Medicare Advantage plans are alternatives to original Medicare. Medicare supplement plans can only be used with original Medicare.
Medicare Advantage insurance combines the benefits of Medicare parts A and B. It can also provide prescription drug coverage. A person with this type of plan pays a premium, copayments, and a deductible.
Meanwhile, Medicare supplement insurance — often called Medigap — helps fill the gaps in original Medicare’s coverage. A supplement plan helps cover coinsurance, copayment, and deductible expenses.
A person cannot use a Medicare supplement plan with a Medicare Advantage Plan.
In this article, learn about the differences between Medicare Advantage and Medicare supplement insurance, including what each type covers, who is eligible, and how to enroll.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare is a federal insurance plan. It helps cover the costs of healthcare for people who:
- are aged 65 or older
- are younger than 65 but receive social security benefits
- have certain health issues, such as end stage renal disease
Medicare has several parts, each of which covers different aspects of healthcare. Though there are exceptions and nuances, the general breakdown is as follows:
- Part A covers hospital care.
- Part B covers outpatient services.
- Part C is also called Medicare Advantage.
- Part D covers prescription drugs.
Private companies run Medicare Advantage plans. They provide all the coverage of parts A and B and often cover prescriptions.
Medicare Advantage plans can look like private insurance plans. Among these Advantage plans are:
- Health maintenance organization plans: This type, called an HMO plan, covers services from providers in the plan’s network and sometimes certain out-of-network services.
- Preferred provider organization plans: A person with this type of plan can use in- or out-of-network services, though in-network services cost less.
- Private fee-for-service plans: This type limits how much a person pays to any given service provider, and it removes the requirement of a referral to see a specialist.
- Special needs plans: This type is only available to people with specific health conditions, and the company tailors the benefits to meet certain needs.
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
Medicare supplement insurance, also called Medigap, helps fill in the gaps in original Medicare’s coverage, including some copayments, deductibles, and coinsurance.
Some supplement insurance, or Medigap, policies cover added services, such as those a person receives while travelling outside the country.
However, these plans do not cover long-term care, eye care, dental care, or hearing aids.
Below, find out whether — and to what extent — each type of plan covers different elements of care.
|Cost||This depends on the company, policy, and health status.||The company sets the premium, which can vary widely.|
|Frequent traveler or favorite doctor out-of-network||It may not cover this.||Yes.|
|Chronic health conditions||It may have lower out-of-pocket maximums.||It may offer more choice of doctors and services.|
|Medication||Some policies cover this.||No — consider Medicare Part D.|
|Routine dental, hearing, or vision care||It may cover this.||No.|
|Part B premium||No.||No.|
|Network of providers||Yes.||No.|
|Copayment and coinsurance||Most plans have copayment and coinsurance.||It may cover all or part of Medicare parts A and B copayment and coinsurance.|
|Do benefits change?||They can.||No, but premiums may go up.|
|Referral to see specialists||This may require one from a primary care doctor.||No.|
A person is eligible for a Medicare Advantage plan if they:
- have Medicare parts A and B
- live in an area with insurance company coverage
- are a United States citizen or national, or otherwise legally reside in the country
- do not have certain health conditions, such as end stage renal disease
A person can enroll in a Medigap, or supplement insurance, policy when they first sign up for Medicare. The policy has a monthly premium.
The benefit of Medicare supplement insurance is that it helps pay for coinsurance, copayments, and deductibles. A person cannot use it with a Medicare Advantage plan.
State-licensed private insurance companies provide supplement insurance policies. This type of policy has guaranteed renewal when the person pays the premium.
A company must offer a supplement insurance, or Medigap, policy when a person first signs up for Medicare. If a person decides to drop their Medigap policy, private companies are not required to offer another supplementary plan.
Private companies run Medicare Advantage and Medigap plans, and a person must contact an insurance company in their area to enroll.
Medicare provides online resources to help a person find Medicare Advantage and Medicare supplement insurance plans available in their area.
A person must give their Medicare number and information about when parts A and B began for them when they sign up for a Medigap policy. This information is on a person’s Medicare card.
A company should never ask for financial information, including credit card or banking information, over the phone.
Private companies offer more choices and lower prices for supplementary plans during a person’s first Medicare open enrollment period. This begins 3 months before a person turns 65 and ends 3 months after their birthday. After this open enrollment period, the prices may go up.
Learn about switching between Medicare Advantage and Medigap plans here.
Medicare Advantage plans offer the same coverage as Medicare parts A and B. Many also cover additional costs, of prescription medications, eye care, and dental care, for example.
Medicare supplement insurance, called Medigap, works with parts A and B, covering some expenses, such as the deductible and copayment.
People with Medicare Advantage plans cannot use Medigap.
If a person has either a Medicare Advantage or Medicare supplement insurance policy, they pay a premium each month to the private company in charge of the policy.