Medicare Advantage vs Medicare Supplement

What you need to know before turning 65.

Nearing retirement, most of us would rather spend our days debating between a destination in the sun or the snow. However, there are still some important healthcare decisions to be made before traveling. Will you enroll in a Medicare Advantage, Medicare Supplement, and/or prescription drug plan, or will you stick with Original Medicare coverage?

In the world of Medicare, the terminology is thrown around like a basketball in the middle of March Madness. It can be challenging to keep up—allow us to break things down to help you understand the key differences.

There are four different parts of Medicare: A, B, C, and D:

  1. Part A covers hospital visits
  2. Part B covers doctor visits and outpatient care    
  3. Part C is something different, known as the Medicare Advantage program
  4. Part D is a prescription drug program

Original Medicare is comprised of Part A and Part B and is administered by the federal government.

Medicare Advantage (Part C)

Here’s where things get a little more complicated. Medicare Advantage plan covers Part A and Part B benefits. They often cover extra benefits not included with Original Medicare, such as vision, hearing, and dental care. Medicare Advantage plans are provided and administered by private insurance companies that the Centers have approved for Medicare and Medicaid Services (CMS), a government entity that oversees the Medicare program.

With Medicare Advantage plans, you still need to continue paying Part A and/or B premiums as you would with Original Medicare. However, the amount you pay for a doctor’s visit, hospital stay, or other medical expenses differs between Medicare Advantage plans and Original Medicare.

For example: Original Medicare covers most doctors’ visits at 80% after you fill a small deductible. With a Medicare Advantage plan, there is usually a small copay, and then the plan covers the rest of the cost.

Medicare Supplement

Medicare Supplement plans, also called Medigap plans, require you to be enrolled in Original Medicare. Private companies offer these plans but act as a secondary insurance policy—covering deductibles, copays, and other out-of-pocket expenses that Original Medicare would make you pay. Original Medicare also does not cover health care costs while traveling outside the United States, but Medicare Supplement plans usually will.

These are the basic differences—many additional factors differ between Medicare Advantage plan and Medicare Supplement plan.

Differences to Consider

Network Access

When it comes to the Medicare Advantage plan, more times than not, you will need to see a doctor in the plan’s network established by the carrier. You may see a doctor outside the network—remember, it will cost more if you choose to do so. For Medicare Supplement plans, if your provider accepts Original Medicare, you don’t need to worry. You may visit any doctor or hospital that accepts payment from Medicare. 

Prescription Drug Coverage

Most Medicare Advantage Plans include benefits for prescription drug coverage. These are referred to as Medicare Advantage Prescription Drug plans (MAPDs). Medicare Supplement plans do not cover prescription drugs. If you choose to go with a Medicare Supplement plan, you can enroll in a Part D plan specifically covering prescription drugs. Part D plans are available through private insurance companies.

Long-Term Care

Medicare Advantage and Medicare Supplement plans do not cover long-term care.

Vision & Dental Care

Many Medicare Advantage plans cover vision and dental care benefits. Medicare Supplement plans usually don’t cover vision and dental care benefits. However, some Medicare Supplement plans offer a discount program to help reduce vision and dental care expenses​.

Hearing

Some Medicare Advantage plans include hearing benefits, such as regular hearing exams and hearing aids. Medicare Supplement plans don’t cover hearing aids or exams.

Eligibility

Medicare Advantage plan options vary from state to state and, in some cases, county to county. Remember that you may only enroll in plans available in your network or area. You must first be enrolled in Medicare Parts A and B and must not have End-Stage Renal Disease. With Medicare Supplements, you must also be enrolled in Medicare Part A and Part B. Sometimes, Medicare Supplement coverage eligibility may depend on your health status or other factors.  

Which one is right for me?

Regardless of your route, weighing the benefits and downfalls of Medicare Advantage and Medicare Supplement plans is important. Because you must enroll in one or the other—you cannot have both.

Choosing the Right Plan for Your Needs

Now that you understand the differences between Medicare Advantage and Medicare Supplement plans, it’s essential to consider your health insurance unique needs and circumstances when making this critical decision. Selecting the right plan can significantly impact your healthcare coverage and overall well-being in retirement.

Health Needs

Assess your current health and any ongoing medical conditions. If you have frequent doctor visits or require specialized care, Medicare Supplement insurance may provide more flexibility, allowing you to see any healthcare provider that accepts Medicare. On the other hand, if you’re generally healthy and prefer preventive services like vision and dental care, a Medicare Advantage plan might offer more comprehensive benefits.

Budget

Consider your budgetary constraints. Medicare Supplement plans typically have higher monthly premiums but lower out-of-pocket costs when you receive medical services. Medicare Advantage plan often have lower premiums, but you may pay more for services when you use them. Evaluate how each plan aligns with your financial situation and your ability to cover potential healthcare expenses.

