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Is Original Medicare with a Supplement More Expensive Than Medicare Advantage?

Updated: Oct 28, 2023


Original Medicare with a Supplement More Expensive Than Medicare Advantage

If you're nearing Medicare eligibility, one of the biggest decisions you'll need to make is whether to get your Medicare benefits through Original Medicare plus a Supplement (Medigap) or a Medicare Advantage Plan. This choice largely boils down to comparing the costs and coverage between these two options.


In general, Medicare Advantage Plans have lower premiums but higher out-of-pocket costs at the point of care, while Medigap policies have higher premiums but lower copays and coinsurance when you receive medical services. But the actual costs vary significantly depending on where you live and your individual health needs.


Below we’ll explain Medicare Supplements vs. Advantage, outline the primary factors that impact costs, and provide strategies to help determine which option may be more affordable for your situation.


Medicare Supplements vs. Medicare Advantage

First, a quick primer on the core differences between Medicare Supplements and Medicare Advantage:


Medicare Supplements (Medigap)

  • Sold by private insurance companies

  • Helps pay for Original Medicare out-of-pocket costs like copays and deductibles

  • Works alongside Original Medicare

  • Covers you with any provider/hospital that accepts Medicare

  • Primarily helps with cost sharing, not extra benefits

Medicare Advantage

  • Plans sold by private insurers approved by Medicare

  • Provides all-in-one alternative to Original Medicare

  • Limited provider network - generally won't cover out-of-network except in emergencies

  • Out-of-pocket costs like copays and deductibles

  • Often includes extra benefits like dental and vision

Key differences to understand:

  • Medicare Supplement works with Original Medicare while Medicare Advantage provides an alternative

  • Medigap covers cost sharing but doesn’t usually include extra benefits

  • Medicare Advantage has networks and copays, Medigap covers coinsurance without networks

You can't have both a Medicare Advantage Plan and a Medicare Supplement. It’s either one or the other.


Factors That Impact Costs: Medicare Supplement insurance vs. Medicare Advantage

Medicare Supplement Plans and Medicare Advantage Plans have different cost structures. The various factors that influence how much you’ll pay include:


Medicare Supplement insurance Cost Factors

  • Plan premium - depends on location and coverage level

  • Part B premium payments continue

  • Part A and Part B deductibles may apply

  • No networks - can see any Medicare provider

  • Little to no copays for covered services

  • No cap on out-of-pocket expenses

Medicare Advantage Cost Factors

  • $0 premiums available but many plans charge premiums

  • Plan copays and coinsurance for services

  • Part B premium still required

  • Maximum out-of-pocket cap limits expenses

  • Network restrictions - no coverage out of network

  • Extra benefits like dental often included

As you can see, Medicare Supplements cost more in premiums but have less cost sharing at the point of care. Medicare Advantage has lower or no premiums but expenses like copays add up when you receive medical services.


Other core factors that impact costs include:

  • Coverage options in your area – more plans means more competition

  • Your health and utilization – costs vary based on how often you need care

  • Which exact plan you select – benefits and costs differ by plan

Next we’ll break down the typical costs in more detail so you can better understand what to expect and budget for.


Medicare Supplement Plan Costs

The primary cost of Medicare Supplements is the monthly premium you pay for the policy. Premiums vary based on your location, insurance company, and the level of coverage.

Some key points about Medicare Supplement premiums:

  • Higher premiums in most states – Usually $100-$300 per month, depending on plan

  • Varies by insurer – Compare quotes from different companies

  • Higher premium for lower deductibles – Plans with lower deductibles have higher premiums

  • Changes by “attained age” – Premiums often increase as you age

The following table provides an overview of estimated national average monthly premiums for Medicare Supplement Plans in 2023, from highest to lowest cost:


Medigap Plan Average Monthly Premium Plan G$221Plan F$213Plan C$203Plan F (high deductible)$144Plan N$140Plan D$135Plan G (high deductible)$120Plan A$109.


