Which is Better, Medicare Advantage vs. Medicare Supplement?

When people compare Medicare with Medicare Advantage, they usually mean Medicare (Original Medicare) with a Medicare Supplement and a Medicare Part D prescription drug plan versus Medicare Advantage (Part C) with prescription drugs included.

The comparison is difficult because they are drastically different, so I believe a fair side-by-side comparison is impossible. That, however, does not stop people from asking the question of which is better, Medicare Advantage or Medicare Supplement.

medicare advantage vs medicare supplement comparison chart

Medicare Is Original Medicare: Part A & B

Original Medicare is Part A for hospitals, and Part B for doctor visits and outpatient procedures. Part A has a $1,600 per event deductible in 60 days without a cap. Part B is an 80/20 split. You pay the 20% coinsurance, and there is no limit on the 20%.

Original Medicare + Medicare Supplement

To fill in the gaps in Medicare, you may purchase a Medicare Supplement / Medigap policy. Depending on where you live and the company you choose, the monthly premium can range from $100 to $200 per month. You can fill in the gap entirely except for the first $226 with a Plan G. As you age past 65, the price of your Medicare Supplement will increase.

Sometimes, your supplement may increase by hundreds of dollars. I recently had someone referred to me who was paying over $300 for her Medigap Plan G policy. She was in her mid-70s. She passed through underwriting, so we switched her to another Medigap plan at half the cost. Some people, however, cannot pass underwriting and need to remain on their high and increased Medigap policy.

Medicare Supplement + Medicare Part D PDP

Part D prescriptions drug plan (PDP) is separate from your Medicare Supplement and a separate charge. Again, the premium can range from $10 to $100 per month, with different prices for your medication copays. The key to comparing Part D plans is the year’s total cost — monthly premium plus individual prescription copays.

Medicare Advantage Or Medicare Part C

medicare advantage vs medicare supplement comparison chart

Medicare Advantage (or Part C) is different. Private insurance companies take what Original Medicare does and has a maximum out-of-pocket cost cap. Original Medicare, remember, is unlimited.

Medicare Advantage breaks out each of the different services. For example, x-rays, outpatient surgeries, labs, emergency services, etc. The service is given small copays versus Original Medicare’s unlimited 20%. These minimal copays add up toward the maximum out-of-pocket (MOOP). Most years, you will not reach your maximum out-of-pocket. In most years, your out-of-pocket will be $500 or less.

Medicare Advantage Has a Maximum Out of Pocket

The maximum out-of-pocket (MOOP) nationally is currently $8,300. The Omaha, Lincoln, and Council Bluffs area average around $4,500 or less for the MOOP. Some of the plans’ MOOP is $3,900. Original Medicare does not cover your coinsurance or deductibles unless you make the additional purchase of a Medigap policy.

Most Medicare Advantage plans also include Part D prescription drug coverage. There is no separate charge. Most of the Medicare Advantage plans in our area are zero premium or are very low premium with prescriptions included. The prescription drug part of Medicare Advantage excludes the Part D deductible on most plans. The current Part D deductible on stand-alone prescription drug plans is $505.

The cost for Medicare Advantage with drug coverage is usually zero. Your only monthly cost is your Medicare Part B premium and possibly copays for the medications.

Over the years, Medicare Advantage copays have increased to reflect rising medical costs and inflation. The increase has been minimal, but that will change, I’m sure, in our current high-inflation atmosphere. The same will be valid for Original Medicare and Medicare Supplements.

Medicare Advantage Has Networks

medicare advantage vs medigap pros and cons

Another difference that concerns people choosing between Medicare Supplement and Medicare Advantage is medical networks. This is a genuine concern in certain areas. In our Omaha, Lincoln, Council Bluffs metro area, there are principally three networks: CHI Health, Nebraska Medicine, & Methodists Health Systems. The Medicare Advantage plans in our area work with all three networks. It is a non-issue. In other places, the network system may be something to be aware of.

All the Medicare Advantage companies offer PPO (Preferred Provider Organization) options. You can go out of network to someone who accepts Medicare. You may pay more and have a larger MOOP, but there is that option.  You are not confined exclusively to the plan network.  

Also, many of the larger insurance companies offer national networks, so even within their HMO (Health Maintenance Organization) system, you may still be able to see doctors and hospitals outside your local service area and pay in-network copays.

Medicare Advantage Prior Authorization vs Original Medicare & Supplement

The other difference between Original Medicare / Medicare Supplement and Medicare Advantage is preapproval. Original Medicare does not require prior authorization for most procedures and services. Medicare Advantage is the reverse. This is an unusual concern because, during all your working years, your insurance companies required prior authorization for any services of any cost or significance.

With Medicare Advantage, there is really no change. Those who do not favor Medicare Advantage put this out as a deficiency in the program. In my experience and statistically speaking, most denials in the big picture are overturned. The national average for Medicare Advantage denials is 4 percent. Those denials are usually attributed to a lack of explanation and documentation on the provider’s part. The fix is usually an easy and quick remedy when the effort is put in to correct the error.

How Much Risk Do You Want to Carry?

Original Medicare with a Medigap policy and Part D prescription drug plan is the most comprehensive Medicare insurance. You have reduced risk to the lowest level. The trade-off is you pay an ever-increasing premium for the convenience of not paying copays or an expensive year when you require many medical services.

Medicare Advantage saves you a monthly premium upfront, but you will pay copays as services are required. You may even reach your maximum out-of-pocket during a challenging year. That is the trade-off.

Networks are something to consider with Medicare Advantage. That consideration should be based on a case-by-case basis, depending on your location. But with national networks and PPO plans, the network issue is not the issue it was a few years ago.

How much risk do you wish to assume, and how much do you want to budget toward healthcare? The answer to those questions is the solution to which is better Medicare Advantage vs. Medicare Supplements.

medicare advantage vs medigap pros and cons

 

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