Choosing your Medicare Path: Medicare Advantage Plans vs. Medicare Supplement Plans

MedicareContrary to what most people new to Medicare think, Original Medicare does not cover everything.  Once you meet your Part A and Part B deductibles, Medicare covers 80% and you must pay out-of-pocket or get insurance to cover the remaining 20%.  Medicare Supplement plans, also known as Medigap plans, and Medicare Advantage plans are two options to ensure all your healthcare needs are covered.

That said, when considering which plan is best for you, there are several determining factors to recognize: How much does each plan cost? What do they cover? Are they reliable? Comparing the advantages and disadvantages of both options is vital in identifying which policy will ultimately keep you happy and healthy.

Advantages of Medicare Supplement Plans

Each Medicare Supplement is standardized by Medicare to provide the same set of benefits. There are 10 different Medicare Supplement plans to choose from, covering all or a select few benefits depending on the plan. Regardless of which plan you choose, you will have access to coverage in all 50 states, and several plans will even provide some coverage for foreign travel emergencies. You will also be able to choose from any doctor and hospital that participates in Medicare, see a specialist without first receiving a referral, and enroll in a plan without worrying about your doctor being dropped or your plan being cancelled or changed.  If you enroll into a Medicare Supplement plan during your one-time open enrollment period, there are no health questions required for approval.

Disadvantages of Medicare Supplement Plans

As shown in the graphic below (Figure 1.0), Medicare Supplement plans lack one major healthcare necessity: prescription drug coverage. In addition to enrolling in Medicare Parts A and B and whichever Medicare Supplement you may choose; Medicare Part D must be purchased in order to cover prescription medication.  Because Medicare Supplements offer you the most flexibility, they tend to have higher premiums than Medicare Advantage plans and premiums can go up annually.

Comparison of Medicare Advantage and Medicare Supplement
Figure 1.0

Advantages of Medicare Advantage Plans

Medicare Advantage plans are HMO and PPO plans in which you agree to use the plan’s network of providers, hospitals, clinics and pharmacies to get your care.  You have a wide variety of policies and cost options with Medicare Advantage, an average $40 a month in premiums and various out-of-pocket maximums.  Advantage plans cover everything Medicare Parts A and B cover and most have a prescription drug plan built in. Different Medicare Advantage plans also have extra benefits such as coverage for vision, dental, and/or hearing needs, unlike basic Medicare.

Disadvantages of Medicare Advantage Plans

The biggest disadvantage of Medicare Advantage is its lack of stability. Your plan can change yearly, your doctor can be dropped, and there is no way to add more supplemental insurance to your plan if these issues do occur. There is also a lack of variety in which doctors you can visit, and you must live in the plan’s service area. With a Medicare Advantage Preferred Provider Organization (PPO) plan, you can get health care from any provider or hospital, but it will cost you extra when they are out-of-network. With Medicare Advantage Health Maintenance Organizations (HMOs) you can only see providers in network (except in emergency situations) and cannot see specialists without referrals from a primary care doctor.

At their core, Medicare Supplement plans are more of an extension of Medicare Parts A and B, while Medicare Advantage is more of an all-encompassing plan. Both plans can help you to obtain coverage that Medicare Parts A and B alone cannot provide.

A Medicare Advocate Can Help

Are you still unsure which path is right for you?  It’s important to compare the coverage, costs, and benefits of each plan against your personal situation.  Our advisors can save you time by researching which plans your doctors take and if your medications are covered.  They can quickly compare plan costs, estimate your savings and help you with enrollment.  Our advisors will be there before, during and after you enroll to ensure you fully understand your options and coverage.

For more information on these plans, see the document attached here, and be sure to contact one of our advisors to help you decide on the best Medicare coverage for you.


Senior Financial Group does Medicare differently.

Sources:; Kaiser Family Foundation

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