Medicare Supplement Insurance vs. Medicare Advantage Plans – Which Is Best?
If you are currently enrolled or soon to be enrolled in Medicare, you usually have just two insurance choices to close/minimize the gaps in this government insurance program: Medicare Supplements or Medicare Advantage plans.
It’s a good idea to choose one or the other as Original Medicare has several benefit gaps with open-ended expenses. Either of these two choices will close these gaps and reduce your out-of-pocket exposure to a known amount.
Comparing Medicare Part C (Advantage) Insurance
Part C is the generic term that includes all privately sold Medicare Advantage plans available for purchase. Your county of residence will determine which Advantage plans are available for enrollment. These are sometimes referred to as MA or MAPD plans for short. (The PD stands for prescription drug.)
Medicare Advantage plans are private insurance programs offered by providers like Aetna, Anthem BCBS, Cigna, Devoted, Humana, Medical Mutual, United Healthcare, among many others. These same insurance companies will also offer Medicare supplements, but you can’t have both. It’s one or the other.
When you compare Medicare supplements to Medicare Advantage (MA) plans, you are simply trying to determine a suitable and affordable way to cover the insurance gaps not covered by Original Medicare Parts A & B. There are pros and cons to both.
Comparing Medicare Supplements to Advantage Plans
| Feature | Medicare Supplements (Medigap) | Medicare Advantage (Part C) |
|---|---|---|
| Monthly Premiums | Higher Predictable Costs • Fixed monthly premiums • Comprehensive options: Plan F, G, or N • Premiums usually increase yearly |
$0 or Very Low Premiums • Lowest upfront monthly expense • Plan cost varies by your county • $0 plans becoming less common |
| Maximum Out-of-Pocket Exposure, Deductibles, and Copays | Minimal Out-Of-Pocket Costs • Most medical gaps are covered completely • Maximum yearly costs are a few hundred dollars with Plans F, G, or N • Small Deductible and low or no copays |
Much higher Potential Costs • Deductibles, copays, and coinsurance add up quickly • Out-of-pocket maximums can approach $14,000 • Higher in-network costs |
| Doctor & Hospital Choice | Complete Freedom • See any doctor that accepts Original Medicare – no PPOs or HMOs • No changing networks, restrictions, or specialist referrals needed • No networks with Supplements |
Network Restrictions • Must use HMO/PPO plan networks for lower costs • Out-of-network care costs more or isn’t covered at all • Preauthorization requirements |
| Prescription Drugs (Part D) | Purchased Separately • Stand-alone Part D Drug plan tailored to your specific prescriptions • Can change your Part D yearly |
Bundled Together • Most plans include Part D drug coverage automatically • Can’t buy seperate Part D plan |
| Plan Flexibility | Significant Freedom • Plan travels with you out-of-state • Switch Medigao plans anytime (subject to medical underwriting) • No yearly open enrollment window |
Lock-in Periods • Bound to plan for calendar year • Drop/switch rules restricted to Open Enrollment and SEPs • Benefits change yearly |
| Extra Benefits | Basic Medical Only • Fewer extras besides gym discounts (SilverSneakers or Renew Active) • Some discount dental & vision plans |
Better Added Perks Included • Dental, vision, hearing, and transportation perks • Meidare Part B Reimbursements |
Medicare Premiums, Out-Of-Pocket & Plan Flexibility
It is difficult to compare monthly insurance premiums versus potential out-of-pocket costs. If you remain in good health, a low-cost Advantage plan will be the least expensive choice overall. However, if you have regular health issues or a significant incident, an Advantage plan can have much higher out-of-pocket expenses when compared to a Medicare supplement like Plan F, G or N.
Furthermore, once your one-year trial period is up, you may be unable to switch back to a traditional supplement if you have certain preexisting conditions. Most Medicare supplement providers require medical underwriting if you have been enrolled in an Advantage plan for over one year. In other words, you can be declined coverage. Additionally, it can be difficult to disenroll from a MA plan outside of the Oct.15th through December 7th Open Enrollment window each fall.
