Medicare Advantage vs. Medicare Supplement (Medigap): Which Is Best? (2023)

What Is the Difference Between Medicare Advantage and Medicare Supplement?

Knowing whether a Medicare Advantage or Medicare Supplement plan is best for your health needs can be difficult. Consider the following factors as you compare benefits.

Medicare Advantage vs. Medicare Supplement: Which Is Right For You?
Medicare Advantage
Medicare Supplement
  • $0 deductible for many plans, no copay for a primary doctor, low copays for specialists
  • Restricted choice of providers, hospitals and suppliers
  • One-stop-shop coverage, but must also be enrolled in Medicare Part A and Part B
  • Most policies include Part D prescription drug coverage, as well as some vision, hearing, dental and fitness benefits
  • Some plans offer out-of-network provider coverage
  • Predictable monthly payments (but can be expensive)
  • Plans K and L have annual out-of-pocket limits
  • Small percentage of plans offer nontraditional benefits like hearing, dental and vision
  • International travel coverage
  • Must also be enrolled in Medicare Part A and Part B
  • Policies don’t cover prescription drugs, so must enroll in Part D separately
  • Only covers one person—spouses must buy separate coverage

Types of Medicare Health Plans

“People in Medicare are either in Original Medicare, or fee-for-service Medicare, or they’re in a Medicare Advantage plan,” says Gretchen Jacobson, Ph.D., vice president of Medicare at The Commonwealth Fund, a foundation that supports independent research on health care issues and makes grants to improve health care practice and policy.

Generally, you need to pay a portion of the cost for each service Original Medicare covers out of pocket. And, according to the U.S. government’s official Medicare handbook for 2022, there’s no limit to what you may pay in a year unless you have other coverage, such as a Medicare Supplement, Medicaid or employee or union coverage, or you enroll in a Medicare Advantage plan.

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What Is Medicare Advantage?

Medicare Advantage (also known as Part C) plans are provided by private insurers and essentially replace Original Medicare as your primary insurance. They cover all Medicare-covered benefits and may also provide additional benefits like some dental, hearing, vision and fitness coverage. Most of them also include Part D, which covers prescription drugs.

“Your choice of doctors and hospitals is more restricted under Medicare Advantage, and you may be required to get different authorizations for care,” says Jacobson. “Private insurers have the ability to manage your use of care in different ways, and this is the big tradeoff,” compared to Original Medicare.

The average person on Medicare has over 30 Medicare Advantage plans to choose from—including health maintenance organizations (HMOs), preferred provider organizations (PPOs), private fee-for-service (PFFS) plans and special needs plans (SNPs). You’ll likely have a lot of choices to sort through, but not all types of plans are available in all areas.

(Video) Medicare Advantage vs Medicare Supplement Plans (2022)

Who Qualifies for Medicare Advantage?

Generally, Medicare Advantage is available for:

  • Seniors age 65 or older
  • Younger people with disabilities
  • People with end-stage renal disease (permanent kidney failure requiring dialysis or transplant)

With Medicare Advantage plans, you must also be enrolled in Medicare Part A (hospital insurance) and Part B (Medicare insurance) and reside in the plan’s service area.

Enrollment only occurs during certain periods, but you cannot be denied coverage due to a preexisting condition. Specifically, you can join or switch to a Medicare Advantage plan with or without drug coverage during the following three windows:

  • Initial Medicare Enrollment Period: Begins three months before you turn 65 and ends three months after you turn 65
  • Open Enrollment Period: From Oct. 15 to Dec. 7
  • Medicare Advantage Open Enrollment Period: Jan. 1 to March 31 annually

What Are the Benefits of Medicare Advantage?

Medicare Advantage plans provide all the same benefits provided by Original Medicare, plus coverage for items and services not covered by Original Medicare, including some vision, some dental, hearing and wellness programs like gym memberships.

