| Thu, Oct 27, 2016 @ 09:00 AM

Medicare Supplement Insurance or Medicare Advantage?

Posted by Medicare Made Clear

questions-about-medicare-advantage-or-supplement-insuranceYou have some decisions to make once you’re enrolled in Original Medicare (Parts A and B). One decision is whether to get other coverage to help with some costs that Original Medicare doesn’t pay.

You may want to consider adding Medicare supplement insurance. Or you may want to choose a Medicare Advantage (Part C) plan. These are two very different choices.

Why Do I Need Either One?

Medicare doesn’t pay 100% of your health care costs. Your out-of-pocket costs may include deductibles, co-insurance and co-pays. You must also pay the Part B monthly premium (and the Part A premium if you owe it).

Part B (medical insurance) generally pays 80% of the Medicare-approved amount for outpatient services, such as doctor visits, after you meet the annual deductible. You are responsible for the remaining 20%. With Part A (hospital insurance) you are responsible for deductibles, co-insurance, and co-pays when you receive covered inpatient services.

A Medicare supplement insurance plan or a Medicare Advantage plan may help keep out-of-pocket costs down. But they do it in different ways, and you have to choose. You can’t use both of these plans together.

Medicare Supplement Insurance

Medicare supplement insurance is coverage that you can add to Original Medicare. Plans help pay some out-of-pocket costs that Original Medicare doesn’t pay. Which costs are paid depends on the plan you choose. In some cases, 100% of your costs could be covered depending on the service received and the plan. In addition, you may see any provider who accepts Medicare.

There are several different Medicare supplement insurance, or Medigap, plans. They are standardized by the federal government in terms of what they cover. However, plan availability and costs may vary widely depending on where you live. (In Massachusetts, Minnesota and Wisconsin, plans are standardized in a different way from those offered in other states.)

Plans are offered through private insurance companies. You pay a monthly plan premium, and you also must pay the Part B premium to Medicare. You may need a stand-alone Part D prescription drug plan as well, since neither Original Medicare nor Medicare supplement insurance plans cover prescription drugs.

Medicare Advantage

Medicare Advantage (Part C) is an alternative to Original Medicare. It’s a different way to get your Medicare benefits.

By law, every Medicare Advantage plan must include all the benefits provided by Original Medicare (Parts A and B). They may offer additional benefits—and many do. This may include coverage for prescription drugs and for routine dental and eye care, for example. Plans may have provider and pharmacy networks that you need to use.

With a Medicare Advantage plan, you pay a co-pay or co-insurance for health care services you receive. These out-of-pocket costs have an annual cap (no more than $6700 in 2016). Once the limit is reached, your plan pays 100% of your health care costs for the rest of the year. There is no out-of-pocket cap with Original Medicare. In addition, drug coverage is included with most Medicare Advantage plans so there’s no additional premium for it.

Medicare Advantage plans are offered through private insurance companies approved by Medicare. You pay a low or $0 plan premium, and you continue to pay the Part B premium to Medicare. Plan benefits and costs may vary.

How Do I Decide?

Bottom line, your total monthly premium payments would likely be higher for a Medicare supplement insurance plan plus a drug plan than for a Medicare Advantage plan. You would pay the higher premium amount whether you use any health care services or not. The pay-off would be that more of your out-of-pocket costs for services you did use would be paid by the plan.

A Medicare Advantage plan is a pay-as-you-go deal. Your total monthly premium amount would likely be low or $0. On the flip side, you would be responsible for deductibles, co-pays and co-insurance for the health care services you use.

It’s Your Choice

There is no right or wrong when it comes to Medicare insurance options. You need to choose based on your needs and on the plans that are available where you live.

And remember, your choices don’t have to be forever. You can change Medicare Advantage and prescription drug plan choices, if you want to, each year during Medicare Open Enrollment (Oct. 15 – Dec. 7).

Related Content

Get Help Managing Out-of-Pocket Medicare Costs

Medicare: How to Put the Parts Together

A Medicare Advantage Plan May Be Your Ticket to Dental and Vision Care


For more information, explore MedicareMadeClear.com or contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048.

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