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Medicare Supplement vs Medicare Advantage​

Deciding between Original Medicare and the Medicare Advantage program is an important first decision everyone needs to consider once they start their Medicare coverage. The two programs are completely different in how they are structured.  Your ability to access either program, personal health considerations, preference for either a fixed monthly budget or a variable monthly budget and the associated higher or lower premiums and access to doctors and/or hospitals can help determine which program you should use.

Let’s compare the two programs and list the pros and cons of each.
When you first start onto Medicare Part B you are able to enroll into either a:
 
  • Medicare Supplement + Prescription Drug Plan
  • Medicare Advantage plan (with or without drug coverage)

This is your only opportunity to join a Medicare Supplement plan without having to answer medical questions. After your initial enrollment period if you wish to change or join Medicare Supplement plans you will be subject to medical underwriting but this can be done at any time during the year.

The Medicare Advantage plans and Prescription Drug Plans allow you to switch between plans once a year (during the Annual Enrollment Period) but these plans do not require medical underwriting.  
Enrollment Considerations:
If you see several specialists or have some major health concerns it might be beneficial to go with Original Medicare + Medicare Supplement coverage.

On that plan you have the fixed premium costs of your Supplement and Prescription Drug plan but potentially very little out of pocket costs after that for doctor and/or hospital charges.  For example, a Medicare Supplement Plan G covers everything but the Part B deductible ($240 in 2024). Meaning after you meet that expense all Medicare approved charges would be covered.

Since the Medicare Advantage programs typically have much lower monthly premiums (several plans offer $0 monthly premiums) the costs for your health coverage are offset by potentially higher maximum out of pocket costs for the plans. In Virginia, the yearly maximum out of pocket for the Medicare Advantage plans usually range between $2,000 – $11,300 depending on the plan.

If you are healthy, you are a great candidate for either program and should think through all of the considerations.  However, if you do use medical services often then you might be better off paying the premium and limiting your out of pocket costs.
Personal Health Considerations:
Similar to what is stated above, the Medicare Supplement plan has more premium per month and potentially very little out of pocket when compared to the Medicare Advantage plans.  Typically, the premiums are about $1,000 – $2500 per year depending on age, gender and tobacco usage.  Out of pocket costs for a plan G is $240 (Part B deductible) for 2024.  Prescription co-pays vary depending on which prescription you are on.

Other people prefer to go onto a Medicare Advantage plan and have lower monthly premium cost knowing that if they get sick they can potentially spend more money out of pocket for the services that they used with their Medicare Advantage plan. Typically, the Medicare Advantage plans are $1,000 – $2,500 less in premium per year than the Medicare Supplement plans.

Consider both the differences in premium between the plans and the potential differences in out of pocket costs to see which fits better for you.  Some people prefer to have a budget with more fixed costs that they can plan on and go with the Original Medicare + Medicare Supplement knowing that if they get sick there would be potentially little out of pocket costs.  Other people prefer to save monthly on their premium expenses and are willing to pay co-pays when they use the services.
Preference for Fixed or Variable Monthly Budget:
Original Medicare is accepted by about 96% of doctors across the country.  Of the 4% that don’t accept Medicare assignment, most of those doctors will still accept Medicare patients.  Medicare Advantage plans are typically either PPO’s or HMO’s so the amount of doctors in network is typically much lower.

If you are going with a Medicare Advantage plan it is important to check that your doctors and preferred hospital networks are in network.  This can save you a lot of extra money and expenses by using “out of network” physicians.

If being able to travel widely and see any physician you would like is a major concern, perhaps going with Original Medicare would be better for you.
Access to doctors / hospitals:

MEDICARE SUPPLEMENT

Costs
You pay a monthly premium for your supplemental plan (in addition to your Part B premium). Premiums vary based on which plan you have, your age, gender, location and sometimes health status.

Medicare Supplement premiums are typically more expensive than MA plans.
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Coverage
Medigap plans help fill in the gaps of Original Medicare Parts A and B. If your service is covered by Original Medicare then you usually have little to no out of pocket costs.

Services not covered by Medicare (eg. prescriptions, dental, routine vision) are not covered by Medicare Supplement plans. If you want these services covered you would need to buy separate coverage.
Access to doctors / hospitals
Accepted at any provider that takes Medicare. No network restrictions.
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Referrals
Not applicable. If you have a Medicare Supplement, you can see any provider without the need for a referral.
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Enrollment
You can enroll into a Medicare Supplement or change from one supplement to another at any time during the year.

However, during your Open Enrollment Period (when you first start Medicare) you are guaranteed coverage at the best available rate regardless of your health status. Outside of this window you will usually need to answer health questions in order to join or change Medicare Supplement plans.
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Extra benefits
Some Medicare Supplement plans include fitness memberships but for the most part  they typically do not provide extra benefits like you sometimes find in Medicare Advantage plans.
If you join a Medicare Supplement and wish to have coverage for dental/vision/hearing then you would need to buy separate coverage.

MEDICARE ADVANTAGE

Costs
Premiums vary from plan to plan but there are many Medicare Advantage plans that have $0 monthly premium.

You must continue to pay your monthly premium for Part B of Medicare (usually comes out of your SS check each month).
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Coverage
When you use services, you pay copays, coinsurance and deductibles up to a set out-of-pocket limit. These co-pays/yearly limits vary depending on the plan as well as the types of services you receive.

Most Medicare Advantage plans include prescription drug coverage.
Access to doctors / hospitals
Most MA plans have a network of providers and some also require you to get a referral prior to receiving care. Depending on the plan you select, you may be able to receive care out-of-network but might pay a higher amount.
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Referrals
You may need referrals, from your primary care physician, before seeing a specialists/receiving certain procedures. Rules for referrals vary from plan to plan.
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Enrollment
Generally, you can only join/change Medicare Advantage plans during the Annual Enrollment Period (Oct 15 - Dec 7) each year.

You can’t be denied coverage or charged more based on your health status.
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Extra benefits
Most MA plans include extra benefits that Original Medicare + Medicare Supplement plans do not cover. These extra benefits also vary from plan to plan but can include things such as: 
  • Dental and/or vision and/or hearing
  • Over-the-counter allowance
  • Fitness membership
  • Healthy grocery allowance
  • Part B premium reimbursement (partial or full)
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