In fairness, there are states like Florida where Medigap rates can be higher than in most other states. And regardless of out-of-pocket expenses, some consumers cannot afford both a Medicare supplement and a stand-alone Part D plan. For these folks, an Advantage plan can be the most suitable option as many are offered at $0 per month.
Medicare Advantage Networks – Doctors and Hospitals
One important difference between supplements and MA coverage is the network options. Unlike almost all supplements, MA plans have a network of doctors, hospitals, and medical facilities that the insured is required to use for service. All plans cover out-of-network emergencies, however. It’s important to keep in mind that these medical situations must be coded as a true emergency to be covered.
Other problems arise when specialists are needed for a consultation – or if the insured is admitted to a rehabilitation or other medical facility that is out of the provider network. It’s not that the insured cannot see these professionals or use the facility, but the Advantage plan may provide little reimbursement, if any at all. This can lead to significant out-of-pocket expenses.
Prescription Drug Part D Rx Coverage
This is an area where MA plans tend to be more beneficial to the insured. Current laws allow insurance companies to package Advantage plans and Part D coverage together. Not all MA plans combine Parts C and D together, but many do as an incentive to the consumer. And many of these combination MAPD plans can be found for under $50 a month. Quite a few are as little as $0 a month.
Conversely, Medicare supplements and prescription Part D coverage must be sold separately by law. There was a time when the two plans could be purchased together, but past regulations separated the two. Many companies offer both supplemental and Part D, but they cannot be purchased together. And it’s wise to shop them independently of one another.
This means that Part D plans will come at an additional cost for those who want a traditional Medicare supplement. Part D premiums will vary, but plans that fit most consumers cost between $0-$30 a month. The plan that’s most suitable depends on what prescriptions the insured takes. Even if there are no Rxs, it’s wise to have a plan to avoid the lifetime Late Enrollment Penalty.
What Is The Future For Medicare Advantage Plans?
It’s hard to say. Health care reform is always evolving. Medicare supplements are here to stay, but Advantage plans seem to fall in and out of the political cross-hairs. At present, the popularity of Medicare Advantage plans seems to be waning.
Congress recently made significant updates to the Part D program. This shifted more costs to insurance companies. As a result, Medicare Advantage plans have rolled back some benefits, increased in- and out-of-network maximums, and shifted from PPOs to HMOs. These trends don’t bode well for consumers at present. And there always seem to be ongoing network negotiations. There are no guarantees your preferred doctors and hospitals will be in-network from one year to the next.
(It is important to note that if your MA insurance company leaves your service area or discontinues coverage, you will receive an open enrollment window when you can purchase some supplements (or a new MA plan if one exists) without any required medical underwriting.)
Which Medicare Plan Do Most People Choose?
We get this question a lot. Othertimes, our clients ask us which type of policy we, as brokers, prefer between Medicare Supplements and Advantage Plans?
Whether they say it or not, most agents seem to have a bias. Our job is to educate and remain neutral. That being said, we see more of our clients choose Medicare Supplements than Advantage plans. Usually, this is for reasons like flexibility and known out-of-pocket exposure.
And when we polled our brokers and asked them which insurance plan they would choose for themselves. The answer was overwhelmingly in favor of Medicare Supplements like Plan G, N, and High Deductible Plan G. Their reasons? These plans are more predictable, easier to navigate, and have not fluctuated as much with all of the changing legislation in healthcare.
Contact Us For Quotes And Coverage
In summary, there is no one-size-fits-all plan for Medicare consumers. While more of our clients tend to purchase Medicare supplements, many are also very content with Advantage plans. We do both and will help you narrow down your choices to the policies that look suitable for your current needs and budget.
Hyers and Associates is an independent insurance agency serving several states nationwide. We work with the leading Medicare insurance providers to help our clients compare their options and enroll in coverage directly – at no additional cost.
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Category: Medicare Advantage, Medicare Supplements
Last updated on May 19th, 2026