by Russell Noga | Updated May 8th, 2023
The Difference Between Medicare Advantage and Medicare Supplement (Medigap)
Millions of elderly Americans and Americans who have been diagnosed with qualifying diseases or disabilities receive their health insurance through Medicare. The fee-for-service, government-sponsored health insurance program has its upsides, but it can also present some challenges. Not only is it a bit confusing, as the program consists of a variety of different parts that cover different medical-related care and services, but Medicare doesn’t cover all costs.
In fact, it only covers 80 percent of medical-related expenses, and it doesn’t cover the cost of certain costs, such as copays, coinsurance, and deductibles.
In order to fill in those gaps in coverage, many individuals purchase Medicare Supplement Insurance or opt for Medicare Advantage. While both will help to pay for a lot of your healthcare needs, the out-of-pocket expenses, as well as the healthcare providers and hospitals, vary from program to program.
To help you decide which option to choose, in this guide, we provide an overview of both options, including what they cover, how they work, and other pertinent information.
Original Medicare: Part A and Part B
Medicare, as mentioned, is a health insurance program that is sponsored by the federal government, and it is comprised of several different parts that cover different healthcare costs and services.
Part A and Part B, when combined, are known as Original Medicare. Part A covers the costs of care and services you receive in an inpatient setting, such as a hospital or skilled nursing facility.
Medicare Part B covers the cost of care and services you receive in an outpatient setting, such as doctor appointments, preventative care, and durable medical equipment. If you decide to enroll in Original Medicare, you will be able to see any provider or use any facility that accepts Medicare.
Medicare Supplement Insurance
Medicare Supplement Insurance, also known as Medigap, is supplemental health insurance that is designed to “fill in the gaps” that Part A and Part B leave behind; copays, coinsurance, and certain deductibles, for example. Since there isn’t an out-of-pocket spending cap for either part of Original Medicare, purchasing a supplemental plan is highly recommended if you decide to enroll.
Medigap is sold by private health insurance companies and is regulated by the Centers for Medicare and Medicaid Services (CMS). There are 10 Medicare Supplement Insurance plans, which are named for letters. Each lettered plan covers different expenses; however, the benefits are standardized, so all plans that are the same letter must provide the same benefits, regardless of where they are purchased or which insurer they’re purchased from.
6-Month Medigap Open Enrollment Period
In order to purchase Medicare Supplement insurance, you must be enrolled in both parts of Original Medicare. You can purchase a plan at any time; however, the ideal time to do so is during the Medicare Supplement Open Enrollment period. This period starts on the first day of the month you turn 65 and lasts for 6 months.
The reason why purchasing Medigap at this time is recommended is that your application cannot be subjected to medical underwriting; in other words, insurance companies cannot consider your current or past health when assessing your application or determining your premiums. If you apply outside the Open Enrollment period, your application can be subjected to medical underwriting and your premiums may be higher, or worse, your application may be denied.
Medicare Advantage is also referred to as Medicare Part C. It’s an alternative option to Original Medicare, as it bundles together the coverage that Part A and Part B provides, as well as some additional benefits, such as the benefits provided by Part D (prescription drugs), vision care, dental care, and more.
Medicare Advantage is also sold by private health insurance companies and there’s no monthly premium with a lot of plans. It’s important to note, however, that you will need to pay for the Part B premium yourself, unless you opt for a Medicare Advantage plan that features what is known as a Part B “give back benefit”, which will pay for either a portion or all of the Part B premium.
Medicare Advantage is a lot like traditional health insurance policies. There is a network of healthcare providers and you will need to see providers who operate in your network in order for the expenses to be covered by your Medicare Advantage plan.
Typically, those who have this insurance pay for the care they receive as they receive it via coinsurance, copayments, and deductibles.
To enroll in Medicare Advantage, you have to be enrolled in Medicare Part A and Part B. You must also live within the area your plan services. Enrollment for Medicare Advantage only takes place at certain times of the year; however, your application cannot be denied because of your health. You can enroll in Medicare Advantage during one of the following periods:
- Initial Medicare Enrollment. Starts three months before and ends three months after your 65th birthday.
- Open Enrollment. Starts October 15 and ends December 7 each year
- Medicare Advantage Open Enrollment. Begins on January 1 and ends on March 31
Which is Better, Medigap or Medicare Advantage?
