Medicare Advantage vs. Medicare Supplement Plans

Medicare Advantage vs. Medicare Supplement: What’s the Difference?

Once you enroll in Medicare Parts A and B, there’s another important decision to make:

How do you want to receive your Medicare coverage?

For many people, the choice comes down to two paths:

Original Medicare + a Medicare Supplement (Medigap) policy

or

a Medicare Advantage plan (Part C).

Both can be good options, but they work very differently. Understanding those differences can help you decide which approach better fits your healthcare needs, budget and preferences.

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First, What Is Medicare Advantage?

A Medicare Advantage plan, also called Part C, is offered by a private insurance company that contracts with Medicare.

You must have Medicare Parts A and B to enroll, and you must live within the plan's service area. Medicare Advantage plans provide your Part A and Part B benefits through the plan, and many also include Part D prescription drug coverage and additional benefits such as dental, vision or wellness programs.  

You still remain enrolled in Medicare and continue to pay your Part B premium.

How Medicare Advantage Plans Work

Medicare Advantage plans may have a monthly plan premium in addition to your Part B premium. Your costs can also include copayments, coinsurance or deductibles when you receive healthcare services, and those costs vary by plan.

Many Medicare Advantage plans also use provider networks.

For example, an HMO generally requires you to use providers within the plan's network except in certain situations such as emergency or urgent care. A PPO typically allows both in-network and out-of-network care, but you generally pay less when using providers in the plan's network.

That's why checking your doctors, hospitals and prescriptions is an important part of comparing Medicare Advantage plans.

What Is a Medicare Supplement?

A Medicare Supplement policy, often called Medigap, works differently.

Instead of replacing the way you receive your Original Medicare benefits, a Medicare Supplement works alongside Original Medicare.

Original Medicare pays its portion of approved Medicare-covered healthcare costs, and the Medigap policy helps pay certain remaining costs, such as copayments, coinsurance and deductibles, depending on the plan you select.

You pay a separate monthly premium for your Medicare Supplement in addition to your Medicare Part B premium.

What About Prescription Drugs?

This is another important difference.

Many Medicare Advantage plans include Part D prescription drug coverage as part of the plan.

Medicare Supplement policies do not include prescription drug coverage. If you choose Original Medicare with a Medicare Supplement and want prescription coverage, you generally need to enroll in a separate Part D prescription drug plan.

What About Choosing Doctors?

Provider access is one of the biggest differences to consider.

Medicare Advantage plans may use provider networks, so it's important to make sure your doctors, specialists and preferred hospitals participate in the plan.

With most Medicare Supplement policies, you can use the policy anywhere in the United States where the provider accepts Medicare.

For someone who travels frequently or wants broad access to Medicare providers, that may be an important consideration.

How Do the Costs Compare?

This is where I encourage people to look beyond just the monthly premium.

With Medicare Advantage, you may have a lower plan premium, but you'll generally have costs such as copays or coinsurance as you use healthcare services.

With a Medicare Supplement, you'll have a separate monthly premium, but the policy helps cover certain costs left behind by Original Medicare.

So instead of simply asking:

“Which one has the lowest premium?”

I think the better question is:

“How do I want to pay for my healthcare—and which type of coverage fits me better?”

Can You Have Medicare Advantage and a Medicare Supplement Together?

No.

This is an important distinction: Medicare Supplement policies are designed to work with Original Medicare, not Medicare Advantage.

If you join a Medicare Advantage plan, you don't need—and cannot be sold—a Medigap policy to supplement that Medicare Advantage plan.

Think of these as two different paths, not two types of insurance you combine.

So, Which One Is Better?

There isn't one answer that's right for everyone.

When helping someone compare the two, I think it's important to look at things such as:

• Monthly premiums

• Expected out-of-pocket healthcare costs

• Doctors and hospitals

• Prescription medications

• Travel

• Additional benefits

• Comfort with provider networks

• How predictable you want your healthcare expenses to be

Someone who prefers a lower monthly plan premium and doesn't mind using a network may feel comfortable with Medicare Advantage.

Someone who values broad provider access and is comfortable paying a separate monthly premium for a Medicare Supplement may prefer the Original Medicare and Medigap route.

The right answer depends on you.

Before You Choose, Compare the Whole Picture

Medicare Advantage and Medicare Supplement coverage can both provide valuable protection, but they do it in very different ways.

Before enrolling, take some time to consider more than just the premium or the extra benefits advertised by a plan.

Look at your doctors, prescriptions, expected healthcare needs, travel habits and budget. Those are often the things that make the differences between these two options much clearer.

If you'd like help comparing your options, I can walk through the differences with you and help you understand which direction may make the most sense for your individual situation.

This article is for educational purposes and is based in part on information from the Louisiana Senior Health Information Program and Louisiana Department of Insurance. Medicare plan availability, benefits, costs and provider networks can vary by plan and location.