Medicare Supplement or Medicare Advantage? Which is best for you?

By Cynthia Pruemm

Annual enrollment period for Medicare runs through Dec. 7. You’ve likely heard about original Medicare, or Parts A and B, which provide hospital and medical insurance. And Part D, which provides prescription drug coverage. But what about Medicare Advantage and Supplemental Plans? What do these plans include and who are they for?

Cynthia Pruemm

A Medicare Advantage Plan, also known as Part C, is a government plan that groups Parts A, B and D, while offering additional benefits such as dental, vision or even hearing. These plans are run by private insurance companies that are approved by Medicare. Unlike traditional or original Medicare, most of these plans are HMOs or PPOs and the benefits are delivered directly through the insurers network and rules. Private-Fee-For-Service or Special Needs Plans also are available.

Under a PFFS, beneficiaries usually have flexibility when it comes to hospitals and providers as long as the doctor of hospital accepts the plan’s payment terms. One of the biggest caveats to a PFFS plan is that the plan itself – not Medicare – decides how much it will pay and how much you will pay for services.

As for SNPs, these plans are designed for those with specific health or life situations and there are three main types. Chronic Condition SNP plans are designed for people with certain ongoing illnesses such as diabetes, heart failure or COPD. Dual-eligible SNP plans are for those who qualify for Medicare and Medicaid. The final type, institutional SNP plans, work best for those who live in a long-term care facility or require long-term care.

A Medicare Supplement or Medigap coverage works much differently. These plans provide extra insurance that you can buy to fill in the gaps in original Medicare coverage such as paying for deductibles, coinsurance and copays. Unlike a Medicare Advantage plan, a supplement plan requires you to keep original Medicare as your main coverage. A Medicare Supplement also gives you the freedom to go to any doctor or hospital that accepts Medicare Assignment, which essentially means the provider agrees to take Medicare’s approved amount as full payment for covered treatment. There are 10 Medicare Supplement plans that are standardized, making it easier for you to compare premiums across various providers.

With so many options available, how can you determine whether it's best to enroll in original Medicare and add a Medicare Supplement plan or opt for a Medicare Advantage plan?

The obvious answer is that it depends on your individual situation; however, there are a few other aspects that can help indicate which plan might be best for you.

For example, since a Medicare Supplement plan has 10 standardized plans, pairs with original Medicare coverage, allows you to visit providers in any network and doesn’t require a referral, someone who travels frequently or lives in another state for part of the year may want to take this route. Some Medigap plans even provide emergency medical care coverage outside of the United States. So if you travel outside of the country, this might be a better option. These plans do not change from year to year.

However, if you’re someone who is looking for an “all-in-one plan,” predictable costs, doesn’t mind staying within a specific provider network or is generally healthy, a Medicare Advantage plan might be a better fit. It is important to note that these plans change each year.

For clients who are choosing between an Advantage Plan versus a Supplement Plan, I always tell them to consider the following:

Are your doctors/preferred hospitals in-network?
How often do you see your doctor?
Are your medications covered?
Do you have any upcoming surgeries or procedures?
How often do you travel?

Choosing the right health coverage is a decision that should not be made lightly or quickly. If you’re enrolling in Medicare for the first time, consider speaking with a financial professional who can help guide you through the different options as they relate to your specific situation.