Is a Medicare Advantage or Medicare Supplement plan better for you?

In short: Medicare Supplement Insurance (Medigap) is a health insurance policy that can pay for several healthcare expenses that Original Medicare doesn’t cover. At the same time, a Medicare Advantage drug (MAPD, Part C) plan combines Parts A and B and can include Part D.

What is Medicare?

Medicare is Health-insurance for people who are 65 years old or older. Or for people under 65 with disabilities or people of any age with End-Stage Renal Disease.

Medicare consists of four different parts:

• Hospital Insurance (Part A)
• Medical Insurance (Part B)
• Prescription drug coverage (Part D)
• Part C Medicare Advantage “bundled” plans include Part A, Part B, and usually Part D)
• Medicare Supplement plan 

Click here to go to our other Medicare blog if you want to learn more about the differences between these four parts of Medicare.

You have two options if you want to replace or enhance your Original Medicare Coverage.

1. First, you can add a Medicare Supplement (or Medigap) insurance plan to your Original Medicare coverage.
2. The second option is a Medicare Advantage plan; this plan is another way to get Original Medicare benefits.

These plans differ in costs, benefits, and how they work.

What is a Medicare Supplement plan (Medigap)?

Medicare Supplement Insurance, also called Medigap, will help fill some gaps that Original Medicare didn’t cover. Original Medicare generally covers 80% of your hospital and medical expenses. 20% of the Original Medicare expenses will most likely come from your pockets. Medigap exists to cover these out-of-pocket costs, such as copayments or deductibles.

Original Medicare doesn’t cover the following:

Long Term Care, most dental care, eye exams related to prescribing glasses, dentures, cosmetic surgery, acupuncture, hearing aids and exams for fitting them, and routine foot care. 

The Gaps Medicare Supplement Insurance (Medigap) can fill:

• deductibles,
• copays
• coinsurance

Which Medicare Supplement Plan fits you best?

What does a Medicare Supplement Insurance plan have:

• Has a Standardized plan letter with associated benefits.
• Medigap policies are standardized and go by letters: A, B, C, D, F, G, K, L, M, and N in most states. Each lettered plan’s benefits are the same, regardless of which insurance company sells them.
• A monthly premium will vary based on county/zip code.
• It will give you access to any Medicare-appointed doctor in the U.S.
• If you have an Original Medicare + Medigap policy, Medicare will pay its share of the Medicare-approved amounts for covered healthcare costs. Then your Medigap policy pays its share and fills the gaps you otherwise would have to pay out of pocket.

A Medicare supplement plan does not cover the following:

Prescription Drugs: Drug coverage will need to be bought separately through
 a Prescription Drug Plan, or other creditable coverage

Other things you should know about a Medicare Supplement Policy:

1. The supplement coverage covers one person; your spouse would have to buy a separate policy.
2. You can buy it from any private insurance company licensed in your state to sell.
3. The insurance company can’t cancel your policy if you pay the premium.
4. Supplement policies sold after January 1, 2006, aren’t allowed to include prescription drug coverage.
5. It’s illegal for anyone to sell you a Medicare Supplement policy if you have a Medicare Advantage Plan, except if you are switching back to Original Medicare.
6. Since January 2020, Medicare supplement plans sold to people new to Medicare can’t cover the Part B deductible anymore. If you qualified for Medicare before January 1, 2020, but are not yet enrolled, you might be able to purchase one of the Part B deductible plans (Plan C or F). Were you covered by Plan C or F (or the Plan F high deductible version) before January 1, 2020? Then you can keep your plan (medicare.gov). 

The insurance plans listed below are not part of a medicare supplement plan:

• Medicare Advantage Plans (such as HMO, PPO, or Private Fee-for-Service Plans)
• Long-term care policies
• Medicare Prescription Drug Plans
• Medicaid
• Employer or union plans
• Tricare
• Veterans’ benefits
• Indian Health Service, Tribal + Urban Indian Health plans

When is the right time to purchase a Medigap policy?

Your Medicare Supplement Open Enrollment Period (OEP) is the best time to buy a Medigap policy. Most likely, you will get better prices and more choices among policies. OEP starts on the first day of the month, on which you are at least 65. You will have six months to buy a Medicare Supplement insurance plan. Another advantage of purchasing a Medigap during OEP is that you will get a guaranteed issue right. A guaranteed issue right means that companies can’t deny your Medicare Supplement insurance plan application because of pre-existing health conditions or disabilities.

It’s essential to understand when your Medigap Open Enrollment Period is, so make sure to check when your open enrollment period is.

Click here to schedule a virtual or in-person appointment if you have questions about your Medigap Enrollment. 

You can still apply after your open enrollment period,  but you could be rejected or charged more if you have health problems.

*Some states have additional Open Enrollment Periods, including those under 65 who qualify.

Who sets the prices for Medigap policies?

Each insurance company can set its price, or premium, for its Medigap policies. Knowing how they set the price could affect how much you pay now and how much you will pay in the future. Insurance Companies can price Medigap policies in three different ways:

1. Community-rated (also called “no-age-rated”)
2. Issue-age-rated (also called “entry-age-rated”)
3. Attained-age-rated

How can you review Medigap costs best?

Since each insurance company can set its prices, the cost of Medigap policies can vary widely. This means: that there can be significant differences in the premiums for the same coverage. As you shop for a Medigap policy, it is essential to review the same type of it and check the pricing they have used. Luckily you can review different medicare insurance companies on our website, so you get competitive prices and never overpay for the same insurance.

