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Medicare Advantage vs Medigap (Medicare Supplement plans)

If you’re trying to decide between a Medicare Advantage plan and a Medicare Supplement plan, it’s important to understand that there isn’t one correct choice for everyone.

Your health needs and monthly budget may fit one plan but not another. Meanwhile, a friend in your age group may have a different budget and needs, so they may be better off with a different plan.

Keep reading to learn about cost considerations and coverage options for Medicare Advantage plans and Medicare Supplement plans.

Original Medicare and its limitations

Original Medicare (Parts A and B) was founded in 1965 as a way of making health insurance more affordable for people aged 65 and older, younger individuals with disabilities, and individuals with end-stage renal disease (ESRD).

  • Part A covers hospital stays, skilled nursing care, hospice, and home health visits.
  • Part B covers doctor visits, outpatient services, and other medical expenses not covered by part A.

These government-managed health plans accomplish a lot, but they don’t cover:

  • Most prescription medicines
  • Routine vision, hearing, and dental services
  • Routine podiatry services
  • Most home safety items — like grab bars in the bathroom, stair lifts or elevators, bathtub lifts or seats, and medical emergency alert systems
  • Long-term care in nursing homes or assisted living facilities
  • Most medical services outside of the United States and its territories
  • Any health services that Medicare doesn’t consider medically necessary (such as cosmetic surgery or a fitness program)

So if, for example, you ever need a hearing aid, Original Medicare does not cover its cost — and a hearing aid can cost thousands of dollars.

If you suffer chronic migraines and acupuncture is the only treatment that helps, you would have to pay its full cost yourself.

If you need a life-saving medication that’s very expensive, Original Medicare might not pay for it.

And if you ever need long-term care in an assisted living facility, you would be responsible for covering the costs of your care.

For reasons like these, most people choose either a Medicare Supplement plan or a Medicare Advantage plan. Many Medicare Advantage plans also include Medicare Part D prescription drug coverage.

Some people sign up for a Part D prescription drug plan without signing up for a Part C plan. While this gives you protection against high drug expenses, it doesn’t protect you against other potentially high health care costs not covered by Parts A and B.

What is a Medicare Advantage plan?

A Medicare Advantage plan is a commercial insurance plan, such as an HMO or PPO, that covers all of your Part A (hospital insurance) and Part B (medical insurance) benefits and preventive care.

Medicare Advantage plans are a type of Medicare health plan, administered by private health insurers, that contract with Medicare to provide Part A and Part B benefits as well as preventive care. They are usually health maintenance organization (HMO) or preferred provider organization (PPO) plans.

Because Original Medicare doesn’t provide prescription drug coverage, many Medicare Advantage plans also offer prescription drug coverage. Some Medicare Advantage plans also include additional benefits as well, such as dental services or fitness programs.

Independence Blue Cross (Independence) offers two types of Medicare Advantage plans: Keystone 65 HMO and Personal Choice 65 PPO.

  • With an HMO (health maintenance organization) plan, your costs are usually lower, but you are required to use only in-network health care providers.
  • A PPO (preferred provider organization) plan generally has higher premiums, but gives you the flexibility to see providers who are not in-network. You still save money by using in-network providers.

Medicare Advantage coverage and costs can vary from year to year, which can impact you financially, so it’s important to make sure you are familiar with current plans.

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What is a Medicare Supplement plan?

A Medicare Supplement plan, also known as Medigap, offers additional coverage that supplements Part A and Part B (Original Medicare) coverage.

A Medicare Supplement plan helps with some or all of the out-of-pockets costs you’re left with after Original Medicare pays its share. This is where the “gap” in Medigap comes from. Medigap plans may “fill in the gaps” of coverage that Original Medicare does not offer.

Medigap plans are sold by private health insurance companies, and may help cover:

  • Copayments
  • Coinsurance
  • Deductibles

There are 10 types of Medigap plans, as defined by the Centers for Medicare and Medicaid Services (CMS). These same 10 types are used throughout the United States. More information is available on the CMS website.

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What’s better — a Medicare Advantage plan or a Medicare Supplement plan?

If you’re looking for additional health insurance coverage to complement Original Medicare, you have two plan types to choose from: Medicare Advantage or Medicare Supplement. Both options are provided by private insurance companies, like Independence. Here is how they compare.

Prescription drug coverage

  • Medicare Advantage (Part C) plans often include Part D prescription drug coverage, but not always. You can’t buy Part D separately from a Part C plan, so choosing a Part C plan that does include prescription drug coverage is a good way to avoid high medicine expenses.
  • Medicare Supplement plans do not include Part D prescription drug coverage, so a Part D plan must be purchased separately to shield you against potentially high medicine costs.

Premium, copay, and coinsurance costs

Medicare Supplement plans typically have higher monthly premiums than Medicare Advantage plans, but they also usually have lower copays and coinsurance.

If you have extensive medical needs, you may save money with a Medicare Supplement plan. But if your health issues are pretty minor, a Medicare Advantage plan may give you sufficient coverage at a more affordable price.

Find out more about how much Medicare plans cost

Extra benefits

Medicare Supplement plans don’t provide some of the extra benefits that many Medicare Advantage plans offer — such as dental, vision, or hearing coverage.

If these features are important to you, it may make more sense to get a Medicare Advantage plan, unless you would prefer to buy dental, vision, and hearing insurance separately.

Still wondering what type of plan to choose?

If you need help choosing a Medicare plan, register for a free webinar. An Independence Medicare expert will walk you through your options and answer your questions.

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Website last updated: 9/1/2021