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What’s the Difference Between Medicare Supplement and Medicare Advantage?

Updated: Oct 6, 2022

When it comes to Medicare, the two most popular options are Original Medicare with a Medicare Supplement plan (also called Medigap or Medicare supplemental insurance) and Medicare Advantage. Seniors may not have a Medicare Supplement plan and a Medicare Advantage plan at the same time, so it’s important to understand the pros and cons of each to decide which type of coverage suits your needs.

With Medicare’s Annual Enrollment Period (AEP) right around the corner (October 15-December 7), kupuna will have the opportunity to make changes to their Medicare insurance, including:

  • Switch from Original Medicare to Medicare Advantage

  • Switch from one Medicare Advantage plan to another

  • Switch from Medicare Advantage back to Original Medicare with a Medicare Supplement plan

If you are thinking about making some changes to your Medicare coverage, this is the time to learn about your options. In this article we’ll answer: What’s the Difference Between Medicare Supplement and Medicare Advantage?

What’s the Difference Between Medicare Supplement and Medicare Advantage?

There are many differences between Medicare Advantage and Medicare Supplement plans. Factors including your lifestyle, budget, and medical coverage needs will play which direction makes most sense for you.

Both Medicare Advantage plans and Medicare Supplement plans are offered and administered by private insurance companies contracted with Medicare and work to provide benefits above and beyond Original Medicare but there are also many differences between them:

1. Medicare Supplement plans act as a secondary coverage source to Original Medicare while Medicare Advantage plans act as the primary source of coverage. Medicare covers Part A and Part B by paying a set amount to your Medicare Advantage insurance carrier for your coverage needs for the calendar year.

2. Medicare Advantage plans come with a regional network of doctors and hospitals, which means that if you travel out of state, you will be out-of-network. Some doctors in your area may also not accept your plan as coverage for their services. Coverage from Medicare Supplement plans, on the other hand, is available from any doctor or hospital that accepts Original Medicare assignment across all U.S. states and territories.

3. While Medicare Advantage plans are required to offer all the benefits you get from Original Medicare and usually also include additional benefits such as prescription drugs, dental, vision, and hearing; additional benefits vary from plan to plan and region to region. By contrast, the coverage provided by Medicare Supplement plans is consistent all across the country.

4. Choosing a Medicare Advantage plan means paying higher out-of-pocket costs in the form of cost-sharing (coinsurance and deductibles) in exchange for a lower monthly premium. By comparison, Medicare Supplement plans charge higher monthly premiums but eliminate most or all out-of-pocket costs for Medicare services.

5. Medicare supplement plans give kupuna the ability to predict their costs because all plans have the same benefits and they remain the same for coverage anywhere in the country. In addition, the most popular Medicare Supplement plans come with foreign travel emergency coverage.

6. Most Medicare Advantage plans are designed to be an “all-in-one” option, whereas seniors who choose a Medicare Supplement plan would need to purchase vision, dental, and prescription drug coverage separately.

7. Medicare Advantage plans typically require referrals to specialists whereas Medicare Supplement plans do not.

8. Medicare Advantage offers more options with hundreds of plans. There are 12 Medicare Supplement plans to choose from.

Should I choose a Medicare Supplement plan or Medicare Advantage plan?

Medicare coverage needs vary from person to person. Medicare Supplement plans are ideal for seniors who want predictable and low out-of-pocket costs, for their coverage to travel with them, and the freedom to choose their own doctors. Conversely, seniors who want to get all their health coverage from one plan, who don’t travel on a regular basis, and who want lower monthly premiums may be better off with a Medicare Advantage plan.

Speak to a local Medicare agent to discuss your options.

Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. As the only Medicare agency who represents every Medicare Advantage plan in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.

At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.


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