Medicare Advantage vs. Medicare Supplement Plans – Which is Best for You?

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Science / Health

Regarding your health insurance, it’s essential to understand the different available plan options. Medicare Advantage and Medicare Supplement plans offer health insurance for people 65 years or older. The key difference is that Medicare Advantage plans offer various levels of health insurance through private companies, while Medicare Supplement plans only offers basic coverage.

What’s Covered?

Medicare Supplement plans are designed to cover the gaps in Original Medicare coverage that you may have. They help cover deductibles, co-payments, co-insurance, and more. All Medicare supplement plans cover the same things, but not all of them extend coverage to the same extent.

Medicare Advantage plans offer prescription drug coverage and often have lower out-of-pocket expenses than Medicare supplement plans. However, they typically have a higher monthly premium. Medicare Advantage plans provide all these benefits and extra benefits like dental and vision coverage. They can also offer you prescription drug coverage at a low cost or no cost!

What Are the Costs?

Premiums

Medicare Advantage plans have higher premiums than traditional Medicare, but they often include additional benefits like dental, vision, hearing, and other services that can help offset those costs. The average monthly premium for a Medicare Advantage plan in 2022 is $25.

Deductibles

Deductibles are another cost factor when comparing Medicare Advantage vs. Medicare Supplement plans. When you enroll in traditional Medicare Part A or Part B, there’s no deductible — you pay nothing until you hit your out-of-pocket maximum. But with a Medicare Advantage plan, you’ll typically have to pay an annual deductible before your coverage kicks in (there may be exceptions depending on your plan). The high deductible plan for 2022 is $2,340.

Cost Sharing

Medicare Advantage Plans have a deductible, but unlike regular Medicare, they also have an out-of-pocket maximum (OOPM). This means that once you’ve met your deductible, you will not be responsible for additional costs until the end of the year. With a Medicare supplement plan, you must pay co-insurance and spend on all services until you reach your OOPM limit.

Out of Pocket Maximums

Medicare Advantage Plans have an out-of-pocket maximum (OOPM), the most money that can be spent on health care expenses before paying 100% of covered services. Most plans have an OOPM of $5,091 per person in 2021; however, some supplement plans may have an OOPM as low as $3,110 or as high as $6,220.

How to Choose Between Medicare Plans

Medicare Advantage is a type of plan run by private companies, but Medicare still approves it. Medicare Supplement plans are sold directly to you and offer additional coverage beyond what Medicare offers.

Flexibility

If you have a chronic condition or other ongoing health care needs, you may want more flexibility than traditional Medicare offers, and that’s where Medicare Advantage plans come in. If flexibility is important to you, then choosing a Medicare Advantage plan might be right for you because it allows you to see any doctor who accepts your health plan without having to get prior approval from your primary care doctor first (as long as they’re part of your network).

Predictability

With traditional Medicare coverage, there are no limits on how much you’ll pay out of pocket each year for medical bills — which means you could end up paying thousands of dollars more than expected if you get sick or injured. However, with a Medicare supplement plan, Medicare pays first with your supplemental plan, paying any co-insurance or deductibles that aren’t covered by traditional Medicare benefits (Medigap).