Is Original Medicare With a Supplement More Expensive Than Medicare Advantage Plan?

October 28, 2023

Medicare comes with a lot of options. Two popular choices for expanded coverage beyond Original Medicare are Medicare Advantage (Part C) and Medigap. But which usually costs more – going with a Medicare Advantage Plan or supplementing your Original Medicare with a Medigap policy?

Medicare can get complicated when you dive into the details. However, by understanding the basic cost structures of Medicare Advantage vs. Medigap, you can determine which route best fits your needs and budget.

Below we’ll compare and contrast these two ways of getting more out of your Medicare.

Medicare Basics

Before weighing Medicare Advantage against a supplement, it helps to understand the basics of Medicare.

Medicare Part A covers hospital insurance. It’s premium-free for most people with a sufficient work history.

Medicare Part B covers medical services like doctor visits and diagnostics. It has a standard monthly premium of $170.10 in 2023, but may be higher based on your income.

Together, Part A and Part B are known asOriginal Medicare. This coverage directly from the government has:

A deductible you must pay before Medicare pays its share
Coinsurance of 20% for most services
No annual out-of-pocket cap

That’s where the coverage gaps come in. Unless you have secondary insurance, you’ll be responsible for paying the Medicare deductibles, coinsurance, and anything else Original Medicare doesn’t cover.

Now let’s see how Medicare Advantage and Medigap aim to fill those gaps in different ways.

What is Medicare Advantage?

Medicare Part C (Medicare Advantage) is an alternative way to get your Medicare benefits. These plans are offered by private insurers approved by Medicare.

Each Medicare Advantage Plan must cover at least the same benefits as covered by Original Medicare. Most plans cover more through value-added benefits like dental, vision, and hearing.

With Medicare Advantage you generally:

Pay a monthly premium (varies by plan)
Pay copays or coinsurance instead of Original Medicare’s deductibles and coinsurance
Receive coverage through a network of doctors and hospitals
Have an annual cap on your out-of-pocket spending

Some Medicare Advantage Plans charge no premium beyond your Part B premium. These $0 premium plans are appealing, but still have copays and other cost-sharing.

Medicare pays the private insurer a set amount per member. The plan then administers your Medicare benefits within that budget.

There are different types of Medicare Advantage Plans available:

HMO: Generally won’t cover out-of-network care except in emergencies
PPO: Will cover some out-of-network services, usually at a higher cost
PFFS: Can see any provider that accepts the plan’s terms
Special Needs: For specific chronic conditions or dual eligibility

Now let’s look at how supplements like Medigap fit into the Medicare equation.

What is Medigap?

Medigap refers to Medicare Supplement Insurance policies sold by private insurers. These are separate from Medicare Advantage Plans.

Medigap insurance is designed to fill gaps in and not replace Original Medicare coverage:

Deductibles
Coinsurance
Copays
Other out-of-pocket costs

Some Medigap policies also cover extras like medical care when traveling abroad.

Unlike Medicare Advantage, Medigap Plans:

Only work alongside your Original Medicare beneficiaries benefits
Do not restrict you to a network
Have higher monthly premiums, but less cost-sharing

There are 10 standardized Medigap Plans labeled A through N. Each offers a different set of basic and extra benefits. Plan F offers the most complete coverage, while Plan A covers only the basics.

You must be enrolled in Medicare Parts A and B to purchase a Medigap policy. You’ll also need to keep paying your Part B premium and any deductibles.

Now that we’ve covered the basics of both programs, let’s directly compare the costs.

Medicare Advantage vs. Medigap Cost Comparison

The cost of Medicare Advantage vs. a Medigap Plan can vary quite a bit. Here are some key factors when comparing your options:

Monthly Premiums

Medicare Advantage:$0 to over $100 depending on the plan. Some have no premium beyond the Medicare Part B premium.
Medigap:Ranges from around $100 per month for lesser coverage up to over $250 for the most comprehensive plans.

Medicare Advantage Plans include generally have lower premiums than Medigap policies.