Lifestyle

Think about your lifestyle and how it may impact your healthcare choices. If you travel frequently or spend extended periods outside the United States, a Medicare Supplement plan with coverage for foreign travel emergencies could be advantageous. Medicare Advantage plan may restrict you to a network of providers, which could be limiting if you have a preferred doctor or hospital.

Prescription Medications

If you take prescription medications regularly, assess your medication coverage needs. Medicare Advantage plans often include prescription drug coverage (Part D), while Medicare Supplement plans do not. If you opt for a Medicare Supplement plan, you must enroll in a separate Part D plan to ensure coverage for your medications. Ensure that your chosen plan covers the specific medication you require.

Future Health Considerations

Think about your long-term health outlook. While you may be healthy now, it’s essential to plan for potential health changes in the future. Some Medicare Advantage plans offer additional services like preventive care and wellness programs, which could benefit you as you age.

Consult with an Expert

Don’t hesitate to seek guidance from a licensed insurance agent or a Medicare counselor. They can help you navigate the available plans, explain their details, and provide personalized recommendations based on your circumstances.

Common Mistakes to Avoid

Selecting the appropriate Medicare coverage is a critical decision, and avoiding common pitfalls can ensure you make the best choice for your healthcare needs. Here are some mistakes to steer clear of:

Not Reviewing Your Current Healthcare Providers

Before enrolling in a plan, confirm that your preferred doctors, specialists, and hospitals are in the plan’s network. Failing to do so can result in unexpected expenses or changing healthcare providers.

Ignoring Prescription Drugs Coverage

Don’t overlook the importance of evaluating a plan’s Part D coverage if you require prescription medications. Ensure that the plan covers your specific medications and conveniently located pharmacies.

Focusing Solely on Premiums

While a low monthly premium can be enticing, remember to consider other costs like deductibles, copayments, and maximum out-of-pocket limits. A plan with a slightly higher premium may offer better overall value.

Not Reevaluating Annually

Your healthcare needs can change from year to year. It’s crucial to reassess your plan each year during the Medicare Annual Enrollment Period to ensure it still aligns with your requirements.

Missing Enrollment Deadlines

There are specific enrollment periods for both Medicare Advantage and Medicare Supplement plans. Missing these deadlines can lead to penalties or delays in coverage. Make sure to mark your calendar and enroll during the appropriate window.

Making the Most of Your Plan

Once you’ve decided between a Medicare Advantage or Medicare Supplement plan that aligns with your healthcare needs, it’s crucial to grasp how to utilize your coverage for maximum benefit effectively. 

Firstly, it’s advisable to stay within your plan’s network of healthcare providers for Medicare Advantage plans. This approach ensures you receive the most comprehensive coverage while keeping out-of-pocket costs to a minimum. Most plans offer online directories or customer service hotlines to assist you in locating in-network doctors, specialists, and hospitals. On the other hand, if you’ve opted for a Medicare Supplement plan, you enjoy greater flexibility in selecting your healthcare providers since these plans typically collaborate with any provider that accepts Original Medicare.

Understanding your plan’s benefits is crucial. Take the time to familiarize yourself with what services are covered, what potential expenses you might incur, and any service limitations. Keeping your plan documents and Summary of Benefits readily accessible for reference can prove invaluable in navigating your plan effectively.

Additionally, make the most of preventive services covered by your plan, including routine check-ups, immunizations, and screenings. Prioritizing preventive care can help detect and address health issues early, potentially saving money and improving your overall health.

Lastly, if you encounter any issues or discrepancies related to your plan, such as billing errors or disputes regarding coverage, do not hesitate to contact your plan’s customer service. They are there to assist you in resolving any problems and ensuring you receive the benefits you are entitled to.

Additional Resources

When it comes to navigating the complex landscape of Medicare, having access to reliable resources can make all the difference. The Medicare official website is a comprehensive hub of information. It offers a wealth of details about Medicare plans, enrollment processes, coverage options, and much more.

The Centers for Medicare and Medicaid Services (CMS) is the federal agency responsible for overseeing the Medicare program, and their website is a treasure trove of Medicare policies, updates, and regulatory information. You can find a multitude of publications and guides to deepen your understanding of Medicare.

State Health Insurance Assistance Programs (SHIPs) are available in every state and are designed to provide personalized counseling and support to Medicare beneficiaries. These programs can help clarify your Medicare choices, facilitate plan comparisons, and address state-specific Medicare questions.

These are just some essential sources that can provide valuable assistance, guidance, and information to ensure you will make informed decisions.

 

— Updated, October 2023

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