What is the Difference Between a Medicare Advantage Plan and a Medicare Supplement Plan?

May 7, 2021
Posted in Medicare
May 7, 2021 Jonathan Nolan

What is the Difference Between a Medicare Advantage Plan and a Medicare Supplement Plan?

Retirement is one of those times in life for which you cannot over-prepare. For many years you probably focused quite a bit on saving a nest egg and strategizing to receive the most Social Security benefits possible. But because the cost of healthcare is often the most significant cost faced by retirees, understanding your Medicare options is crucial to establishing a satisfactory budget in retirement.

Having said that, many people are not aware of all their different options with regard to Medicare. We tend to assume that we’ll turn 65, sign up for benefits, and then receive healthcare services. But that’s not exactly how it works. Medicare doesn’t actually cover 100 percent of your healthcare costs, and you can choose from many different plans to help manage those expenses.

For example, one of the first choices you will make involves Original Medicare (possibly with the addition of a Supplement Plan) versus Medicare Advantage.

Original Medicare plus a Supplement Plan. Original Medicare, or parts A and B, provide for much of your healthcare needs but certainly not everything. That’s why many enrollees also elect a Supplement Plan. A Supplement Plan, often called Medigap, simply covers some of the costs that are not covered by Original Medicare.

For example, your Supplement Plan might kick in to cover co-payments, deductibles, Medicare Part B excess charges, or emergency services when traveling outside the country. In exchange for one monthly premium, you can reduce unexpected expenses and usually keep your budget more predictable. Supplement Plans can be used only with Original Medicare, and if you need a prescription plan (Part D) you must enroll in that separately.

Medicare Advantage. Medicare Advantage plans are provided by private health insurance companies as an alternative to Original Medicare, but these plans must meet certain minimum standards (and you’re technically still enrolled in Medicare). These plans combine Parts A and B, and sometimes offer additional coverage such as a prescription drug plan. You will still be subject to certain premium amounts, along with co-payments and deductibles according to the plan. Some prefer Medicare Advantage because they find it easier to understand the benefits offered under on plan, and feel that their budgets are more manageable this way.

With Medicare, there is no single plan that is best for everyone. Your decision will depend upon your budget, healthcare needs, and personal preferences. If you need help comparing plans and understanding the differences between them, contact us and we’ll be happy to help.


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