The Difference Between Medicare Supplement and Medicare Advantage

Original Medicare, which includes both Medicare Part A and Part B, covers a range of healthcare services for seniors. However, Original Medicare is not always enough to protect people from the rising costs of healthcare. To access more benefits or to reduce out-of-pocket costs for healthcare, seniors may decide to enroll in a plan that offers them additional coverage.

The two main options that provide more benefits and coverage than Original Medicare are Medicare Supplement plans and Medicare Advantage plans. Both options are provided by private insurance companies, and both offer coverage that extends beyond Medicare Parts A and B. Between the two of them, there’s a wide range of plans that are appropriate for every lifestyle and budget. You can be sure to find a plan with the right balance of cost and coverage for you.

But what are the differences between Medicare Supplement plans and Medicare Advantage plans? As you consider your options, understanding what makes these two types of plans different can help you decide which might be a better fit for you.

Medicare Supplement (Medigap) plans

Medicare Supplement Insurance plans, also called Medigap, are private insurance plans that work alongside Medicare Part A and Medicare Part B. These plans do what the name implies — they supplement or fill in the coverage gaps of Original Medicare.

A Medigap plan helps pay for costs not covered by Medicare Part A or Part B like deductibles, coinsurance or copayments. Medigap plans pay after Medicare Parts A and B pay their share. This means that Original Medicare is your primary coverage and your Medigap policy is secondary.

For example, if you seek outpatient care, Medicare Part B may cover 80 percent of a covered service. Normally, you’d have to pay the remaining 20 percent of the bill out of pocket. But if you have a Medigap policy, your plan may cover the remaining 20 percent for you.

Medigap plan types

There are 10 different types of Medigap plans that each cover different benefits at varying amounts. These plans are standardized on the state and federal levels (outside of Massachusetts, Minnesota and Wisconsin). The following are all potential types of Medigap plans: A, B, C, D, F, G, K, L, M and N. Not all insurance companies sell all of these plan types.

The following Medigap plans are often the most popular:

· Plan F: Covers all deductibles, coinsurance and copayments for Medicare Parts A and B, as well as some emergency costs if you travel to a country outside of the U.S. Note that this plan is no longer an option for people who are new to Medicare on or after 1/1/2020

· Plan G: Covers the deductible for Medicare Part A, coinsurance for skilled nursing care and Medicare Parts A and B and any excess charge benefits for Medicare Part B.

· Plan N: Covers the deductible for Medicare Part A, coinsurance for skilled nursing care and Medicare Parts A and B and some emergency costs if you travel to a country outside of the U.S.

Regardless of the Medigap plan you choose, you can see any provider across the United States who accepts Medicare. This means you are not limited by a network.

Medigap plans do not offer prescription drug coverage. You may purchase standalone Medicare Part D, as well as a Medigap plan, but the Medigap plan will not offer any drug benefits. Additionally, Medigap policies do not cover extra services like long-term care, vision, dental or hearing.

Enrolling in Medigap

In order to purchase a Medigap plan, you must be enrolled in Medicare Part A and Part B. You will pay a monthly premium for this policy to your private insurance provider. This premium is in addition to the monthly premium you pay for Medicare Part B.

The best time to enroll in a Medigap plan is during your one-time, six-month Medigap Open Enrollment Period that starts as you enroll in Medicare Part B. During this period, insurance companies cannot ask health questions to determine the cost of your policy.

If you want to purchase a Medigap policy after your Medigap Open Enrollment Period ends, you are able to. However, insurance companies can ask health questions and deny you a plan or charge you a higher premium due to pre-existing health conditions.

Medicare Advantage plans

Medicare Advantage plans are also known as Medicare Part C. These private insurance plans have all the benefits you get with Medicare Part A and Medicare Part B — and they may include additional benefits as well as prescription drug coverage.

A Medicare Advantage plan pays instead of Medicare Parts A and B. This means that your Medicare Advantage plan is your primary health insurance plan. Private companies that offer Medicare Advantage Plans must be contracted with Medicare.

In addition to your Medicare Part B premium, you may need to pay an additional monthly premium for your Medicare Advantage plan, although some Medicare Advantage plans have no monthly premiums. Typically, Medicare Advantage plan premiums are lower than Medigap premiums.