Out-of-Pocket Spending

Medicare Advantage:Copays and coinsurance for services up to an annual cap (ex: $5000).
Medigap:Little to no copays or coinsurance. Higher premiums offset smaller out-of-pocket costs.

Medigap offers predictability with most expenses covered by premiums. Medicare Advantage has lower premiums but unpredictable out-of-pocket costs.

Additional Benefits

Medicare Advantage:Many plans include dental, vision, hearing, and more.
Medigap:Only covers core medical costs. Some offer minimal extras like foreign travel.

Medicare Advantage tends to offer richer benefits beyond traditional Medicare coverage.

Provider Network

Medicare Advantage:Generally must use in-network providers.
Medigap:Any provider that accepts Medicare. No network restrictions.

Medigap offers open access to providers who take Medicare. Medicare Advantage has networks, but a wide choice of plans.

Prescription Drug Coverage

Medicare Advantage:Usually includes Medicare Part D Plan with copays.
Medigap:Does not cover prescriptions. Must purchase a separate Part D Plan.

Getting drug coverage bundled with medical can make Medicare Advantage more convenient.

Travel Coverage

Medicare Advantage:Emergency coverage only out-of-network/area.
Medigap:Some plans cover urgent care and emergencies when traveling.

Medigap can provide peace of mind for frequent travelers on Medicare.

As you can see, Medicare Advantage tends to cost less overall in monthly premiums. But with Medigap you avoid most out-of-pocket costs and unpredictability.

Is Medicare Advantage or Medigap Better?

Whether Medicare Advantage or Medigap ends up more affordable depends on your health needs and budget.

Medicare Advantage pros:

Lower premiums
Built-in prescription drug coverage
Maximum annual out-of-pocket cap
Extra benefits like dental and vision

Medigap pros:

Lower overall out-of-pocket costs
Use any provider that accepts Medicare
Some plans cover travel medical
No referrals needed for specialists

There are compelling reasons to go with either Medicare Advantage or a Medigap supplement. It comes down to understanding your total costs, health priorities, and desire for flexibility.

For example, if you travel frequently or want broad provider choice, a Medigap Plan may be worth the higher premiums. Or if you have extensive dental needs, the coverage some Medicare Advantage Plans provide could save you money.

Carefully weigh the pros and cons based on your situation. Think about your health, finances, and lifestyle to choose the right path.

Switching Between Medicare Advantage and Medicare Supplement Plan

One final consideration is that switching between Medicare Advantage and Medigap is not always seamless.

For example, if you’re in Original Medicare with a Medigap type of plan and decide to switch to a Medicare Advantage Plan, you may not be able to simply reactivate your old Medigap coverage later. Rules vary by state and situation.

Additionally, enrolling in a Medicare Advantage Plan when you first turn 65 can make it harder to purchase a Medigap policy down the road without medical underwriting.

So it’s wise to carefully consider your initial Medicare choices when first signing up to avoid limiting your options later. Understanding enrollment windows and state regulations is key.

An experienced, objective advisor can explain the ins and outs of changing paths so you go in with eyes wide open.

Weighing Medicare Advantage vs. Medicare Supplement Insurance

Medicare Advantage and Medigap offer different approaches to getting more coverage out of Medicare. There are reasonable arguments for choosing either path. It comes down to knowing your needs and priorities.

While plan costs evolve each year, in general many Medicare Advantage Plans offers lower premiums but unpredictable out-of-pocket costs. Medigap insurance plan has higher premiums but pays for most health expenses so you face minimal additional bills.

Look at the total value each brings. Include premiums, the plan’s cost-sharing, extra benefits, and network flexibility. Consider the “what ifs” like significant health events or lots of travel.

Understanding how these two options compare will help you make an informed Medicare decision. The right choice comes down to your personal health and financial situation.

Seeing the bigger picture allows you to go beyond the monthly premiums and make a confident Medicare Plan selection. Education and insight bring clarity to a complex system.

FAQS

Is Original Medicare with a supplement more expensive than a Medicare Advantage?

