By Wiley Long
MediGap Advisors

Medicare Supplement
Vs. Medicare Advantage:
Which is best?


Newsletter Issue #6


It’s Wiley Long here from MediGap Advisors. I hope you’re finding our MediGap Advisors’ Guided Path to Medicare monthly newsletter to be beneficial and informative. In last month’s newsletter I reviewed the basics of Medicare Advantage plans, and now I’m going to provide a more comprehensive comparison between the Medicare supplement and Medicare Advantage plans, to help you decide which type of plan might be best for you.

Key Differences Between Medicare Supplement and Medicare Advantage Plans

My son is 16 years old, and he asks LOTS of questions. About the only place I hear more questions is from people confused about whether they should get a Medicare supplement or Medicare Advantage plan.

Because Medicare alone leaves you so exposed to unlimited out-of-pocket expenses, it is essential that you choose either a Medicare supplement (or “Medigap”) plan to supplement Medicare, or sign up for a Medicare Advantage plan instead of traditional Medicare. There are several major factors you want to consider when deciding which plan is best for you. These include:

Medicare Supplement Plans Offer Greater Provider Access.

With a Medicare supplement plan, you can see practically any provider you choose. If a physician doesn’t participate with Medicare, some Medicare supplement plans (F and G) will pick up the excess charges (an excess charge is the difference between what a provider charges and what Medicare pays).

Medicare Advantage plans require patients to choose physicians from a list of participating providers. The lists typically have a limited number of providers to choose from, so you’ll want to check and see if your doctor is on the list before selecting a plan. Be advised that these lists can change from year to year. Most Medicare Advantage plans don’t provide out-of-network coverage, and some require referrals to see a specialist.

Medicare Supplement Plans and Medicare Advantage Plans Both Put a Cap on Out-of-pocket Expenses

Medicare supplement plans can save you thousands of dollars per year. Some plans not only cover your Part A and Part B deductibles, but also pick up all or some of your coinsurance, leaving you with $0 or minimal out-of-pocket expenses. Remember Jerry from a few newsletters ago who racked up $42,700 in out-of-pocket expenses with Medicare alone? He should have had a Medicare supplement plan!

Medicare Advantage plans can also help you save big. These plans typically work by charging copays rather than hefty deductibles. In recent years, however, copays have increased - some as high as $50 for a specialist visit. If you frequent your primary care physician or numerous specialists, copays could become quite costly.  However, these plans still put a cap on your out-of-pocket expenses.

Most Medicare Advantage Plans Include Prescription Coverage

Prescription coverage is certainly the highlight for Medicare Advantage plans as they are typically included in your coverage. Each plan has a list of covered medications, so you’ll want to be sure any medications you take on a regular basis are covered by your plan. With Medicare alone, or even with a Medicare supplement plan, you’ll have to purchase a separate Medicare Part D prescription plan.

Medicare Advantage Plans Are Less Expensive

Medicare Advantage Plans offer a cost-effective alternative to minimizing your out-of-pocket expenses. Most plans are offered at low or $0 premiums - you just continue paying your Medicare Part B premium.

Medicare supplement plan premiums vary based on the coverage you choose. To help keep premiums low, Plan F offers a high-deductible option ($2,300 deductible) with rates starting at under $100 per month - a small price for a wealth of protection!

Medicare Advantage Plans Do Not Cover As Much

If you do need medical care, you’ll likely end up paying more out-of-pocket with a Medicare Advantage plan, than if you have a Medicare supplement plan along with original Medicare. Medicare supplement plans are designed to cover your copays and deductible, often leaving you with very little exposure.

Both Medicare Supplement plans and Medicare Advantage plans offer guarantee-issue coverage during your initial open enrollment period

During your Medicare initial enrollment period, you have the option to choose between original Medicare or a Medicare Advantage plan. Your enrollment period for Medicare Advantage plans lasts for seven months and begins three months before the month you turn 65 and ends three months after the month you turn 65. You can’t be denied coverage based on any pre-existing medical conditions (although plans are typically not available for end-stage renal disease).

Your Medicare supplement enrollment period begins the month you turn 65 and are enrolled in Medicare Part A and B and lasts for six months. During this time these plans are also guaranteed-issue - meaning you can’t be denied coverage due to a pre-existing illness. This may be the only time you’ll ever have guaranteed-issue rights on Medicare supplement plans - so this is one of the most critical decisions you’ll ever make regarding your Medicare coverage.

Your Options During Medicare’s Annual Enrollment Period

You can switch to a Medicare supplement plan, or change plans any time - if you qualify. You can switch to or change Medicare Advantage plans only during the Annual Enrollment Period from October 15 - December 7 - but there is no medical qualification required.

Below you can see an overview of the differences between Medicare supplement and Medicare Advantage plans:

Medicare Supplement Medicare Advantage
Caps out-of-pocket expenses
Foreign travel coverage N/A
Charges a Premium Premiums vary Low or $0 premium (You continue paying your Part B premium)
Covers Part B excess charges N/A
Additional 365 inpatient lifetime reserve days N/A
Includes Prescriptions N/A
Provider Access Can see any provider (some plans cover excess charges) Patient chooses providers from a limited network list - Typically no out-of-network coverage
Covers Part A & Part B deductible Most cover Part A, some cover Part B Many plans charge copays rather than deductibles
Initial Enrollment Period Begins the month you turn 65 and are enrolled in Medicare Part A & B and lasts for six months (Lasts for 7 months) Begins three months before the month you turn 65, runs through the month you turn 65, and ends three months after the month you turn 65.
Annual Enrollment Does not apply October 15 - December 7
Year-Round Enrollment Apply any time throughout the year Not available

Why Use a MediGap Advisors’ Personal Benefits Manager

Because everyone’s needs are different, your Personal Benefits Manager can provide you with one-on-one assistance (at no cost to you) to help you pick the type plan that works best for you. And because we work with many different insurance carriers, you can feel confident knowing that we work for you - not the insurance company!

Even after you sign up for a plan, your Personal Benefits Manager and I are still available anytime to help you with any claims issues or to answer any questions that might come up. MediGap Advisors also offers an Annual Comprehensive Policy Review to ensure you remain in the best plan available at the best rate available from year to year. Remember - we’re on your side!

In next month’s issue, I’ll cover, How Medicare Works With Employer-Based Coverage.

Best regards,

Wiley P. Long III
President - MediGap Advisors