“Some plans even provide transportation to doctor visits and adult day care services,” says Amanda Baethke, director of corporate development at Aeroflow Healthcare in North Carolina, referring to newly expanded supplemental benefits. “Plans can also tailor their benefit packages to offer benefits to those who are chronically ill.”

Cigna, for example, launched free COVID-19 vaccination transportation for its Medicare Advantage customers. Over 500,000 customers (plus their caregivers) in 23 states are eligible for four one-way trips, up to 60 miles each way, to get a vaccine.

Another bonus to consider is that coverage is expanding. According to a new report commissioned by the Better Medicare Alliance, the number of Medicare Advantage plans offering Special Supplemental Benefits for the Chronically Ill (known as SSBCI) rose from 245 plans in 2020 to 845 in 2021. Some of the top new non-medical benefits offered include[1]NORC at the University of Chicago. Innovative Approaches to Addressing Social Determinants of Health for Medicare Advantage Beneficiaries. Better Medical Alliance. Accessed 9/6/21. :

  • Meals
  • Non-medical transportation
  • Resources addressing social needs
  • Pest control

“Overall, Medicare Advantage plans offer convenient coverage options that are largely covered by a single insurer,” said Baethke. “There is also a sizable cost-saving opportunity.”

How Much Does a Medicare Advantage Plan Cost?

Many Medicare Advantage plans have a $0 premium, so be sure to explore your options. Baethke explains it like this: “If you enroll in a plan that does charge a premium, you must pay this fee every month in addition to your Medicare Part B premium, which is around $165 [or higher, depending on your income].”

(Video) Medicare Advantage vs Medicare Supplement Plans (Updated Review and Important Tips)

Medicare Part B’s coinsurance and the deductible is $226, according to Medicare.gov, and once they are met, your copay under Medicare Advantage is typically 20% of the Medicare-approved amount for most services and products, such as durable medical equipment (DME) like glucometers, walkers, hospital beds and more.

What gets many people into financial trouble is not following the rules of their plan, such as using an out-of-network provider or facility or getting products or services from a supplier not approved by Medicare.

“Sometimes, patients urgently need this medical equipment and aren’t thinking about reading the fine print,” says Baethke. “This is why it’s so important to understand Medicare’s DME requirements from the beginning.”

Nebulizers, for instance, are DME commonly used to treat conditions that cause difficulty breathing, such as asthma and COVID-19. If your doctor recommends one, Medicare requires you to get the machine through a Medicare-approved supplier. Not doing so will mean a denied claim from your Medicare Advantage insurer—and a sizable surprise bill.

To learn more about your costs in specific Medicare Advantage plans, contact the plan or visit Medicare.gov/plan-compare.

What Is Medicare Supplement (Medigap)?

Medicare Supplement plans (commonly known as Medigap plans) are sold by private insurance companies to help fill the gaps of Original Medicare coverage.

In 2018, 34% of people enrolled in Original Medicare had coverage provided by Medicare Supplement plans to cover some of the costs of approved services—that’s roughly 11 million people, according to a report from the Kaiser Family Foundation[2]Koma W, Cubanski J, Neuman T. A Snapshot of Sources of Coverage Among Medicare Beneficiaries in 2018. Kaiser Family Foundation. Accessed 9/4/2021. .

There are 10 Medigap plans to choose from—all with letter names ranging from A to N—that provide standardized coverage and help pay for things like deductibles, coinsurance and copays. However, Medigap policies don’t cover prescription drugs; you’ll need to purchase a Medicare Part D plan in addition to a Medicare Supplement plan.

Who Is Eligible for a Medicare Supplement Plan?

If you’re turning 65:

“The six-month open enrollment period is a really important time for anyone entering Medicare to learn as much as they can about the program, what’s covered and their coverage options,” says Jacobson.

The window starts on the first day of the month that you’re 65 or older and enrolled in Medicare Part B. For instance, if you turn 65 in July and enroll in Part B that same month, the best time to buy a Medigap policy is between July and December.

