Choosing between a Medicare Advantage plan and a Medicare Supplement (Medigap) is a very personal decision, but the following example may help identify some of the important issues surrounding these two different types of coverage.
I am paying over $300 a month for my ever-increasing Medicare Supplement premium plus another $35 a month for my Medicare Part D prescription drug coverage – before even buying any prescriptions. I originally joined a Medicare Supplement because my health was not very stable: I am an adult diabetic with several other medical conditions and I see a number of regular doctors (and specialists) in my area, most of whom I have visited for years. Unfortunately, with inflation and economic changes, things have gotten financially tougher for me, although I am not eligible for Medicaid or the Medicare Part D Extra Help
program. So, can I save money by enrolling in a Medicare Advantage plan that has prescription drug coverage and a low or no monthly premium?
The Short Answer:
You may save on monthly premiums by enrolling into a Medicare Advantage plan over a Medicare Supplement, but the far larger cost will be the actual “costs” that you are paying for your healthcare coverage - and this cost will depend on your chosen Medicare Supplement
or your Medicare Advantage plan - and the healthcare you need throughout the year. In addition, the decision will depend on whether your chosen healthcare providers are part of your Medicare Advantage plans healthcare network - or whether you are willing to see other doctors who are network providers.
(1) Reminder: Medicare Advantage plans are not the same as Medicare Supplements
Medicare Advantage plans
administer or implement your Original
Medicare Part A and
Part B coverage. Medicare Advantage plans must offer coverage at least
as good as your Original Medicare and often add additional benefits like
Medicare drug coverage, non-health related supplemental benefits,
vision, dental, hearing and/or wellness programs (such as
Silver Sneakers). Medicare Advantage coverage benefits are not
standardized and vary from company-to-company and even county-to-county
(or Zip Code area) for the same company. Medicare Advantage plan cost
and coverage changes every year
(Medigap policies) are designed to work
your Original Medicare, filling the “gaps” (deductibles and copayments)
in your Medicare Part A (in-patient or hospital insurance) and Medicare
Part B (out-patient or physician insurance) coverage. Medicare
Supplements are standardized across most of the country (Medigap Plans
C, E, F, H, I, or J still exist, but are not available to new
beneficiaries) - some states do not offer the same variations of Medicare Supplement plans
that are not offered across the country (such as, Massachusetts, Minnesota, and Wisconsin).
(2) Medicare Advantage plan premiums are usually lower than Medicare
Supplement premiums (sometimes $0 - or even less because of Part B refunds or givebacks)
Of the thousands of Medicare Advantage plans offered each year
(5,377 in 2024), many of Medicare Advantage plans have a low or $0
premium and also include prescription drug coverage (depending on the
area of the country) - and some Medicare Advantage plans in certain
areas of the country have a $0 premium and "giveback"
a portion of your Medicare Part B premium.
What Medicare Advantage plans are available in your area?
If you use our Medicare Advantage Plan Finder (MA-Finder.com
the Medicare.gov Plan Finder site, or telephone Medicare
at 1-800-Medicare (1-800-633-4227) or call or visit a SHIP volunteer, you can get a complete overview of the Medicare
Advantage plans available in your area.
For this example, we will use Summit County, Ohio
(Zip 44319) where you would find a number of Medicare Advantage plans
available (119 in 2024). Of these plans, many have a $0 monthly premium
and include Medicare Part D prescription drug coverage. You may also
find that some Medicare Advantage plans in your area are Special Needs
) - especially designed for low-income people or people with specific chronic health conditions (such as Diabetes).
(3) What are other important costs to consider with either plan?
Finding a Medicare plan with a low premium is only the first step
and starts the decision process when comparing coverage options.
-- Is Medicare Part D prescription drug coverage included?
-- What are you paying for healthcare cost sharing: Copays and Coinsurance?
You will pay anywhere from about $10 to over $100+ to add Medicare
Part D coverage to your Medicare Supplement - depending on the drug
plans that are available in your area. You can use our Medicare Part D
Plan Finder (PDP-Finder.com
) to see all of the stand-alone Medicare drug plans in your area.
Also be sure to check: Are all your medications
covered and at what cost? Does the drug plan include additional Donut Hole coverage
or a lower-cost mail order
option? Are there any Usage Management restrictions
for your medications such as needing prior authorization or quantity limits per month?
In our example, we have someone with several chronic conditions
requiring visits to multiple healthcare providers (and specialists) and
this person should consider the costs to visit a doctor, hospital, or
specialist. You will need to refer to the details of your Medicare
Supplement as compared to a Medicare Advantage plan to see how
cost-sharing differs. The table below offers only an example of how
different plans cover healthcare costs.
|$40 (authorization required)
|$295 per day (days 1-7)
($0 Rx deductible)
out of network)
|$50 ($50 Out of Network)
||$490 per day (days 1-4)
($250 Rx deductible)
*There are no “Out-of-Pocket Maximums” for Medicare Supplements A
through J, however, by design, these Medicare Supplement plans provide
coverage for 100% of most Medicare Cost-Sharing. Remember:
A Medicare Advantage plan's maximum out-of-pocket limit (MOOP) may exclude some of your Part A and Part B healthcare costs
Following our example, the Medicare Supplement may cost more per month
in premium, but the Supplement also may be less expensive in the long
run given the health of our example beneficiary.
Be sure to sit down with a calculator and, based on
last year’s experience, estimate your cost with either a Medicare
Supplement or Medicare Advantage plan.
(4) Are your doctors, specialists, and hospitals in the plan's network?
Probably the most important factor for many people is whether their
regular doctor (or set of doctors) and local hospital accepts their
chosen Medicare Advantage plan and to know what it costs (or the
procedures necessary) to see a healthcare provider outside of the plan's
network. For example, some Medicare Advantage plans will not cover non-emergency, out-of-network healthcare
without prior authorization - and out-of-network healthcare may be
excluded from your plan's maximum out-of-pocket spending limit (MOOP
) or you may have a higher out-of-network MOOP.
When in doubt, call your doctors’ offices and
hospital to confirm that they will accept your new Medicare health
coverage or ask them which Medicare Advantage plans they do accept - and
understand that a Medicare Advantage plan's healthcare network can
change at any time throughout the year.
In our example, the choice of doctors is probably the most important
consideration. If the person is unwilling to change doctors or
specialists, then they probably do not want to move from their Medicare
Supplement - or will need to confirm that their current healthcare
providers are within the Medicare Advantage plan's network.
(5) What are some other important considerations when considering plan options?
The company reputation and Medicare star rating
(out of five stars) is important to review. The Medicare ratings will
give you any idea of what you can expect with your newly chosen
insurance provider. Also, as noted, some Medicare Advantage plans also
offer additional services
like vision care, dental services, non-health related supplemental
benefits, and wellness programs - and these programs are usually beyond
coverage usually offered by Medicare.
: Our example Medicare beneficiary may save money on
monthly premiums by switching from their Medicare Supplement and
Medicare Part D plan to a Medicare Advantage plan with a drug benefit
(MAPD) – but… our example person may also sacrifice the freedom of
choosing their own doctors and lose the predictability of accurately
estimating their annual total healthcare costs.
Also see: Can I join a Medicare Advantage plan if I already have a Medicare Supplement?