Medicare Supplement Insurance vs. Medicare Advantage Plans – What are the Differences?

If you are on Medicare A & B, there are two very distinct types of insurance plans that you are eligible for. The first type of plan is a regular Medicare Supplement plan, and the second type of plan is a Medicare Advantage plan. While many people call Advantage plans “supplements”, the fact is that the two types of plans are very different. They cannot, and should not, be lumped together as one type of plan. There are few important differences, which we’ve elaborated on below.

  1. First of all, the easiest way to understand the main difference in the two types of plans is to look at how they “pay”. Medicare Supplement plans pay AFTER Medicare pays using the Medicare “crossover” system, which coordinates payments to the provider. The Advantage plans pay INSTEAD of Medicare. In other words, your coverage is provided through the private insurance company, rather than through Medicare. Essentially, Medicare pays the private insurance company to take over management of your health benefits.
  2. The second big difference in these two types of plans that we should look at is the eligibility ramifications of the two types of plans. Medicare Supplements use medical underwriting to determine one’s eligibility for their plans UNLESS you are in an open enrollment (just going on Medicare or turning 65) period or “guaranteed issue” period (i.e. losing employer coverage, losing Advantage plan coverage, etc.). Medicare Advantage plans, on the contrary, do not use comprehensive underwriting like the supplement plans do. They ask one medical question regarding End-Stage renal disease, but other than that, there are no medical questions to get a Medicare Advantage plan.
  3. The next difference to look at between the two types of plans is what is typically included in coverage. Medicare Supplement plans include doctor and hospital coverage, and generally speaking, they pay on things that Medicare pays on. So, if it is something that Medicare covers, the supplement plan, in almost all cases, will also cover it. Medicare Supplements do not, however, cover prescription medications – you must have a separate Part D plan to have prescription medication coverage. Many Medicare Advantage plans, on the contrary, do cover prescription medications. The include Part D as part of the Medicare replacement plan.

When you are considering which of the two types of plans you prefer, it is important to understand these major differences and to compare “apples to apples”. Medicare Supplements are Federally-standardized and very easy to compare on the basis of price and company reputation. However, Advantage plans cannot be compared as easily and require a more in-depth view as co-pays can vary widely. Many Medicare Supplement plans (F, C, etc.) do not have any co-pays or deductibles, regardless of the company that is selling the plan. So in this case, comparing options is easy to do.

If you have questions about which plan is right for you or just want to get Medicare Supplement quotes, please contact us using our quote form at Medicare Supplement .US.

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