“It’s not a very long time, but it’s the only time when you’re guaranteed to get a Medigap policy without medical underwriting,” Jacobson says. In other words, it’s better to enroll right from the start because companies cannot deny you based on a preexisting condition or health problem.

If you’re 65 or older:

If you apply for Medigap coverage after your open enrollment period, there’s no guarantee an insurance company will sell you a policy. Insurers can:

  • Request your medical history as part of the conditions of issuing you a plan
  • Refuse to sell you a policy
  • Make you wait for coverage to start
  • Charge you more

If you are under 65:

Federal law doesn’t require insurance companies to sell Medigap policies to people under 65. However, some states require companies to sell policies to people under the age of 65, although eligibility varies.

(Video) Medicare Plan N - Best Insurance Companies Revealed

What Are the Benefits of a Medicare Supplement Plan?

A Medicare Supplement plan makes your out-of-pocket costs more predictable and easier to budget.

“From a cost-sharing perspective, many people like it because you don’t need to worry about how much is owed every time you go to the doctor or are hospitalized,” said Jacobson. “You can literally see any doctor around the country that you would like to see.” For example, if you live in Arizona, you can fly to Minnesota to go to the Mayo Clinic.

Unfortunately, Jacobson says having this benefit tends to be much more important for people when they’re sicker. “When people first go on Medicare, they’re usually relatively healthy and not thinking necessarily about when they’re sick and what type of plan would be best for them in that situation. The inability to easily switch back and forth between Medicare Advantage and Medicare Supplement makes it pretty complicated for people,” she says.

For example, if you join a Medicare Advantage plan for the first time and aren’t happy with it, federal law grants you special rights if you return to Original Medicare within the first 12 months. After that, you can only disenroll or change plans during the Open Enrollment Period or if you qualify for a Special Enrollment Period. Depending on the type of Special Enrollment Period, you may or may not have the right to buy a Medigap policy.

If you’re considering disenrollment from your Medicare Advantage plan and picking up a Medigap plan, contact the local office of your State Health Insurance Assistance Program.

At the end of the day, the decision often comes down to whether you can afford a Medigap plan, as they can be more expensive.

Medigap With Nontraditional Benefits: Vision, Dental and Hearing

A recently released analysis from The CommonWealth Fund looks at Medigap plans offering nontraditional benefits like vision, dental and hearing services that aren’t covered by Original Medicare[3]Ali R, Hellow L. Small Share of Medicare Supplement Plans Offer Access to Dental, Vision, and Other Benefits Not Covered by Traditional Medicare. The Commonwealth Fund. Accessed 9/4/2021. . “Our research showed a relatively small share of plans—only 7%—offering these benefits,” said Jacobson. “I think most people don’t realize there are these plans out there with benefits comparable to Medicare Advantage.”

At the federal level, there are tradeoffs in terms of policies encouraging or discouraging these benefits being offered. The American Dental Association, for example, is currently advocating for a distinct program to provide comprehensive dental care for low-income older adults—not the Medicare Part B program that has been part of past and current proposals.

“We need comprehensive oral health coverage in Medicare, as well as hearing and vision,” said Amber Christ, directing attorney at Justice in Aging, an advocacy organization protecting the rights of low-income older adults. “Nearly half of Medicare enrollees have no dental coverage at all—that’s 24 million older adults and people with disabilities who have no coverage.”

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What Is the Average Cost of Medicare Supplement Insurance?

The estimated average monthly premium (the amount you pay monthly) for a Medicare Supplement plan can range from $150 to around $200, depending on the state you live in and your insurer.

Just like Medicare Advantage plans, it’s good to shop around—65-year-olds stand to save an average of $840 a year with Medicare Supplement Plan G or $648 a year with Plan N if they enroll in the lowest-cost option available in their areas, according to a price comparison analysis by eHealth, Inc.

“We continue looking at how private plans and Medicare can be more efficient, effective and equitable for people,” says Jacobson. “The good story here is in the data. We’ve seen pretty consistently that inequities are much smaller in Medicare than any other source of coverage.”