These plans may also charge you deductibles, copayments and coinsurance for services. What you ultimately pay for care under a Medicare Advantage Plan will be determined by a few different factors, including the type of plan, the services it covers and how often you access care.

Medicare Advantage plan types

There are multiple types of Medicare Advantage plans available. Not all companies will offer all types of Medicare Advantage plans, and you must use a plan that is available in the county where you live. These plan types largely resemble the group or individual private health insurance plans you may have been covered by prior to enrolling in Medicare.

Some of the most common Medicare Advantage plans types are:

· Health Maintenance Organization (HMO) plans: With an HMO plan, you choose an in-network Primary Care Physician (PCP) and visit in-network health providers, aside from emergency situations. If you seek care outside of the network, you may have to pay the full cost out of pocket. To see a specialist, you typically need a referral. HMO plans might include prescription drug coverage.

· Preferred Provider Organization (PPO) plans: In a PPO plan, you do not usually need to choose a PCP. You may seek covered healthcare services from an in-network or out-of-network provider. You typically pay less to visit an in-network provider, but the plan may still cover costs for an out-of-network provider. Some PPO plans include prescription drug coverage.

· Special Needs Plans (SNP): SNPs are for people with specific conditions or circumstances. These plans are more closely tailored to meet the specific medical needs of their members. Plan types may include Dual Eligible SNPs for people with Medicare and Medicaid and Chronic Condition SNPs for people with certain chronic conditions like diabetes or heart disease.

Your Medicare Advantage plan may also include Part D Prescription Drug coverage. If your Medicare Advantage plan does not include prescription drug coverage, you may be able to purchase a standalone Medicare Part D if you have certain plan types, such as a Medicare Medical Savings Account plan or Private Fee-for-Service plan.

Enrolling in Medicare Advantage

Seniors who wish to enroll in a Medicare Advantage plan can do so during their Initial Enrollment Period that starts around their 65th birthday. If you don’t enroll in a Medicare Advantage plan at this time, or if you do enroll in a plan but want to change it, you may have opportunities to do so during other enrollment periods.

During the Annual Enrollment Period from October 15 to December 7 for Medicare Advantage and Medicare Part D, you may:

• Switch from Original Medicare to Medicare Advantage
• Switch from one Medicare Advantage plan to another

During the Medicare Advantage Open Enrollment Period from January 1 to March 31, you may:

• Switch from one Medicare Advantage plan to another
• Go back to Original Medicare

Because you are only able to enroll or switch under certain circumstances, outside of these periods or Special Enrollment Periods, you are unable to enroll in a Medicare Advantage plan or switch your plan.

Which is right for you?

Now that you understand more about Medicare Supplement/Medigap plans and Medicare Advantage plans, you’re probably wondering which one is the best fit for you. Ultimately, that will depend on a number of factors, including your monthly budget, the providers you want to see and the benefits you need.

It’s important to note that a Medigap plan and a Medicare Advantage plan cannot work together. If you want to purchase a new Medigap plan but are currently enrolled in a Medicare Advantage plan, you’ll need to switch back to Original Medicare during the appropriate enrollment period, then purchase a Medigap policy.

To determine whether a Medigap or Medicare Advantage plan is better for you, consider the following factors:

• Premium: Seniors on either a Medigap or Medicare Advantage plan will still need to pay their Medicare Part B premium. Medigap premiums tend to be higher and may increase annually. Medicare Advantage premiums tend to be lower (you may even be able to get a $0 premium) and they may increase annually, but not always.
• Out-of-pocket costs: With a Medigap plan, your out-of-pocket costs will be minimized thanks to the coinsurance and copayment coverage provided by your plan. In a Medicare Advantage plan, you may pay more out of pocket until you reach your out-of-pocket maximum, but this depends on how often you seek care.
• Networks: With Medigap, you’re able to see any doctor in the U.S. who accepts Medicare, giving you greater choice in providers. In a Medicare Advantage plan, you may be limited to networks and service area restrictions that may or may not include your preferred doctors.
• Value-added benefits: Medigap plans do not offer benefits that aren’t already included in Original Medicare. Many Medicare Advantage plans do offer additional benefits and more.

Do you have more questions about Medigap or Medicare Advantage plans? PlanEnroll is ready to help! Our licensed insurance agents have access to a wide range of Medicare Advantage and Medigap plans. They can help you get the specific benefits and coverage you need.

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