Beyond the premium, you’ll still have to pay:

  • The monthly Part B premium (standard amount is $164.90 in 2023)

  • The Part A deductible for hospital stays ($1,600 in 2023)

  • The Part B annual deductible ($226 in 2023) if your plan has it

So when budgeting, factor in the plan premium plus these other costs.


Medicare Advantage Costs

With Medicare Advantage Plans, your main costs come from:

  • Monthly plan premium (many $0 premium plans available)

  • Copays when you receive medical services

  • Coinsurance percentages you pay for covered care

  • Your plan’s out-of-pocket maximum (often $5,000-$6,700)

Here are some key details on how Medicare Advantage costs work:

  • Premiums range from $0 to over $100 on average, depending on plan/coverage

  • You may pay a copay like $10 or $15 to see a primary doctor

  • Coinsurance is usually 20% or less for services like hospital stays

  • The plan pays 100% once you hit the out-of-pocket maximum

  • Monthly Part B premium also required

Advantage plans have limits on your spending through the annual maximum out-of-pocket. But your total costs depend on how much care you need during the year. More doctor visits and services means higher overall costs.


Difference Medicare Advantage and Medigap Plan

Given the differences in cost structure, it can be hard to directly compare “apples to apples” between Medicare Supplement and Medicare Advantage. But reviewing a few sample scenarios can help provide a sense for when one option may be more affordable.


Example #1

  • Medigap Plan G: $250 monthly premium

  • Medicare Advantage HMO: $20 primary doctor copay

If you only visit the doctor once a year, you’d pay $250 for the Medigap option ($250 x 12 months) compared to a $20 copay with Medicare Advantage, making Medicare Advantage the cheaper option.


Example #2

  • Medigap Plan N: $150 monthly premium

  • Medicare Advantage PPO: $400 monthly premium with 20% coinsurance

With 4 doctor visits at $75 each, you’d pay $1800 for Medigap vs. $2400 ($400 x 12 months + 20% x $75 x 4 visits) with Medicare Advantage. In this scenario, the lower premiums and cost sharing with Medigap make it cheaper.


Example #3

  • Medigap Plan F: $250 monthly premium

  • Medicare Advantage HMO: $0 premium with $4000 out-of-pocket max

If you undergo surgery and hit the $4000 max with Medicare Advantage, your total costs would be $4000. With Medigap, you may pay $250 x 12 months = $3000 in premiums plus cost sharing, so Medicare Advantage would likely be cheaper if you max out the $4000 cap.


As you can see, there are scenarios where Medicare Advantage costs less and cases when coverage paired with Medigap has lower overall spending. It depends on your health, Medicare options available, and what plans you’re comparing.


Strategies to Determine Which Option is More Affordable

With the differences between Medicare Supplement and Medicare Advantage costs in mind, what are some of the best strategies to determine which route may be more budget-friendly for your situation?


Consider your expected healthcare needs – If you require frequent medical care and services, the cost sharing discounts from Medigap may add up to less overall. With limited needs, the lower Medicare Advantage premiums could save you money.


Use Medicare Plan Finder – Go to www.medicare.gov to compare estimated plan costs. Input your medications and services to personalize the estimates.


Get quotes – Talk to insurers/brokers to request rate quotes for plans in your area. They can run scenarios to compare options.


Look for extras like dental or vision – Many Medicare Advantage Plans include these benefits which could be cheaper than separate policies.


See if you qualify for financial assistance – People with limited incomes and resources may eligible for programs that reduce Medicare costs.


Compare total estimated spending – Look at the big picture based on your situation, not just premiums or copays in isolation.


Weigh priorities like networks or flexibility – Consider cost in the context of other factors like provider access that may impact plan choice.


Key Takeaways

  • Medicare Supplement Plans typically have higher premiums but less out-of-pocket costs for services.

  • Medicare Advantage Plans have lower or $0 premiums but you pay copays and coinsurance that can add up.

  • Convenient benefits like dental coverage are common with Medicare Advantage, while Medigap covers emergency care worldwide.