Medicare Advantage vs. Medicare Supplement: Which Is Right For You?
Medicare Advantage
Medicare Supplement
  • $0 deductible for many plans, no copay for a primary doctor, low copays for specialists
  • Restricted choice of providers, hospitals and suppliers
  • One-stop-shop coverage, but must also be enrolled in Medicare Part A and Part B
  • Most policies include Part D prescription drug coverage, as well as some vision, hearing, dental and fitness benefits
  • Some plans offer out-of-network provider coverage
  • Predictable monthly payments (but can be expensive)
  • Plans K and L have annual out-of-pocket limits
  • Small percentage of plans offer nontraditional benefits like hearing, dental and vision
  • International travel coverage
  • Must also be enrolled in Medicare Part A and Part B
  • Policies don’t cover prescription drugs, so must enroll in Part D separately
  • Only covers one person—spouses must buy separate coverage

Frequently Asked Questions (FAQs)

Is a Medigap plan better than an Advantage plan?

Medigap and Medicare Advantage plans offer different benefits, and which will better serve you depends on your specific health needs. Medigap plans offer additional coverage for people enrolled in Original Medicare, but they exclude prescription drugs. Meanwhile, Medicare Advantage plans offer the same coverage as Original Medicare plus additional benefits, such as prescription drugs, vision, dental, hearing and other wellness services.

What is the downside to Medigap plans?

Medigap plans can be purchased in addition to Original Medicare and offer additional benefits that are otherwise not covered. There are 10 standardized Medigap plans to choose from, though prescription drug coverage is not offered in these options.

What is the biggest disadvantage of Medicare Advantage?

Some Medicare Advantage plans may come with a monthly premium, and the selection of in-network doctors and specialists may be limited. Costs may be higher if you choose to use an out-of-network provider.

FAQs

Which is better Medigap or a Medicare Advantage Plan? ›

A Medicare Advantage plan may be a better choice if it has an out-of-pocket maximum that protects you from huge bills. Regular Medicare plus a Medigap insurance plan generally allows you more choice in where you receive your care.

What is the difference between a Medicare Supplement and Medicare Advantage plan? ›

A Medigap policy is different from a Medicare Advantage Plan. Those plans are ways to get Medicare benefits, while a Medigap policy only supplements your Original Medicare benefits. The periodic payment to Medicare, an insurance company, or a health care plan for health or prescription drug coverage.

Which Medicare plan has the best benefits? ›

Best Medicare Advantage Plans in 2022
  • Best for size of network: UnitedHealthcare Medicare Advantage.
  • Best for extra perks: Aetna Medicare Advantage.
  • Best for member satisfaction: Kaiser Permanente Medicare Advantage.
  • Best for low-cost plan availability: Humana Medicare Advantage.
8 Sept 2022

What are the negatives of a Medicare Advantage plan? ›

The biggest disadvantage of Medicare Advantage plans is the closed provider networks, limiting your choice of which doctor or medical facility to use. Medicare Advantage costs are also largely based on how much medical care you need, making it more difficult to budget for health care costs.

Why should I choose Medigap? ›

Why Do I Need Medigap? Medigap policy supplements your Original Medicare coverage, covering more expenses. Medigap provides more choice and covers a larger network of health care providers than other options. If you travel or need coverage that Original Medicare doesn't provide, Medigap might be a good option for you.

What is the advantage of a Medicare Supplement over a Medicare Advantage plan? ›

Most Medicare Advantage plans require you to use an approved provider network. On the other hand, a Medicare Supplement plan allows you to be treated by any provider that accepts Medicare.

Can I switch from Medigap to Medicare Advantage? ›

Yes. Not only you can switch from Medigap to Medicare Advantage (MA), but depending on your situation, this may be a smart move for Medicare-eligible seniors.