What will be covered if you travel with a Medigap Policy?

Some Medigap policies offer emergency health care services for when you are outside of the U.S.

• Standard Medigap Plans C, D, F, G, M, and N can cover foreign travel emergency healthcare when you travel outside the U.S.
• Plans E, H, I, and J is no longer available. However, if you bought one before June 1, 2010, you might be able to keep it. These plans cover foreign travel and emergency health care when you travel outside the U.S.
• Medigap Plan C, D, E, F, G, H, I, J, M, or N; Cover foreign travel emergency care in the first 60 days of your trip
• Pays 80% of the billed charges for some medically necessary emergency care outside the U.S. after you meet the $250 deductible for the year.
  Medigap Foreign travel emergency coverage has a lifetime limit of $50,000.

How can I buy a Medicare Supplement Insurance plan?

• First Step: Decide which benefits you want, then decide which standardized Medigap policies fit these needs best.
• Second Step: Review the policies you’re interested in on our website and review the costs.
• Third Step: Buy the Medigap policy online or Schedule a meeting with a licensed insurance agent.

What are the Medicare Supplement Insurance Pros & Cons?

PROS

1. Medigap will help fill some gaps that Original Medicare doesn’t cover.
2. You will have access to providers nationwide who accept Medicare.
3. Most Medigap plans will help pay the Part A deductible.
4. You can get a supplemental plan that covers Part A and Part B coinsurance.
5. There are plans with no copayments.
6. With Plan F, you don’t have to worry about out-of-pocket expenses.
7. Standardized – 10 plans have the same coverage, no matter which company. 
8. A Medicare Supplement company cannot cancel your policy for using the policy too much. Your policy will renew automatically every year.
   You can change your Medigap plan or company at any time you want.
9. You have 30 days to drop the coverage and receive your premium back when your policy is approved.

Cons

1. Medigap plans do not cover prescription drugs.
2. If it is more expensive, your rate most likely increases
3. You have to have Part A and Part B.
4. Do not cover routine dental, vision, or hearing care.
5. After your Guarantee issue ends, getting approved might be tricky if you have certain health conditions.

What is a Medicare Advantage Prescription Drug Plan?

Medicare Advantage, Part C is a replacement policy for original Medicare coverage. This plan offers lower out-of-pocket costs and extra benefits such as vision care services. Coverage typically includes all of the Parts A and B, a prescription drug plan (Part D), and other possible benefits depending on your choice of a Medicare Advantage plan.


• Offered through private insurance companies
• Many plans also include prescription drug coverage
• This plan includes Part A and Part B services that Original Medicare covers. Part C is required to cover every service that the original Medicare does.
• It may cover extra benefits such as; coverage for prescription drugs, Routine dental care including cleanings, x-rays, and dentures, Routine vision care including contacts and eyeglasses, Routine hearing care including hearing aids, Fitness benefits including exercise classes, and more.
• Some policies have lower copayments and coinsurance or a smaller deductible.
• With these all-inclusive Medicare Advantage plans, you will cover all your health services in a single plan.
• Possibly you will have some network restrictions.

Fees

• You don’t have to enroll in a Medicare Advantage plan, but these plans can be a better deal for many people than paying separately for Parts A, B, and D.
• You still have to pay for your Part B and Part A premiums if you have one.
• Depending on the plan, you may or may not need to pay an additional premium for Part C.
• Low to no-cost premiums may be available.
• Some advantage plans have lower out-of-pocket costs than Original Medicare.
• Your total costs for the Part C Advantage plan will depend on your chosen plan (compare different plans and carriers.
• Medicare puts an out-of-pocket maximum for all Medicare Advantage part C plans; this was $7,550 in 2021

An overview of the different types of Medicare Advantage plans

• HMO (Health Maintenance Organization): 
• PPO (Preferred Provider Organization) 
• PFFS (Private Fee-for-Service)
• SNP (Special Needs Plan) 
• HMO-POS (Health Maintenance Organization Point-of-Service)
• MSA (Medical Savings Account). 

When should you enroll in Medicare Advantage?

• During your seven-month Initial Enrollment Period for Part D.
• Annual Election Period (AEP): October 15 to December 7.
• Special Election Period (SEP) during other times of the year, so you can make a change to your Medicare Advantage coverage.

Shop for Part C plans with Medicare’s plan finder tool on our website to review part C plans available in your area.

What are the Medicare Advantage Insurance Pros & Cons?

PROS

1. The out-of-pocket maximum is $7,550 a year
2. Many plans cost low to no cost a month
3. Can include drug coverage
4. Many plans may include vision, hearing, and dental
5. Gym discounts

CONS 

1. You can only change your policy during Open Enrollment
2. Smaller network, so there is no nationwide coverage
3. Many plans require referrals to see a specialist
4. Plans are not standardized 
5. Medicare Advantage can change its benefits every year

Main Differences between Medicare Supplement (Medigap) and Medicare Advantage plan:

A Medicare Supplement Insurance (Medigap) policy is health insurance that can help pay some healthcare costs that Original Medicare doesn’t cover. Medigap helps you pay for deductibles, coinsurance, and other out-of-pocket expenses. Medicare Advantage drug (MAPD, Part C) plan combines Parts A and B and can include Part D; coverage plans may include hearing, dental, vision, and many other services.