If you are enrolled in Medicare Parts A and B only, it’s important to understand how coverage works and what out-of-pocket costs may apply.
While Original Medicare covers many medically necessary services, beneficiaries are generally responsible for certain costs, such as deductibles, coinsurance, and copayments. The amount you pay can vary depending on the services you receive.
Some individuals choose to enroll in additional coverage, such as a Medicare Advantage plan or a Medicare Supplement (Medigap) plan, to help manage these potential out-of-pocket expenses. Reviewing your options can help you determine what type of coverage aligns with your healthcare needs and financial situation.
Let’s discuss the differences between Medicare Advantage vs. Medicare Supplement so you can determine which plan may fit your needs better.
How are Supplemental and Medicare Advantage Plans Similar?
Before diving into the differences between Medicare Advantage and Medicare Supplement plans, there is one key similarity. You must be signed up for Medicare Parts A and B before you can get an Advantage or Supplemental plan.
Differences Between Medicare Advantage vs. Medicare Supplement
Now, let’s dive into the six key differences between Supplemental and Advantage plans.
1. Out-of-Pocket Costs
One key difference between Medicare Supplement (Medigap) plans and Medicare Advantage plans is how costs are structured.
With a Medicare Supplement (Medigap) plan, you pay a monthly premium. Premium amounts can vary based on factors such as your location, age, gender, tobacco use, and the pricing method used by the insurance company.
In addition to the premium, you may be responsible for certain costs, such as the Medicare Part B deductible, depending on the plan you choose. After applicable costs are met, some Medigap plans are designed to help cover many Medicare-approved out-of-pocket expenses, though coverage details vary by plan.
With a Medicare Advantage plan, costs are typically structured differently. Some plans may have lower monthly premiums, although others may charge a premium in addition to the Medicare Part B premium. Instead of primarily paying through premiums, you may have cost-sharing, such as copayments or coinsurance, when you receive services. Costs can vary depending on the plan and services used.
These costs can apply to services like doctor visits, hospital care, or procedures, depending on the plan. Medicare Advantage plans also include an annual maximum out-of-pocket limit for Medicare-covered services, after which the plan may cover additional eligible costs for the remainder of the year.
2. Provider Networks
Another difference between Medicare Supplement (Medigap) plans and Medicare Advantage plans is how provider access works.
Medigap plans are designed to work alongside Original Medicare. With Original Medicare, you can generally visit any doctor or hospital in the United States that accepts Medicare. Coverage depends on the services being Medicare-covered and provided by a participating provider.
Medicare Advantage plans are offered by private insurance companies and typically use provider networks. Depending on the plan, you may need to use in-network providers to receive services at the lowest cost.
Some Medicare Advantage plans are structured as HMOs or PPOs. HMO plans generally require you to use network providers, except in certain situations such as emergency or urgently needed care. PPO plans may allow you to see out-of-network providers, although costs are often higher when you receive care outside of the plan’s network.
3. Pre-Certifications
Another difference between Medicare Supplement (Medigap) plans and Medicare Advantage plans is how certain services are approved.
With Original Medicare (and Medigap), covered services are generally provided without prior authorization. In many cases, your healthcare provider determines the care you receive, as long as the services are considered medically necessary and meet Medicare coverage requirements.
Medicare Advantage plans may require prior authorization for certain services, tests, or procedures. This means the plan may need to review and approve the service before it is covered.
During this process, the plan evaluates whether the requested service meets its coverage criteria. In some cases, additional steps—such as trying other treatments first—may be required before certain procedures are approved.
Because prior authorization requirements can vary by plan and service, it’s important to review your plan’s rules and work with your provider to understand what may be needed before receiving care.
4. Plan Inclusions
Medicare Supplement (Medigap) plans are designed to help cover certain out-of-pocket costs associated with Medicare-covered medical and hospital services. These plans generally do not include prescription drug coverage or other non-Medicare-covered benefits.
Medicare Advantage plans must cover Medicare-covered services, and some plans may include prescription drug coverage.
You can review plan details or seek guidance if you would like help understanding your options.
5. Prescription Drug Coverage Plans
Another difference between Medicare Supplement (Medigap) plans and Medicare Advantage plans is how prescription drug coverage is structured.
Individuals who choose a Medigap plan may also consider enrolling in a separate Medicare Part D prescription drug plan to help cover outpatient medications. The number of available plans can vary by location, and each plan has its own formulary, costs, and coverage rules.
Because of this, some individuals review multiple Part D plan options to find coverage that aligns with their medication needs.
With a Medicare Advantage plan, prescription drug coverage may be included, depending on the plan. When drug coverage is included, it is provided as part of the overall plan, and the specific medications covered, costs, and rules will vary based on that plan’s formulary and terms.
6. How to Switch Plans
Another difference between Medicare Supplement (Medigap) plans and Medicare Advantage plans is how switching between them works.
If you are enrolled in a Medigap plan and want to switch to a Medicare Advantage plan, you may be able to do so during Medicare’s Annual Enrollment Period (October 15 to December 7). During this time, you can review available Medicare Advantage plans and enroll in coverage that is available in your area.
In most cases, Medicare Advantage plans do not require medical underwriting, although eligibility and plan availability may depend on your location and specific circumstances.
If you are enrolled in a Medicare Advantage plan and want to switch to a Medigap plan, the process can be different. In many situations, Medigap plans may require medical underwriting if you apply outside of a guaranteed issue period. This means you may be asked health-related questions as part of the application process.
Approval for a Medigap plan can depend on a variety of factors, including your health history and the insurer’s underwriting guidelines. Because requirements can vary by plan and state, it’s important to review your options carefully before making a change.
Additional Resources with Medicare School
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