Medicare Supplement Insurance (Medigap) vs. Medicare Advantage Plans

• by Christian Worstell
• January 12, 2024
• Reviewed by John Krahnert

Medicare Supplement Insurance (also called Medigap) and Medicare Advantage plans (Medicare Part C) are two very different private Medicare options that you may consider.

This guide highlights the differences between Medicare Supplement Insurance and Medicare Advantage so you can better understand these two private Medicare coverage options.

You can compare the different types of Medicare plans to find the best type of coverage for your needs.

What is the difference between Medicare Supplement and Medicare Advantage plans?

Both Medicare Supplement Insurance and Medicare Advantage plans are private Medicare options sold through individual insurance companies.

The primary difference between these types of insurance:

• Medicare Supplement Insurance is used along with Original Medicare to help pay certain Medicare out-of-pocket costs.
  
  These costs can include costs like Medicare Part A coinsurance, the Medicare Part A deductible or Part B coinsurance. Medigap plans do not typically offer additional benefits beyond what Original Medicare covers.
  
  
• Medicare Advantage is used as an alternative to Original Medicare. A Medicare Advantage plan will replace your Original Medicare coverage.
  
  You’ll receive the same benefits that are offered by Medicare Part A and Part B, but from a private insurance company.
  
  Many Medicare Advantage plans offer additional coverage for services and items not found in Original Medicare. 

You cannot have a Medicare Advantage plan and a Medicare Supplement Insurance plan at the same time.

Why should I enroll in a Medicare Supplement Insurance plan?

When you use Medicare Part A or Part B benefits, you’ll often be left with some out-of-pocket expenses like deductibles, coinsurance or copayments. This is known as “cost sharing.”

That’s where Medicare Supplement Insurance comes into play. As the name implies, this type of plan is used alongside your Original Medicare coverage.

Here are a few examples of how a Medigap plan can work:

• You schedule a doctor’s appointment with a doctor for services that are covered by Medicare Part B. The doctor accepts Medicare “assignment” — this means she accepts Medicare’s reimbursement rate for all covered services as payment in full.
  
  Medicare Part B does not cover doctor’s appointments in full. After you meet your Part B deductible ($240 per year in 2024), you’ll typically be responsible for the 20 percent of the Medicare-approved amount billed for the services you receive.
  
  If you had a Medigap plan that fully covers this 20 percent Part B coinsurance (and you already met your Part B deductible), you would pay nothing out-of-pocket for the appointment.
  
  
• You are admitted to the hospital for Medicare-approved inpatient care. Before Medicare Part A provides any coverage, you’ll have to first meet the Part A deductible of $1,632 in 2024.
  
  The Part A deductible must be met for each benefit period. A benefit period starts once you’re admitted for inpatient care, and it ends when you haven’t receiving inpatient hospital care for 60 days. You could potentially need to meet this deductible more than once in a given year.
  
  If you had a Medigap plan that fully covers this Part A deductible, you would pay nothing out-of-pocket toward your deductible.
  
  
• You visit a doctor who does not accept Medicare’s rate as full payment for their services. This means they can charge you up to 15 percent more than the Medicare-approved amount for their services. These costs are known as Medicare Part B excess charges.
  
  If you had one of the two Medigap plans (Plan F or Plan G) that cover Part B excess charges, you wouldn’t have to pay for these additional costs.

What do Medicare Supplement Insurance plans cover?

There are nine potential benefits that can be covered by the 10 standardized Medicare Supplement Insurance plans sold in most states (Massachusetts, Minnesota, and Wisconsin have different standards).

Each type of plan offers partial or full coverage for a different combination of these benefits.

• Medicare Part A coinsurance
  While it’s not common to require a hospital stay long enough to incur Medicare Part A coinsurance charges, these costs can range up to $816 per day in 2024 for extended stays at hospitals and other inpatient facilities.
  
  
• Medicare Part B coinsurance
  Medicare Part B typically requires a 20 percent coinsurance payment for Medicare-approved services and items after you meet your Medicare Part B deductible.
  
  
• Medicare Part A deductible
  The Medicare Part A deductible is $1,632 per benefit period in 2024. The Medicare Part A deductible is not annual — you could potentially need to meet this deductible more than once in a given year.
  
  
• Medicare Part B deductible
  The Medicare Part B deductible is $240 per year in 2024.
  
  
• Medicare Part B excess charges
  Doctors who do not accept Medicare assignment reserve the right to charge up to 15 percent more than the Medicare-approved amount for services and items they provide. These costs are called excess charges.
  
  
• Medicare Part A coinsurance and copayments for hospice care
  Medicare Part A generally requires you to pay a copayment for prescription drugs used for hospice treatment. You are typically also responsible for hospice respite care coinsurance costs.
  
  
• Medicare Part A coinsurance for skilled nursing facility care
  Medicare Part A requires a coinsurance payment of $204 per day in 2024 for inpatient skilled nursing facility stays longer than 20 days.
  
