Medicare Advantage vs. Medicare Supplements
Medicare Advantage (also known as Medicare Part C) is a bundled alternative to Original Medicare coverage offered by private companies approved by Medicare.
Each month, Medicare pays a fixed amount for your healthcare to the private company that offers your Medicare Advantage plan. These companies are required to follow the rules set by Medicare, but these plans usually have different rules about how you access care and can charge you different out-of-pocket costs.
Medicare Advantage offers Original Medicare coverage (Medicare Parts A and B) and often includes extra coverage like prescription drugs, vision, dental, and/or fitness and wellness programs. There are several different kinds of Medicare Advantage plans, each with different rules about how you access care:
- Health Maintenance Organization (HMO) Plans, where you usually need to get your care from providers within the plan’s network (with a few exceptions)
- Preferred Provider Organization (PPO) Plans, where you pay less when you use in-network providers and hospitals
- Private Fee-for-Service (PFFS) Plans, which determines how much it will pay health care providers and hospitals, and how much you have to pay to get services
- Special Needs Plans (SNPs), which are limited to people with specific diseases or characteristics and tailor benefits for those groups
- Medicare Medical Savings Account (MSA) Plans, which have a high deductible and savings account to cover your medical costs
What Are Medicare Supplements?
Medicare Supplements, also referred to as Medigap, are plans that supplement your Original Medicare benefits. Rather than a bundled alternative to Original Medicare like Medicare Advantage, they are an addition to Original Medicare.
Medicare Supplements are sold by private companies. When you buy a policy, you pay the insurance company a monthly premium in addition to your Original Medicare monthly premium. When you need care, Medicare pays its share of your covered medical costs. Then, your Medicare Supplement kicks in to pay its share, and you pay the amount that’s left if there even is an amount left to pay as some plans will cover all the remaining costs.
There are many different Medicare Supplement plans, which include Medigap Plans A, B, C, D, F, G, K, L, M, and N.
Should I Choose Medicare Advantage or a Medicare Supplement Plan?
Medicare Advantage is a bundled alternative to Original Medicare, while Medicare Supplements are an addition to Original Medicare. Both can help you save money and close gaps in your coverage, and they are mutually exclusive – you cannot have both a Medicare Advantage plan and a Medicare Supplement plan.
About two-thirds of Medicare recipients choose Original Medicare, and one-third choose Medicare Advantage. Your financial and health care needs will help you determine whether Medicare Supplements or Medicare Advantage is better for you, but the following are a few things to consider:
- Cost. Medicare Advantage plans may have a lower premium than Medicare Supplements, but make sure to check if you need to buy a separate Medicare Part D (prescription drug coverage) plan.
- Choice. Medicare Advantage plans usually restrict you to in-network providers, while Original Medicare (with a Medicare Supplement) allows you to use any provider in the United States that accepts Medicare (and most do).
- Health conditions. If you have a serious health condition or chronic disease, your decision will be even more important. You’ll need to choose a Medicare Supplement plan that can protect you with out-of-pocket maximums, or look into a Medicare Advantage plan that does the same.
- Other benefits. Medicare Advantage plans offer other benefits that Original Medicare and Medicare Supplements do not, like coverage for prescription drugs, adult daycare, dental, and more.
Choosing A Medicare Plan Can Be Difficult…
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