Medicare Supplement Insurance (Medigap) vs. Medicare Advantage Plans

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.

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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 like prescription drugs, routine dental care, vision and hearing benefits and more.

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

  Medicare Advantage Medicare Supplement Insurance
Availability 2,734 different plans available nationwide in 20171 10 standardized plans available in most states, though all 10 may not be available to you in every state
Eligibility Available to beneficiaries enrolled in Original Medicare who live in the plan’s service area More widely available to people over age 65 in some states, though younger people can be eligible to apply for a plan depending on where they live
Enrollment Initial Enrollment Period, Medicare Annual Election Period and Special Enrollment Periods. No medical underwriting required

Enrollment is year-round, but enrolling during your Medigap Open Enrollment Period or during a period when you qualify for a guaranteed issue right can be beneficial

 

Medical underwriting may be utilized if not applying for a policy during your Medigap Open Enrollment period or when you have a guaranteed issue right
Popularity Over 20 million Medicare beneficiaries (34%) in 20181 13.1 million Medicare beneficiaries in December 20162
Coverage of Medicare out-of-pocket costs No coverage of Original Medicare out-of-pocket costs, but MA plan out-of-pocket costs may be more affordable than what Original Medicare includes Coverage for Medicare Part A and B deductibles, copayments and coinsurance (depending on the plan)
Additional health benefits not found in Original Medicare Can offer additional benefits, such as dental, vision, hearing and prescription drug coverage, among other benefits No additional benefits to what Medicare offers, except for qualified emergency care received outside of the U.S.

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 ($185 per year in 2019), 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 $1,364 (in 2019).

    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).

Medicare Supplement Insurance Plans 2019
Medicare Supplement Benefits A B C D F1 G K2 L3 M N4
Part A co-insurance and hospital costs
Part B co-insurance or co-payment 50% 75%
First 3 pints of blood 50% 75%
Part A hospice care co-insurance or co-payment 50% 75%
Co-insurance for skilled nursing facility     50% 75%
Medicare Part A deductible   50% 75% 50%
Medicare Part B deductible                
Medicare Part B excess charges                
Foreign travel emergency     80% 80% 80% 80%     80% 80%
1. Plan F offers a high-deductible plan. This plan requires you to pay a $2,300 deductible in 2019 before it covers anything.
2. Plan K has an out-of-pocket yearly limit of $5,560 in 2019. After you pay the out-of-pocket yearly limit and yearly Part B deductible, it pays 100% of covered services for the rest of the calendar year.
3. Plan L has an out-of-pocket yearly limit of $2,780 in 2019. After you pay the out-of-pocket yearly limit and yearly Part B deductible, it pays 100% of covered services for the rest of the calendar year.
4. Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to a $50 copayment for emergency room visits that don’t result in an inpatient admission.
View an image version of this table.

Learn more about the Medicare Supplement Insurance plan options that are available in your state.

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 $682 per day in 2019 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 $1,364 per benefit period in 2019. 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 $185 per year in 2019.

  • 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 $170.50 per day in 2019 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. Most Medicare Advantage also offer benefits that are not covered by Original Medicare.

These additional benefits can include things like:

Benefits and plan availability 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 $0 premiums.

  • Many Medicare Advantage plans offer prescription drug benefits and some of the additional benefits listed above, 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.

How do Medicare Advantage plans work?

Here are a few examples of how a Medicare Advantage plan can work (remember that benefits and network restrictions can vary from plan to plan):

  • You are prescribed medication by your doctor, but neither Medicare Part A nor Part B provide coverage for the prescription drug. Unless you have a Medicare Part D prescription drug plan or other drug coverage, you’ll be left paying for your prescription out of your own pocket.

    But a Medicare Advantage plan with prescription drug coverage can help pay for some of your out-of-pocket costs for both the appointment and the prescription.  

  • You visit a dentist for a checkup. Original Medicare does not include any routine dental coverage, so you’ll either have to pay for the services out of pocket or buy a standalone dental insurance plan.

    If you had a Medicare Advantage plan that offers basic dental coverage, your plan would help pay for qualified dental services.

  • You wear glasses. Original Medicare typically does not cover eyeglasses or corrective lenses, so you’ll be left to pay for your glasses out of pocket, unless you have a standalone vision insurance plan.

    If you had a Medicare Advantage plan that offers vision benefits, your eye exams and glasses may be covered by the plan. How much you pay out-of-pocket could vary based on your specific plan.  

There are more than 2,700 Medicare Advantage plans available around the U.S. in 2019.1  

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

In 2018, 34 percent of Medicare beneficiaries were enrolled in a Medicare Advantage plan.1

In 2016, the exact same percentage of Medicare beneficiaries (34 percent) were enrolled in a Medicare Supplement Insurance plan.2 However, Medicare enrollment is growing overall, as is Medicare Advantage plan enrollment.

With the two types of insurance being nearly equally 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 Medicare Advantage plan in 2018 was $35.55.3

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

The average monthly premium for a Medicare Supplement Insurance plan in 2019 was $125.93.4

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 wear eyeglasses or hearing aids?

  • Do you visit the dentist regularly?

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 near future?

  • Do you frequently travel outside of the U.S.?

If so, certain types of Medicare Advantage 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.

Learn about Medigap plans in your area

Visit MedicareSupplement.com

Copyright 2019 TZ Insurance Solutions LLC. All rights reserved.

1 Kaiser Family Foundation. Medicare Advantage 2019 Spotlight: First Look. (Oct. 16, 2018.) Retrieved from www.kff.org/report-section/medicare-advantage-2019-spotlight-first-look-data-note.

2 The State of Medigap 2018. AHIP. (June 2018). Retrieved from https://www.ahip.org/wp-content/uploads/2018/06/State_of_Medigap18_FINAL.pdf.

3 MedicareAdvantage.com's internal analysis of CMS Medicare Advantage landscape source files, May 2018. Data retrieved from www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn.

4 TZ Insurance Solutions LLC internal sales data, 2019. This data is based on the Medicare Supplement Insurance policies TZ Insurance Solutions LLC has sold. It is not a comprehensive national average of all available Medicare Supplement Insurance plan premiums.

MedicareAdvantage.com is a website owned and operated by TZ Insurance Solutions LLC. TZ Insurance Solutions LLC and TruBridge, Inc. represent Medicare Advantage Organizations and Prescription Drug Plans having Medicare contracts; enrollment in any plan depends upon contract renewal.

Plan availability varies by region and state. For a complete list of available plans, please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.

Medicare has neither reviewed nor endorsed this information.

MedicareSupplement.com is owned and operated by TZ Insurance Solutions LLC. It serves as an invitation for you, the customer, to inquire about further information regarding Medicare Supplement Insurance. TZ Insurance Solutions LLC and the licensed insurance agents who may call you are not connected with or endorsed by the U.S. Government or the federal Medicare program. Medicare has neither reviewed nor endorsed the information contained on MedicareSupplement.com.