  • Shop around and compare total estimated costs, not just premiums, to determine potential savings.

  • Your needs, health status, location, and plan choice impact which option may be affordable.

Both Medicare Supplement and Medicare Advantage have pros and cons. Take time to review both options in detail during open enrollment. Look at the complete picture - premiums, benefits, networks, flexibility, and costs. This will ensure you find coverage suited both your health 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.


FAQs


Is Medicare with a supplement more expensive than a Medicare Advantage?

The cost of Medicare with a supplement and Medicare Advantage Plans can vary depending on various factors such as your location, the specific plan you choose, and your healthcare needs. Generally, Medicare Advantage Plans have lower premiums but may have co-pays and deductibles. On the other hand, Medicare with a supplement (also known as a Medigap Plan) typically has higher premiums but offers more comprehensive coverage.


What is the difference between Medicare Advantage and Medicare?

Medicare Advantage, also known as Medicare Part C, is an alternative to Original Medicare (Medicare Parts A and B) provided by private insurance companies approved by Medicare. It typically includes additional benefits like prescription drug coverage, dental, and vision. Medicare Advantage Plans are required to cover everything that Original Medicare covers, but they may have different cost-sharing arrangements and networks.


Is Medicare Part B included in Medicare Advantage Plans?

Yes, Medicare Part B is generally included in Medicare Advantage Plans. Medicare Advantage Plans must provide at least the same benefits as Medicare Part A and Part B, and many plans also include additional benefits such as prescription drug coverage (Part D) and extra services like dental and vision care.


What is the best Medicare Plan for me?

The best Medicare Plan for you depends on your individual healthcare needs and preferences. It's important to consider factors such as your current health conditions, prescription drug needs, preferred healthcare providers, and budget. You may want to compare different Medicare Advantage Plans and Medicare with a supplement (Medigap) Plans to determine which one offers the coverage and cost that best meets your needs.


Can I have both Medicare Advantage and Medicare Supplement Plans?

No, you cannot have both Medicare Advantage and Medicare Supplement Plans at the same time. Medicare Advantage Plans replace your Original Medicare coverage, while Medicare Supplement Plans work alongside Original Medicare to help cover certain out-of-pocket costs like deductibles, coinsurance, and copayments.


How do I choose between Medicare Advantage and Medicare Supplement Plans?

To choose between Medicare Advantage and Medicare Supplement Plans, you should consider factors such as cost, coverage, provider networks, and your healthcare needs. Medicare Advantage Plans may have lower premiums but may require you to use in-network providers. Medicare Supplement Plans typically have higher premiums but offer more flexibility in choosing healthcare providers.


Does Medicare Advantage cover prescription drugs (Part D)?

Yes, many Medicare Advantage Plans include prescription drug coverage (Part D) as part of their benefits. However, not all plans offer this coverage, so it's important to review the plan details and formulary to ensure your medications are covered.


Does Original Medicare cover everything?

No, Original Medicare (Medicare Parts A and B) does not cover everything. There are gaps in coverage, such as deductibles, coinsurance, and certain types of care like dental, vision, and hearing. That's why many people choose to enroll in a Medicare Advantage Plan or purchase a Medicare Supplement (Medigap) Plan to help cover these additional costs.


Can I buy a Medigap policy if I have a Medicare Advantage Plan?

In most cases, you cannot purchase a Medigap policy if you have a Medicare Advantage Plan. Medigap policies are designed to work with Original Medicare (Part A and Part B) and cannot be used to pay for Medicare Advantage Plan costs.


What are the differences between Medicare Advantage and Original Medicare coverage?

Medicare Advantage Plans combine the coverage of Original Medicare (Parts A and B) with additional benefits such as prescription drug coverage, dental, and vision. These plans may have different cost-sharing arrangements and provider networks compared to Original Medicare. Original Medicare allows you to visit any healthcare provider that accepts Medicare, while Medicare Advantage Plans typically have a network of providers that you must use to receive the full coverage benefits.

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