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 alongwith 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 Supplement Insurance
3,550 different plans available nationwide in 20211
10 standardized plans available in most states, though all 10 may not be available to you in every state
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
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
Over 24 million Medicare beneficiaries1
14 million Medicare beneficiaries2
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 ($203 per year in 2021), 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 $1,484 (in 2021).
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).
* Plan F and Plan C are not available to Medicare beneficiaries who became eligible for Medicare on or after January 1, 2020. If you became eligible for Medicare before 2020,... you may still be able to enroll in Plan F or Plan C as long as they are available in your area.
1 Plans F and G offer high-deductible plans that each have an annual deductible of $2,370 in 2021. Once the annual deductible is met, the plan pays 100% of covered services for the rest of the year. The high-deductible Plan F is not available to new beneficiaries who became eligible for Medicare on or after January 1, 2020.
2 Plan K has an out-of-pocket yearly limit of $6,220 in 2021. 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 $3,110 in 2021. 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 $50 copayment for emergency room visits that don’t result in an inpatient admission.+ Read more
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 $742 per day in 2021 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 $1,484 per benefit period in 2021. 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 $203 per year in 2021.
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 $185.50 per day in 2021 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:
Routine dental care coverage
Prescription drug coverage
Routine vision care and allowances for eyeglasses and eye exams
Routine hearing care and coverage for hearing aids
Gym memberships and fitness programs. such as SilverSneakers
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 3,550 Medicare Advantage plans available around the U.S. in 2021.1
How do I choose between Medicare Supplement Insurance and a Medicare Advantage plan?
In 2021, over 24 million Medicare beneficiaries are enrolled in a Medicare Advantage plan.1
A similar number of Medicare beneficiaries (14 million) are 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.
The average monthly premium for a Medicare Advantage plan in 2021 is $33.57.3
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.
1 Fuglesten Biniek, J. et al. (Oct. 29, 2020). Medicare Advantage 2021 Spotlight: First Look. Kaiser Family Foundation. Retrieved from https://www.kff.org/medicare/issue-brief/medicare-advantage-2021-spotlight-first-look.
2 AHIP. (June 2020). State of Medigap: Trends in Enrollment and Demographics. Retrieved from https://www.ahip.org/wp-content/uploads/AHIP_State_of_Medigap-2020.pdf.
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.
About the author
Christian Worstell is a licensed insurance agent and a Senior Staff Writer for MedicareAdvantage.com. He is passionate about helping people navigate the complexities of Medicare and understand their coverage options.
His work has been featured in outlets such as Vox, MSN, and The Washington Post, and he is a frequent contributor to health care and finance blogs.
Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism. He currently lives in Raleigh, NC.
Where you've seen coverage of Christian's research and reports:
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