Medicare Advantage vs Medigap: Which plan should you choose?

If you’re new to Medicare, making all of these decisions can be confusing. At Medicare On Video, we work to help our clients understand your choices. One of your first decisions you have to make is to decide whether you want a Medicare Advantage Plan or Original Medicare plus a Medicare Supplement policy. We’ll walk you through the advantages and disadvantages of each of those policies below.

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Making the first decision: Original Medicare vs Medicare Advantage Plans

Original Medicare is exactly what it sounds like: the well-known federal health insurance plan offered by the Centers for Medicare and Medicaid Services (CMS). It covers inpatient and hospital needs, outpatient needs, and prescription drugs. It is offered by the federal government in accordance with state and federal laws. Medicare Supplement Plans, also called Medigap policies, are an addition to Original Medicare. They are private plans offered by private insurers to cover the out-of-pocket expenses that Medicare doesn’t cover. For example, Medicare will cover about 80% of certain outpatient costs. Many Medicare Supplement Plans will cover all or some of the remaining 20%. They decrease out-of-pocket costs but do not add additional bonuses.

Medicare Advantage Plans, on the other hand, are an alternative to Original Medicare. They are plans offered by private insurers. They also cover inpatient and outpatient healthcare services, but many Medicare Advantage Plans include additional bonuses. These bonuses could include gym membership, prescription drug coverage, vision insurance, etc. Each plan is different from one another as they are offered by different private insurers.

Medicare Advantage vs. Medicare Supplement Plans

Let’s compare Medicare Advantage Plans vs Medicare Supplement Plans . The main questions to ask are what are the differences in cost and what are the differences in coverage. We’ve broken them down below and go into more detail in each section.

Medicare Part A and B

Medicare Advantage Plans: Cover the same things as A and B plus more

Medicare Supplement Plans: Cover the costs of Part A and B that Original Medicare doesn’t

Medicare Advantage Plans and Medicare Supplement Plans both encompass Parts A and B of Medicare. First, in order to purchase either plan type, you need to enroll in Parts A and B of Medicare. Medicare Advantage Plans typically cover more than is required by Parts A and B, but the consumer always has Medicare Parts A and B coverage under Medicare Advantage Plans. Medicare Supplement Plans cover the out-of-pocket expenses associated with Parts A and B of Original Medicare.

Prescription Drug Coverage

Medicare Advantage Plans: most plans include prescription drug coverage

Medicare Supplement Plans: coverage not included in most supplement plans

Some Medicare Advantage Plans include prescription drug coverage. The prescription drug coverage may be included in a more comprehensive Medicare Advantage Plan or in a specific type of Medicare Advantage Prescription Drug plan, otherwise known as MA-DP. Medicare Supplement Plans do not include prescription drug coverage generally. In Original Medicare, you will often have to purchase drug coverage as Part D.

Your choice of doctors/hospitals

Medicare Advantage Plans: Limited flexibility, similar to an HMO Medicare Supplement Plans: Any provider who accepts Medicare

One of the most convenient aspects of Original Medicare is the ease of finding providers. As federal health insurance, there are providers in every state who accept Medicare. Because Medicare Supplement Plans are an extension of Original Medicare, they do not limit which providers you can see. This is different from Medicare Advantage Plans. Medicare Advantage Plans are private insurance plans sold in certain areas. These plans often restrict people to seeing people who are in-network. That network is generally local and not nearly as widespread as Original Medicare providers.

Monthly cost

Medicare Advantage Plans: $0-100 Medicare Supplement Plans: $50-200

Both Medicare Advantage Plans and Medigap policies have different costs depending on the plan. The figures provided above are a rough estimate of the monthly premiums associated with each type of plan. Keep in mind that your costs would be different depending on your plan.

Total out of pocket costs

Medicare Advantage Plans: Increases with time

Medicare Supplement Plans: Decreases out-of-pocket expenses

Medicare Advantage Plans add another monthly premium and potential out-of-pocket expenses if you see a provider out-of-network. Medicare Supplement Plans also require a monthly premium, but their entire purpose is to decrease out-of-pocket expenses associated with Original Medicare. Typically, Medicare Supplement Plans save money in the long-run while Medicare Advantage Plans may add expenses in exchange for more services.


Medicare Advantage Plans: Some referrals required Medicare Supplement Plans: No effect on paperwork

Depending on the type of Medicare Advantage Plan, you may have to have a referral in order to see specialists. For example, an HMO requires patients to choose a PCP and for that PCP to refer them to a specialist as needed. A PPO, on the other hand, does not require any of these steps. These details are unique to each Medicare Advantage Plan, so be sure to check with an agent before choosing a plan. A Medigap policy does not affect paperwork. Medicare does not require referrals to see specialists. Likewise, Medicare Supplement Plans do not require referrals

Still Have Medicare Questions?

Medicare can be confusing. Choosing between Original Medicare and Medicare Advantage Plans is a huge decision. Choosing whether or not you need a supplement plan in addition to Original Medicare adds another layer of confusion. Call us today at Medicare On Video and watch our videos for more information.


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