicare Advantage plan, check out our Medicare library that’s filled with videos to address a wide range of common Medicare questions.