Medicare Supplement Insurance (also called Medigap) and Medicare Advantage plans (Medicare Part C) are two very different private Medicare options that you may consider.
This guide highlights the differences between Medicare Supplement Insurance and Medicare Advantage so you can better understand these two private Medicare coverage options.
You can compare the different types of Medicare plans to find the best type of coverage for your needs.
Both Medicare Supplement Insurance and Medicare Advantage plans are private Medicare options sold through individual insurance companies.
The primary difference between these types of insurance:
You cannot have a Medicare Advantage plan and a Medicare Supplement Insurance plan at the same time.
|Medicare Advantage||Medicare Supplement Insurance|
|Availability||3,550 different plans available nationwide in 20211||10 standardized plans available in most states, though all 10 may not be available to you in every state|
|Eligibility||Available to beneficiaries enrolled in Original Medicare who live in the plan’s service area||More widely available to people over age 65 in some states, though younger people can be eligible to apply for a plan depending on where they live|
|Enrollment||Initial Enrollment Period, Medicare Annual Election Period and Special Enrollment Periods. No medical underwriting required||
Enrollment is year-round, but enrolling during your Medigap Open Enrollment Period or during a period when you qualify for a guaranteed issue right can be beneficial
Medical underwriting may be utilized if not applying for a policy during your Medigap Open Enrollment period or when you have a guaranteed issue right
|Popularity||Over 24 million Medicare beneficiaries1||14 million Medicare beneficiaries2|
|Coverage of Medicare out-of-pocket costs||No coverage of Original Medicare out-of-pocket costs, but MA plan out-of-pocket costs may be more affordable than what Original Medicare includes||Coverage for Medicare Part A and B deductibles, copayments and coinsurance (depending on the plan)|
|Additional health benefits not found in Original Medicare||Can offer additional benefits, such as dental, vision, hearing and prescription drug coverage, among other benefits||No additional benefits to what Medicare offers, except for qualified emergency care received outside of the U.S.|
When you use Medicare Part A or Part B benefits, you’ll often be left with some out-of-pocket expenses like deductibles, coinsurance or copayments. This is known as “cost sharing.”
That’s where Medicare Supplement Insurance comes into play. As the name implies, this type of plan is used alongside your Original Medicare coverage.
Here are a few examples of how a Medigap plan can work:
There are nine potential benefits that can be covered by the 10 standardized Medicare Supplement Insurance plans sold in most states (Massachusetts, Minnesota, and Wisconsin have different standards).
|Medicare Supplement Benefits||A||B||C1||D||F1||G||K||L||M||N|
|Part A coinsurance and hospital costs||✓||✓||✓||✓||✓||✓||✓||✓||✓||✓|
|Part B coinsurance or copayment||✓||✓||✓||✓||✓||✓||50%||75%||✓||✓|
|First 3 pints of blood||✓||✓||✓||✓||✓||✓||50%||75%||✓||✓|
|Part A hospice care co-insurance or co-payment||✓||✓||✓||✓||✓||✓||50%||75%||✓||✓|
|Co-insurance for skilled nursing facility||✓||✓||✓||✓||50%||75%||✓||✓|
|Medicare Part A deductible||✓||✓||✓||✓||✓||50%||75%||50%||✓|
|Medicare Part B deductible||✓||✓|
|Medicare Part B excess charges||✓||✓|
|Foreign travel emergency||80%||80%||80%||80%||80%||80%|
|1. Plans C and F are not available to new beneficiaries who became eligible for Medicare on or after January 1, 2020.
2. Plans F and G also offer a high deductible plan which has an annual deductible of $2,370 in 2021. Once the annual deductible is met, the plan pays 100% of covered services for the rest of the year. The high deductible Plan F is not available to new beneficiaries who became eligible for Medicare on or after January 1, 2020.
3. Plan K has an out-of-pocket yearly limit of $6,220 in 2021. Plan L has an out-of-pocket yearly limit of $3,110 in 2021.
4. Plan N pays 100% of the Part B coinsurance, except for a copayment of up to $20 for some office visits and up to $50 for emergency room visits that don’t result in an inpatient admission.
View an image version of this table.
Each type of plan offers partial or full coverage for a different combination of these benefits.
Medicare Advantage plans are a type of private Medicare insurance that offers all of the same benefits as Original Medicare.
Most Medicare Advantage also offer benefits that are not covered by Original Medicare.
These additional benefits can include things like:
Benefits and plan availability can vary from plan to plan. Be sure to check with your plan’s Explanation of Coverage to find out exactly what is covered.
A licensed insurance agent can help you compare Medicare Advantage plans in your area, including the benefits they offer.
Some potential benefits of having a Medicare Advantage plan include:
Some potential downsides of a Medicare Advantage plan can include:
Whether or not a Medicare Advantage plan is a good fit for you will depend on your personal health care and budget needs.
Here are a few examples of how a Medicare Advantage plan can work (remember that benefits and network restrictions can vary from plan to plan):
There are 3,550 Medicare Advantage plans available around the U.S. in 2021.1
In 2021, over 24 million Medicare beneficiaries are enrolled in a Medicare Advantage plan.1
A similar number of Medicare beneficiaries (14 million) are enrolled in a Medicare Supplement Insurance plan.2 However, Medicare enrollment is growing overall, as is Medicare Advantage plan enrollment.
With the two types of insurance being nearly equally popular among Medicare beneficiaries, how do you choose which type of coverage is right for you?
Here are a few factors you can consider when deciding.
The average monthly premium for a Medicare Advantage plan in 2021 is $33.57.3
You’ll also still pay your Medicare Part B premium in addition to your Medicare Advantage plan premium.
The average monthly premium for a Medicare Supplement Insurance plan in 2019 was $125.93.4
Some people may choose to enroll in a Medicare Supplement Insurance plan so they can save money on their out-of-pocket Medicare costs. Medicare Supplement Insurance is accepted by any health care provider who also accepts Medicare.
Some people may choose to enroll in a Medicare Advantage plan because the premiums are typically lower than Medigap plan premiums, or because they are drawn to the additional benefits many Medicare Advantage plans offer.
In the end, it all depends on the type of health care you need and the manner in which you expect to use your insurance.
It may help to have a conversation with a licensed insurance agent who can review your medical needs and help you decide which type of plan might be most beneficial for your situation.
Deciding between these two types of plans can also boil down to what your needs are.
If so, you might consider the benefits of enrolling in a Medicare Advantage plan.
If so, certain types of Medicare Advantage plans might be a good choice for you.
A licensed insurance agent can help learn about the Medigap plans that are sold in your area.
Learn about Medigap plans in your areaVisit MedicareSupplement.com
1 Fuglesten Biniek, J. et al. (Oct. 29, 2020). Medicare Advantage 2021 Spotlight: First Look. Kaiser Family Foundation. Retrieved from https://www.kff.org/medicare/issue-brief/medicare-advantage-2021-spotlight-first-look.
2 AHIP. (June 2020). State of Medigap: Trends in Enrollment and Demographics. Retrieved from https://www.ahip.org/wp-content/uploads/AHIP_State_of_Medigap-2020.pdf.
3 MedicareAdvantage.com's The Best States for Medicare in 2021 report. (Oct. 27, 2020).
4 TZ Insurance Solutions LLC internal sales data, 2019. This data is based on the Medicare Supplement Insurance policies TZ Insurance Solutions LLC has sold. It is not a comprehensive national average of all available Medicare Supplement Insurance plan premiums.