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Medicare Advantage vs Medicare Supplements (Medigap)

By Colton Mortensen

The differences between Medicare Advantage and Medicare Supplement (Medigap) plans are among the most common questions people have about their Medicare options. As an agent who helps people make these decisions, this is a topic discussed with practically everyone I meet. We will go over each one and why you may choose one over the other in this article.

First, a little bit about Original Medicare

It’s important to understand how Original Medicare Parts A and B work in order to make a smart decision with the rest of your insurance. Parts A and B are the same for everyone and are offered by Medicare (the federal government).

Part A primarily covers inpatient hospitalization but also covers skilled nursing facilities, hospice and home health care as long as certain conditions are met. There are deductibles, copayments and coinsurances you have to pay when you receive Part A services. You can read more about those in this article.

Part B covers outpatient services like doctor or specialist visits, ambulance rides, outpatient surgeries, ER visits and radiology services. For Part B services, you are first responsible for an annual deductible. After that is met, you have to pay a 20% coinsurance for services for the remainder of the year. Some people have to pay what is called a Part B excess charge but we won’t go into that here. You can read more about it in the article mentioned before.

Medicare Advantage Plans

Medicare Advantage plans go by a few different names like Part C, replacement plans, or the acronym MA. These are plans offered by private insurance companies contracted but not endorsed by Medicare.

Medicare Advantage plans combine benefits from Parts A and B of Medicare into one plan. They also offer some benefits beyond what Parts A and B offer as well and we will get into those shortly. It is important to understand that if you enroll into a Medicare Advantage plan, that plan will be your primary coverage instead of Medicare. Claims will not be paid by your advantage plan and not by Medicare. You still need to have both Parts A and B to be eligible to be enrolled into a Medicare Advantage plan.

Some of the potential benefits of having a Medicare Advantage plan include:

  • A maximum-out-of-pocket. This is how much you could spend in medical services in a calendar year before the plan picks up 100% of your covered services. Original Medicare does NOT have a maximum out of pocket at all so there’s technically no limit to how high your bills could go.
  • A more predictable coverage structure. You will need to look at the details of each Medicare Advantage plan but typically these plans have specific copay/coinsurance amounts for each service you may use.
  • Prescription Drug coverage. This is included in most Medicare Advantage plan but you definitely to verify that with each plan you’re considering.
  • There are also a lot of extra benefits that may be offered like dental, vision and hearing coverages. They may also offer over the counter credits and gym memberships. I wouldn’t make my decisions based off of these but they are definitely nice to have!

There are several items that you need to consider before choosing a Medicare Advantage plan that will have a critical impact on your experience.

  1. Networks: Medicare Advantage plans are network based. They are strutted as HMO’s, PPO’s, PFFS, etc. You will need to verify that any providers you use are included in the plan network.
  2. Drug Formularies: Each plan is going to have it’s own drug formulary. This means that a certain drug may be covered under one plan and not another. The cost for the drug may also vary from plan to plan.
  3. Affordability: You need to really understand the costs associated with these types of plans. Do you know what your costs will be if you were to spend several days in the hospital or need to undergo chemotherapy treatments? Prices can be very reasonable but be careful to not be caught off guard.

Medicare Advantage plans are becoming more popular every year and for good reason. They do a great job and creating a good balance and they save a lot of people quite a bit of money in premium.

My main recommendation here is to talk to someone who is knowledgeable who can help you compare your options. You may also want to consider some other plans to compliment your advantage plan such as hospital indemnity and cancer policies. These can do a lot to offset some of the higher costs associated with Medicare Advantage.

Medicare Supplements (Medigap)

The first main difference with Medicare Supplement plans is that they remain secondary to Original Medicare. You are then of course required to have both Parts A and B of Medicare in order to be enrolled in a Medicare Supplement plan.

There are a handful of different Supplement plans to choose from. They range from plans A through N with the exemption of several plans that Medicare has done away with over the years. Each of these plans are going to help cover deductibles, copayments, and coinsurances that you would normally have to pay under Medicare.

Screenshot 2023 06 01 at 7.49.07 AM
This chart is accurate for the year 2023

As you can see in the chart, each supplement plan is going to cover different gaps in your Medicare coverage. Not every carrier offers every plan and not everyone will be eligible for every plan either. For example, only those who were eligible for Medicare prior to 2020 may enroll into a Plan F.

A very important thing to understand is that the coverage in these different plans will be the same from the different insurance companies because in order to offer a Plan G for instance, the insurance company must follow the guidelines put forth for Plan G. The main 2 differences will be what your premium is when you sign up and what your rate increases will be going into the future. These are the variables to consider when choosing which insurance company to go with.

The last important detail on this topic is to understand that Medicare Supplement plans are only required to cover claims approved by Medicare. If Medicare pays a claim then the Supplement plan is required to pay it’s portion as well. If Medicare does not approve a claim, the Supplement plan does not have to approve it either. If you need insurance for items not covered under Medicare, you will need to get those policies separately.

In Conclusion

Try not to get caught up in the idea that one of these options is better than the other. Medicare Advantage and Medicare Supplements work different from each other. Your needs may be different from your neighbors or siblings and you need to choose based on your needs and budget.

If one of these options doesn’t cover something that you have concerns about, there is probably a different kind of policy that you can apply for that will cover it. You just need to know where to look.

We help people just like you make these decisions every single day. I recommend you reach out to someone who can help you as well. If you don’t have anyone or would just like a second opinion, please give us a call at (928)532-6698 and we will give you the best service you could ask for! Also feel free to reach out on our contact page or browse the rest of the valuable information on the site!

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