Can I drop my Medicare Advantage plan and go back to original Medicare? ›

Yes, you can elect to switch to traditional Medicare from your Medicare Advantage plan during the Medicare Open Enrollment period, which runs from October 15 to December 7 each year. Your coverage under traditional Medicare will begin January 1 of the following year.

Do Medigap plans have a maximum out-of-pocket? ›

October 2022 Announcement

The 2023 out-of-pocket (OOP) limits for Medigap plans K & L are $6,940 and $3,470, respectively. These increases in the limits are based on estimates of the United States Per Capita Costs (USPCC) of the Medicare program developed by the Centers for Medicare & Medicaid Services (CMS).

What is the highest rated Medicare Advantage Plan 2022? ›

For 2022, Kaiser Permanente ranks as the best-rated provider of Medicare Advantage plans, scoring an average of 5 out of 5 stars.

What is the most popular Medicare Supplement plan? ›

By and large, Plan F is the most popular Medicare Supplement plan due to its coverage of more out-of-pocket Medicare costs than any other Medigap plan type.

Who is the best Medicare Supplement provider? ›

Best Medicare Supplement Insurance Companies of 2023
  • Best Overall: AARP / UnitedHealthcare.
  • Most Medigap Plan Types: Blue Cross Blue Shield.
  • Best Medigap High-Deductible Plan G Provider: Mutual of Omaha.
  • Lowest Cost High-Deductible Plan G: Humana.
  • Best for Financial Strength: State Farm.

Can Medicare Advantage plans deny coverage? ›

Once you're accepted and enrolled in a Medicare Advantage plan, it can't deny you coverage because of a pre-existing condition. However, most Medicare Advantage plans can deny applicants who have end-stage renal disease (ESRD) from enrolling in the plan to begin with.

Do I still pay Medicare premiums with an Advantage plan? ›

In addition to your Part B premium, you usually pay a monthly premium for the Medicare Advantage Plan. In 2022, the standard Part B premium amount is $170.10 ($164.90 in 2023) (or higher depending on your income).

Can I switch from Medicare Advantage to Medigap without underwriting? ›

For example, when you get a Medicare Advantage plan as soon as you're eligible for Medicare, and you're still within the first 12 months of having it, you can switch to Medigap without underwriting.

What is not covered by Medigap? ›

Medigap is extra health insurance that you buy from a private company to pay health care costs not covered by Original Medicare, such as co-payments, deductibles, and health care if you travel outside the U.S. Medigap policies don't cover long-term care, dental care, vision care, hearing aids, eyeglasses, and private- ...

Do you really need a Medicare Supplement plan? ›

If you are like most of us, you can't pay that much out of pocket. So yes, then you need a Medicare supplement or Medicare Advantage plan. A Medigap plan or Medicare Advantage plan is a wise investment to protect you from catastrophic medical spending.

What services are typically paid for using Medigap? ›

Medigap is Medicare supplemental insurance sold by private companies to help cover original Medicare costs, such as deductibles, copayments, and coinsurance. In some cases, Medigap will also cover emergency medical fees when you're traveling outside the United States.

Can you be denied a Medicare Supplement plan? ›

The first important thing to know is that if you buy Medicare Supplement insurance during your Open Enrollment period, you cannot be denied, even if pre-existing medical conditions exist.

Can you have an advantage plan and a supplemental plan? ›

Medicare Advantage (Part C) and Medicare Supplement (Medigap) plans both offer coverage for out-of-pocket medical expenses. You cannot have both a Medicare Advantage and Medicare Supplement plan.

What are two options for Medicare consumers? ›

There are 2 ways to get Medicare drug coverage:

Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care. Part B covers certain doctors' services, outpatient care, medical supplies, and preventive services. to join a separate Medicare drug plan.

Can I switch from Medigap to Medicare Advantage? ›

Yes. Not only you can switch from Medigap to Medicare Advantage (MA), but depending on your situation, this may be a smart move for Medicare-eligible seniors.

