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.
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:
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.|
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:
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 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 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.
Some potential benefits of having a Medicare Advantage plan include:
Some potential downsides of a Medicare Advantage plan can include:
Whether or not a Medicare Advantage plan is a good fit for you will depend on your personal health care and budget needs.
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):
There are more than 2,700 Medicare Advantage plans available around the U.S. in 2019.1
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.
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.
Deciding between these two types of plans can also boil down to what your needs are.
If so, you might consider the benefits of enrolling in a Medicare Advantage plan.
If so, certain types of Medicare Advantage plans might be a good choice for you.
A licensed insurance agent can help learn about the Medigap plans that are sold in your area.
Learn about Medigap plans in your areaVisit MedicareSupplement.com
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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.
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