When deciding which option will best meet your needs, considering the state of your health, the amount of medical care you think you’ll require, and your budget is important. Additionally, here are some other key points to consider:
- Payments are more predictable but can be pricey
- No network; visit any doctor or specialist in the country that accepts Medicare
- Vision, dental, and hearing care typically isn’t included
- Some plans include overseas medical emergency care
- There’s no annual out-of-pocket limit
- Does not cover prescription drugs, so you’ll need to enroll in Part D
- Only covers one individual
- Typically low premiums
- The choice of providers and hospitals is restricted (Networks)
- You may need prior authorization for many services
- Most plans include prescription drug coverage (Medicare Part D)
- Many plans also cover dental, vision, and hearing
- Out-of-network provider coverage for some plans
Frequently Asked Questions
What is the primary distinction between Medicare Advantage Plans and Medicare Supplement Plans?
Medicare Advantage Plans, also known as Part C, are all-in-one alternatives to Original Medicare (Parts A and B). They are offered by private insurance companies and include additional benefits. In contrast, Medicare Supplement Plans, or Medigap, are policies designed to cover the out-of-pocket costs left by Original Medicare, such as deductibles and copayments.
Can I enroll in both a Medicare Advantage Plan and a Medicare Supplement Plan simultaneously?
No, you cannot have both a Medicare Advantage Plan and a Medicare Supplement Plan at the same time. You must choose one or the other based on your healthcare needs and preferences.
How do the costs differ between Medicare Advantage Plans and Medicare Supplement Plans?
Medicare Advantage Plans often have lower or no monthly premiums, but they may have higher out-of-pocket costs, such as copayments and deductibles. Medicare Supplement Plans have a monthly premium, but they help pay for out-of-pocket costs in Original Medicare.
Are prescription drug coverage options different between the two types of plans?
Most Medicare Advantage Plans include prescription drug coverage (Part D). If you have Original Medicare and a Medicare Supplement Plan, you may need to purchase a separate Part D plan for prescription drug coverage.
What are the provider network differences between Medicare Advantage Plans and Medicare Supplement Plans?
Medicare Advantage Plans typically have a restricted provider network (HMO or PPO), while Medicare Supplement Plans allow you to visit any doctor or hospital that accepts Medicare.
How does coverage for additional benefits like dental, vision, and hearing care differ between the two types of plans?
Medicare Advantage Plans often include additional benefits, such as dental, vision, and hearing care, which are not covered by Original Medicare. Medicare Supplement Plans do not provide these additional benefits.
Do both types of plans require referrals for specialist visits?
Some Medicare Advantage Plans may require referrals to see specialists, while Medicare Supplement Plans do not have such restrictions.
How do out-of-state or international coverage options differ between Medicare Advantage Plans and Medicare Supplement Plans?
Medicare Supplement Plans typically offer broader coverage for out-of-state and international travel. Medicare Advantage Plans may have limited or no coverage outside of their network area.
How do the enrollment periods for Medicare Advantage Plans and Medicare Supplement Plans differ?
The Annual Enrollment Period (AEP) for Medicare Advantage Plans runs from October 15 to December 7, while the Initial Enrollment Period for Medicare Supplement Plans is a six-month window starting the month you turn 65 and are enrolled in Medicare Part B.
How do the plan-switching opportunities differ between the two types of plans?
You can switch between Medicare Advantage Plans during the Annual Enrollment Period or during the Medicare Advantage Open Enrollment Period (January 1 to March 31). To switch to a Medicare Supplement Plan, you may need to undergo medical underwriting unless you qualify for guaranteed issue rights.
How to Enroll in a Medicare Supplement Plan
As mentioned, each Medicare Supplement plan is the same regardless of which company offers it. But their rates are all different, so it’s very easy to overpay.
The easiest way to get started in making sure you pay the least amount possible for the best plan to fit your needs is to give us a call today. Our licensed insurance agents can help answer all your questions about Medicare, then shop the rates from the top insurance companies in your area.
To get started, call us today.
Russell Noga is the CEO of Medisupps.com, an online Medicare Agency and resource center helping Medicare beneficiaries learn about Medicare, Medigap and Part D drug plans, and Medicare Advantage plans since 2009. Russell is licensed in all 50 states and has been featured as a keynote speaker, and author of several publications, along with hosting the very popular Medisupps.com Youtube channel.