Medicare Advantage vs Medicare Supplement

Which is better? When do we recommend them? When don’t we?

Insurance and Risk

To start out, the most important thing to remember is the relationship between insurance and risk. The reason insurance exists is to manage risk. We pay companies a premium to help take on the risks of health issues, car accidents, fires, natural disasters, etc. and the costs associated with them. Generally, the more we pay the insurance company, the more risk they will take on and the less risk we have. What people consider an acceptable amount of risk depends on each individual, so this article will speak generally about the options, risks associated with them, what we would typically recommend in certain circumstances, but we recognize that each person is unique and must decide for themselves the amount of risk they are comfortable with.

What is Medicare Advantage

Medicare Advantage, also referred to as Part C, is a health insurance plan managed by private health insurance companies that covers Part A and B services. These plans cover all Part A and Part B services, and many plans also include Part D prescription coverage. These plans also often include “extra” benefits like dental, vision, hearing, gym memberships etc. at NO additional cost. These plans have copays, coinsurance and out of pocket maximums that you pay when receiving medical care or hospitalization.

What is Medicare Supplement

A Medicare Supplement plan, also called Medigap, is a plan offered by a private insurance company that works with Medicare to pay for the costs leftover after Medicare Part A and B have paid. Supplements are referred to by different letters, the most common plans being Plan F, Plan G and Plan N. Supplements are federally regulated. The coverage follows the letter of the plan NOT the company offering it. Plan G coverage from company A is exactly the same coverage as Plan G from company X, Y, or Z. Supplements only cover medical costs, they do not include any dental, vision, hearing, or prescription drug coverage.

Which Route is Better

Please see the table below to compare these two options side by side.

	Medicare Advantage	Medicare Supplement	Winner
Monthly Premium	Low – $0 in some zip codes	High – around $200 for a Plan G plus $15+ for prescription drug plan	Medicare Advantage
Network	Only doctors and facilities that are contracted with the Medicare Advantage plan	Choose any doctor or facility contracted with Medicare in the USA	Medicare Supplement
Coverage	Pay as you go. Copays and Coinsurance for each service	Only $240 out of pocket annually (Plan G 2024)	Medicare Supplement
Extra Benefits	Dental, vision, hearing, and other extra benefits likely included	Additional costs for dental, vision, hearing	Medicare Advantage

Both are great options, there aren’t any true “cons” to either of them. It just comes down to personal preferences. As stated at the beginning of this article, selecting the right insurance plan always comes down to the personal preference of how to manage risk. Someone who is more risk averse would likely feel more comfortable paying a higher price for the Medicare Supplement plan, but someone who is more comfortable with risk would likely enjoy the low monthly cost and extra benefits of the Medicare Advantage plans.

Recommendations

The first recommendation would be if you don’t have an agent/broker that you are working with already, find one! It costs you nothing to sit down with us to go over these options to help you understand them and to help you find the right plan for you. We are here to help you, so give us a call!

If you still find yourself stuck in the middle, unsure of which to choose, again, give us a call so we can help review your situation. Also, generally, a Medicare Supplement makes sense for people in the following situations:

 

• • Splits time between zip codes (i.e. Idaho in the Summer, Arizona in the Winter)

• • Has consistent, expensive medical treatments, or had them in the past and they could return (cancer treatments, infusions, etc.)

Generally, a Medicare Advantage plan makes sense for people in the following situations:

 

• • Is fairly health and has little medical needs or costs.

• • Has needs for dental, vision, hearing coverage

Is My Decision Permanent?

Lastly, an important thing to remember is that this decision is not permanent. If you select a Medicare Supplement at the start of Medicare, you can change to a Medicare Advantage plan during the Annual Election Period from October 15^th – December 7^th. If you select a Medicare Advantage plan first, you have a 12 month trial period during which you could choose to switch to a Medicare Supplement plan with no questions asked. You can also switch if you move outside of your plan’s service area or if your plan leaves your area. Other than those situations, when you switch from Medicare Advantage to Medicare Supplement you will have to go through health underwriting and the company could deny you based on your answers to some health questions. This is another reason to work with an agent/broker to help you know when and how to switch between plans.

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People often have decision paralysis when it comes to deciding on a Medicare plan, and the important thing to remember is that they are both great options! You don’t really have a bad choice. Our agency has been helping people navigate this choice for over a decade. Feel free to reach out to us. We would love to talk with you to help you choose the right plan for you.