The cost of Original Medicare with a supplement and a Medicare Advantage Plan can vary depending on your specific circumstances. Generally, Medicare Advantage Plans may have lower premium costs, but they may also have additional out-of-pocket expenses. On the other hand, Original Medicare with a supplement may have higher premium costs, but it provides more comprehensive coverage and may potentially have lower out-of-pocket expenses. It’s important to evaluate your healthcare needs and compare the costs and benefits of both options before making a decision.

What is the difference between Medicare Advantage, Medigap, and Medicare?

A: Medicare Advantage is a type of Medicare Plan offered by private insurance companies that provides all of your Medicare Part A (hospital insurance) and Part B (medical insurance) coverage. Medigap, also known as Medicare Supplement Insurance, is a type of private insurance that helps cover the gaps in Original Medicare, such as deductibles, copayments, and coinsurance. Medicare refers to the federal health insurance program for individuals aged 65 and older, as well as certain younger individuals with disabilities or specific health conditions, that consists of Part A, Part B, Part C (Medicare Advantage), and Part D (prescription drug coverage).

How do I choose between Medicare Advantage and a Medicare Supplement?

Choosing between Medicare Advantage and a Medicare Supplement (Medigap) depends on your individual healthcare needs and preferences. Some factors to consider include your budget, preferred doctors and hospitals, prescription drug coverage needs, and any specific health conditions you have. Medicare Advantage Plans may offer additional benefits beyond what Original Medicare covers, such as dental, vision, and hearing coverage, but they usually have a network of providers you must use. Medigap Plans can provide more flexibility to see any doctor or specialist who accepts Medicare. It’s always a good idea to compare the costs and benefits of both options before making a decision.

What does Medicare Advantage cover?

Medicare Advantage Plans generally provide all of the same coverage as Original Medicare (Part A and Part B), but they often include additional benefits. These benefits can vary depending on the specific plan, but may include prescription drug coverage (Medicare Part D), vision, dental, hearing, and fitness benefits. Some Medicare Advantage Plans also offer care coordination services or disease management programs. It’s important to review the details of each plan to understand what is covered.

Can I buy a Medigap policy if I have a Medicare Advantage Plan?

If you have a Medicare Advantage Plan, you generally cannot purchase a Medigap (Medicare Supplement) policy. Medigap policies are specifically designed to work with Original Medicare, not Medicare Advantage. However, if you decide to switch from a Medicare Advantage Plan back to Original Medicare, you may have the opportunity to purchase a Medigap policy during certain enrollment periods.

Are Medicare Advantage Plans better than Original Medicare?

Whether Medicare Advantage Plans are better than Original Medicare depends on your specific needs and preferences. Medicare Advantage Plans often offer additional benefits beyond what Original Medicare covers, such as prescription drug coverage, dental, vision, and hearing benefits. However, they typically have a network of providers and may require you to obtain referrals or prior authorization for certain services. if enrolled in Original Medicare, with or without a Medigap policy, provides more flexibility to see any doctor or specialist who accepts Medicare. It’s important to evaluate your healthcare needs and compare the costs and benefits of both options to determine which is best for you.

What is the difference between Medicare Part B and Part D prescription drug coverage?

Medicare Part B provides coverage for medically necessary services and supplies, such as doctor visits, outpatient care, and preventive services. Part B does not typically cover prescription drugs, except in certain situations, such as chemotherapy drugs administered in a doctor’s office. Medicare Part D, on the other hand, is a separate prescription drug coverage plan that is offered by private insurance companies. Part D helps pay for prescription medications and can be added to Original Medicare or a Medicare Advantage Plan.

Can I return to Original Medicare Plans if I have a Medicare Advantage Plan?

If you have a Medicare Advantage Plan, you generally have the option to return to Original Medicare during the Medicare Advantage Disenrollment Period, which occurs annually from January 1st to February 14th. During this time, you can disenroll from your Medicare Advantage Plan and return to Original Medicare. However, if you wish to purchase a Medigap (Medicare Supplement) policy, you may have limited options and could be subject to medical underwriting.