Is Medicare Supplement and Medigap the same thing? ›

Medicare Supplement and Medigap are different names for the same type of health insurance plan – you can use either name. To explain the terms themselves, you can think of “Medigap” as a plan that fills in some of the “gaps” for benefits that Original Medicare (Part A and Part B) doesn't cover.

Can I drop my Medicare Advantage plan and go back to original Medicare? ›

Yes, you can elect to switch to traditional Medicare from your Medicare Advantage plan during the Medicare Open Enrollment period, which runs from October 15 to December 7 each year. Your coverage under traditional Medicare will begin January 1 of the following year.

Do you have to pay for Medicare Part B if you have an Advantage plan? ›

Medicare Advantage Plans have a yearly limit on your out-of-pocket costs for all Part A and Part B services. Once you reach this limit, you'll pay nothing for services Part A and Part B cover.

Does Medigap cover drugs? ›

Q: Do Medicare supplement plans include prescription drug coverage? A: Modern Medigap plans do not include prescription drug benefits. Instead, Medicare offers prescription drug coverage under Part D.

What are the top 5 Medicare Supplement plans? ›

Best Medicare Supplement Insurance Companies of 2023
  • Best Overall: AARP / UnitedHealthcare.
  • Most Medigap Plan Types: Blue Cross Blue Shield.
  • Best Medigap High-Deductible Plan G Provider: Mutual of Omaha.
  • Lowest Cost High-Deductible Plan G: Humana.
  • Best for Financial Strength: State Farm.

What is Medigap coverage used for? ›

A Medigap policy is health insurance sold by private insurance companies to fill the “gaps” in Original Medicare Plan coverage. Medigap policies help pay some of the health care costs that the Original Medicare Plan doesn't cover.

What is the average cost of Medigap? ›

Cost of Medicare Supplement

For 2023, a Medicare Supplement plan (also called a Medigap plan) costs an average of $155 per month. However, costs will depend on two factors: the policy you choose and the pricing structure in your state.

Is it necessary to have a Medicare Supplement? ›

Medicare supplement plans are optional but could save you big $$$ on doctor bills. Your cost-sharing under Part B is similar. You are responsible for paying your Part B deductible, which is $233 in 2022. Then Part B Medicare only pay 80% of approved services.

Can you be denied a Medicare Supplement plan? ›

The first important thing to know is that if you buy Medicare Supplement insurance during your Open Enrollment period, you cannot be denied, even if pre-existing medical conditions exist.

Can I switch from an Advantage plan to a supplement? ›

Once you've left your Medicare Advantage plan and enrolled in Original Medicare, you are generally eligible to apply for a Medicare Supplement insurance plan.

Can I switch from Medicare Advantage to Medigap without underwriting? ›

For example, when you get a Medicare Advantage plan as soon as you're eligible for Medicare, and you're still within the first 12 months of having it, you can switch to Medigap without underwriting.

Is Humana Medicare Advantage a good plan? ›

97% of Humana's Medicare Advantage members are in contracts rated 4-star or higher for 2022, reflecting strong commitment to quality of care, patient-centered clinical outcomes and customer service. Humana Inc. Accessed 8/4/2022.

How do I get my $144 back from Medicare? ›

Even though you're paying less for the monthly premium, you don't technically get money back. Instead, you just pay the reduced amount and are saving the amount you'd normally pay. If your premium comes out of your Social Security check, your payment will reflect the lower amount.

What is the best Medicare Advantage Plan for seniors? ›

The Best Medicare Advantage Provider by State

Local plans can be high-quality and reasonably priced. Blue Cross Blue Shield, Humana and United Healthcare earn the highest rankings among the national carriers in many states. Overall, Aetna Medicare ranks the best in the most (23) states.

Does Medicare cover 100 percent of hospital bills? ›

Most medically necessary inpatient care is covered by Medicare Part A. If you have a covered hospital stay, hospice stay, or short-term stay in a skilled nursing facility, Medicare Part A pays 100% of allowable charges for the first 60 days after you meet your Part A deductible.

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