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Is Medicare Supplement or Medigap More Expensive Than Medicare Advantage?

Medicare Supplement or Medigap More Expensive Than Medicare Advantage

Medicare Supplement (Medigap) and Medicare Advantage take different approaches to healthcare coverage in retirement. While both provide comprehensive medical benefits, their cost structures differ significantly. Medicare Supplement Plans charge higher monthly premiums, while Medicare Advantage has lower premiums but cost-sharing when you receive care. Determining which option is ultimately more expensive depends on your healthcare needs and utilization patterns.

How Do Medicare Supplement Insurance and Medicare Advantage Plan Premiums Compare?

The most obvious cost difference lies in the plan premiums:

· Most Medicare Advantage Plans may have $0 premiums beyond the monthly Part B premium you pay for Original Medicare, which is $164.90 per month in 2023. This makes premium costs quite low.

· Premiums for Medicare Supplement policies range from around $100 on the low end up to over $250 per month for the most comprehensive coverage. So your monthly supplement premium is often substantially higher than your Part B payment alone.

· However, keep in mind that Medicare Advantage Plans can charge premiums over $100 monthly in addition to your Part B premium, making the costs more comparable to Medicare Supplement. But $0 premium Medicare Advantage Plans are common.

Difference Between Medicare Advantage and Medicare Supplement Plan?

Beyond premiums, you must also consider your out-of-pocket costs for medical services:

· Medicare Supplement pays 100% of coinsurance, copays and deductibles for Medicare Part A and B covered services. So after paying your premium, your out-of-pocket costs at time of care are $0.

· Medicare Advantage typically charges copays and/or coinsurance for many services, similar to a private insurance plan. These costs can range from $5 to over $100 depending on the type of care.

· However, Medicare Advantage does limit your annual out-of-pocket costs for medical care. Once you hit that cap, costs are fully covered. With Original Medicare coverage, there is no limit to your coinsurance expenses each year.

What About Prescription Drug Costs?

Most Medicare Advantage Plans include prescription drug coverage at no added premium cost. Standalone drug plans must be purchased separately with Medicare Supplement:

· Adding a Medicare Part D drug plan to Original Medicare with Supplement incurs an additional $20 to $100 per month in premium costs depending on the plan.

· Medicare Advantage includes integrated prescription coverage with the same benefits and typically low copays, usually saving substantially on drug plan premiums.

· If you take expensive brand name medications, the Part D savings with Medicare Advantage could outweigh higher medical out-of-pocket costs compared to a Medicare Supplement Plan.

Could Medicare Medigap Ultimately Provide Savings?

For some seniors, the lower out-of-pocket costs with Medicare Supplement may offset the higher premiums:

· If you require frequent healthcare services, tests and procedures, your share of the 20% Medicare coinsurance costs will add up quickly without supplemental coverage.

· The premium savings from $0 cost Medicare Advantage Plans can disappear after as Medicare beneficiaries you pay just a few hundred dollars in coinsurance bills under Original Medicare. At that point, a Medicare Supplement policy with lower utilization costs provides better overall value.

· If you hardly use medical services, the lower premium costs of Medicare Advantage make more sense. You get minimal benefit from a Medicare Supplement Plan if you rarely have out-of-pocket expenses.

Does Choice of Doctors Impact Costs?

Your provider preferences also impact comparative costs:

· Medicare Supplement allows you to see any healthcare provider in the U.S. who accepts Medicare. If your current doctors participate in Medicare, you can keep seeing them.

· Medicare Advantage networks are more restricted. If your providers are not in-network, you'll pay higher costs to see them or have to switch doctors.

· Medicare Advantage without your preferred doctors and hospitals in-network results in higher expenses to get care outside the plan's coverage rules.

The most cost-effective option depends on your unique healthcare situation. Speaking with a Medicare insurance company broker provides guidance on whether Medicare Supplement or Medicare Advantage better fits your needs and budget.

We’re Here to Help

You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give the licensed insurance agents at Lane Financial Strategies a Call at (804) 897-2170. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.


Is a Medicare Supplement more expensive than Medicare Advantage?

The cost of Medicare Supplement (Medigap) plans can be higher than Medicare Advantage Plans, but the trade-off is often greater coverage and flexibility in choosing healthcare providers.

What is the difference between Medicare Advantage and Medigap Plans?

Medicare Advantage Plans are alternative ways to receive Medicare benefits, while Medigap Plans work alongside Original Medicare to cover gaps in coverage such as copayments, deductibles, and coinsurance.

What does Medicare Part B cover?

Medicare Part B covers medically necessary services like doctor's visits, outpatient care, mental health services, preventive services, and some home health care.

Do Medicare Advantage Plans offer prescription drug coverage?

Many Medicare Advantage Plans include prescription drug coverage, known as Medicare Part D, as part of their benefits package.

Can I choose Medicare Advantage if I already have traditional Medicare?

You have the option to switch to Medicare Advantage during specific enrollment periods, but it's important to carefully consider the coverage and costs before making a decision.

What are the types of Medicare Plans available?

Medicare Plans include Original Medicare, Medicare Advantage Plans, standalone Medicare Part D prescription drug plans, and Medicare Supplement (Medigap) Plans.

What is the best Medicare Plan for me?

The best Medicare Plan depends on individual healthcare needs, preferred providers, and budget. It's important to compare plan options and consider coverage, costs, and network providers before making a decision.

Can a Medigap policy provide prescription drug coverage?

Medigap policies don't cover prescription drugs, and beneficiaries are recommended to purchase a standalone Medicare Part D prescription drug plan for this coverage.

Can I return to Original Medicare if I'm enrolled in a Medicare Advantage Plan?

You have the option to switch back to Original Medicare during specific enrollment periods, allowing for changes in coverage based on individual needs and circumstances.

What does Medicare cover in terms of health insurance?

Medicare provides coverage for hospital care (Part A) and medical services (Part B) and offers the option to add prescription drug coverage or Medicare Part D Plan and supplemental coverage through Medigap Plans.

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