  
• First three pints of blood
  Original Medicare does not provide coverage for the first three pints of blood used for a blood transfusion.
  
  
• Foreign travel emergency care
  In most cases, Original Medicare does not provide coverage for emergency medical care received outside of the U.S. Several Medigap plans cover 80 percent of emergency medical care received abroad.

What is Medicare Advantage?

Medicare Advantage plans are a type of private Medicare insurance that offers all of the same benefits as Original Medicare.

Medicare Advantage plans also offer benefits that are not covered by Original Medicare.

Benefits, plan availability, and costs can vary from plan to plan. Be sure to check with your plan’s Explanation of Coverage to find out exactly what is covered.

A licensed insurance agent can help you compare Medicare Advantage plans in your area, including the benefits they offer.

What are the advantages and disadvantages of Medicare Advantage plans?

Some potential benefits of having a Medicare Advantage plan include:

• All Medicare Advantage plans have an annual out-of-pocket spending max, which Original Medicare does not offer.
  
  
• Some Medicare Advantage plans offer low premiums.
  
  
• Many Medicare Advantage plans offer benefits which are not covered by Original Medicare.

Some potential downsides of a Medicare Advantage plan can include:

• Certain types of Medicare Advantage plans (such as Medicare HMO plans or Medicare PPO plans) may limit you to a provider network. If so, you’ll be required to visit health care providers who are in the plan network for your care to be covered.
  
  
• The provider networks in some Medicare Advantage plans may be small — limited to a certain geographic region. This could be an issue if you travel frequently or live in different parts of the country during certain times of the year.

Whether or not a Medicare Advantage plan is a good fit for you will depend on your personal health care and budget needs.

There were 3,998 Medicare Advantage plans available around the U.S. in 2023.¹  

How do I choose between Medicare Supplement Insurance and a Medicare Advantage plan?

Over 30 million Medicare beneficiaries are enrolled in a Medicare Advantage plan. This accounts for over half the total Medicare-eligible population.¹

Roughly 15 million Medicare beneficiaries are enrolled in a Medicare Supplement Insurance plan.² 

With the two types of insurance being very popular among Medicare beneficiaries, how do you choose which type of coverage is right for you?

Here are a few factors you can consider when deciding.

Cost

The average monthly premium for a 2024 Medicare Advantage plan is $13.24.³

You’ll also still pay your Medicare Part B premium in addition to your Medicare Advantage plan premium.

The average monthly premium for the popular Medicare Supplement plan G in 2023 was $135.⁴

Some people may choose to enroll in a Medicare Supplement Insurance plan so they can save money on their out-of-pocket Medicare costs. Medicare Supplement Insurance is accepted by any health care provider who also accepts Medicare.

Some people may choose to enroll in a Medicare Advantage plan because the premiums are typically lower than Medigap plan premiums, or because they are drawn to the additional benefits many Medicare Advantage plans offer.

In the end, it all depends on the type of health care you need and the manner in which you expect to use your insurance.

It may help to have a conversation with a licensed insurance agent who can review your medical needs and help you decide which type of plan might be most beneficial for your situation.

Your Health Care Needs

Deciding between these two types of plans can also boil down to what your needs are.

• Do you take prescription drugs?
• Do you want coverage for benefits Original Medicare doesn't cover?

If so, you might consider the benefits of enrolling in a Medicare Advantage plan.

• Do you have a health condition that requires frequent trips to the doctor or the use of medical equipment in your home?
  
  
• Do you expect to undergo surgery or other major procedures in your future?
  
  
• Do you frequently travel outside of the U.S.?

If so, certain types of Medicare Supplement plans might be a good choice for you.

Learn about Medigap plans in your area

A licensed insurance agent can help learn about the Medigap plans that are sold in your area.

About the author

Christian Worstell is a senior Medicare and health insurance writer with MedicareAdvantage.com. He is also a licensed health insurance agent. Christian is well-known in the insurance industry for the thousands of educational articles he’s written, helping Americans better understand their health insurance and Medicare coverage.

Christian’s work as a Medicare expert has appeared in several top-tier and trade news outlets including Forbes, MarketWatch, WebMD and Yahoo! Finance.

Christian has written hundreds of articles for MedicareAvantage.com that teach Medicare beneficiaries the best practices for navigating Medicare. His articles are read by thousands of older Americans each month. By better understanding their health care coverage, readers may hopefully learn how to limit their out-of-pocket Medicare spending and access quality medical care.

Christian’s passion for his role stems from his desire to make a difference in the senior community. He strongly believes that the more beneficiaries know about their Medicare coverage, the better their overall health and wellness is as a result.

A current resident of Raleigh, Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism.

If you’re a member of the media looking to connect with Christian, please don’t hesitate to email our public relations team at Mike@tzhealthmedia.com.

 

 

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