MEDICARE SUPPLEMENT VS. MEDICARE ADVANTAGE; A BRIEF SUMMARY*

Medicare Advantage (Aka Part C) – Medicare Advantage plans are offered by private companies with a contract with Medicare and combine coverage for Part A (Hospital), Part B (Medical) services, and usually Part D (Drug coverage).

Medicare Advantage plans are typically “HMO” or “PPO” plans with a network of providers.

Advantages of Medicare Advantage Plans:*

  • Lower plan premiums and, in many cases, a zero-plan premium. This is possible because Medicare pays the private insurance company to manage your benefits in lieu of Medicare.

  • Premiums do not go up based on your age

  • Places an annual cap (Maximum-out-of-pocket) on your medical costs, usually between $2,500 and $7,500 (varies by plan)

  • Prescription drug coverage is usually bundled in with your medical benefits allowing you to have one ID card

  • Often include benefits not provided by Medicare like dental, eyewear, hearing, and other benefits

You must still pay your Part B Medicare premium (the standard premium in 2024 is $174.70/month).

Disadvantages of Medicare Advantage Plans:*

  •  Plan benefits and provider networks can change every year

  • Provider networks (doctors and hospitals) can drop out of the provider network

  • Once enrolled you may not be able to return to a Medicare Supplement plan without having to answer health questions to be approved. While some exceptions apply, it is essential to understand that your ability to get a Medicare Supplement plan in the future may not be guaranteed

  • Copays, deductibles, and coinsurance are significantly higher than Medicare Supplement plans

  • Part B drugs, like infusions or chemotherapy, often have a 20% coinsurance with Advantage plans which can result in you incurring out-of-pocket costs up to your plan’s out-of-pocket maximum

  • MUST use network providers for the lowest cost:

    • HMO-style: Must have a Primary Care Doctor and obtain “referrals” for specialty care. No coverage outside of the network except in an emergency

    • PPO-style: Plan doesn’t require referrals to specialists (unless it’s a part of the office’s policy) but much higher costs are incurred at out-of-network providers and out-of-network providers are not obligated to accept the plan terms   

  • “Prior Authorizations” – Medicare Advantage plan require Prior Authorization for many services. These Prior Authorizations can lead to delays or sometimes denials of care. This is one of the most often cited complaints about Medicare Advantage plans.

  • Poor or Mediocre Ancillary Benefits – Dental, vision, and/or hearing benefits may require use of small provider networks and have minimal value. Is it important to check the details of these ancillary benefits as they can be more of a sales tool rather than providing optimal benefits (varies by plan)

Advantages of Medicare Supplement Plans:*

  • Ability to see any provider, anywhere in the U.S. who accepts Medicare and agrees to see you. Over 90% of non-pediatric doctors accept Medicare

  •  No referrals to specialists required by the Medicare Supplement company (some specialists may require a referral as part of their office policy)

  • The supplement carrier does not require “Prior Authorizations” for care. Medicare determines if your recommended care is covered

  • Very low out-of-pocket costs for Medicare-covered medical services on Plans F, G, and N

  • Medical benefits don’t change year-to-year

  • The Part B deductible can go up each year

  • Guaranteed Renewable; you cannot be canceled as long as you pay your premium

Disadvantages of Medicare Supplement Plans:*

  • Plan premiums are higher than most Medicare Advantage plans

  • Premiums go up as you get older

  • Need to buy a stand-alone Part D Prescription Drug Plan (but get choice of all that are available for you)

  • No or minimal built-in ancillary benefits

*This is a brief summary only and is not a complete list of the advantages and disadvantages of Medicare Advantage or Medicare Supplement plans