Medicare Supplements and Medicare Advantage plans are very different and this is maybe the most asked question we receive. So what is the difference between a Medicare Supplement (Medigap) and a Medicare Advantage plan? It’s actually very easy to boil it down and we are going to keep it relatively high-level and simple here.
Medicare Supplements
A Medicare Supplement is a secondary policy that you purchase to cover the deductibles and copays that Original Medicare has. Your doctor bills Medicare first, then bills your Supplement. Depending on which plan you have, you may have no financial responsibility or limited responsibility. There are several different plans, but the most popular are the F, G and N. The benefits of these plans are standardized by the government, which means that no matter what insurance company you buy the plan from, you get the same exact benefits. Supplements do not have networks of doctors, so you are free to see any doctor in the U.S. that accepts Medicare and will have the same coverage.
Typically, but depending on your plan, you will have no charges at the hospital or doctor, or will only pay the Part B deductible then be covered 100%.
Medicare Advantage w/ Prescription Drug Plans (MAPD)
Medicare Advantage plans bundle your Part A (hospital & skilled nursing), Part B (outpatient services) and Part D (drug coverage) into one plan. These plans are commonly called “Medicare Replacement plans” because it is Medicare’s coverage outsourced to private insurance companies. You are still enrolled in the Medicare program, but Medicare no longer pays your claims or provides benefits; your insurance company does. They must cover all services that Medicare covers, but can set the rules for how you access your care, like having networks of doctors and copays for all visits and services. Insurance companies can create different plans and make the copays whatever they want, although the copays are typically reasonable and customary. So there are many plans that all have different benefits.
With a Medicare Advantage plan, your monthly premium will be lower than a Supplement, but you will always have some level of cost associated with every visit and service you receive. Each plan has a maximum-out-of-pocket, so there is a cap to your annual financial responsibility.