A Side-by-Side Comparison of Medicare Advantage and Medicare Supplements
When it comes to Medicare, you only have two big options. That’s it.
The piles of mail you’ve been receiving from various agents as you approach 65 do not represent hundreds of choices. There are only 2 ways to get your Medicare coverage.
First, I hope you have already signed up for Medicare (If not, hop on over to our blog titled “What Is the Fastest Way to Sign Up For Medicare? to take care of that, then come back and read the rest of this!).
The first way is just to stick with original Medicare—Parts A and B. Then you need what is known as Medicare Supplement Insurance, named as such because it “supplements” Medicare, filling in the gaps of what Medicare doesn’t cover.
The other option, however, is to get a Medicare Advantage Plan. This is an alternative to Original Medicare provided through private insurance companies that have contracted with Medicare. Although you still have to sign up for Parts A and B to be eligible, this replaces Medicare as the primary payer of your claims.
Choosing one or the other comes down to what’s most important to you. You can’t have both! What I am going to do is hold both of these options up to the light, side-by-side, so you can see clearly the strengths and weaknesses of each.
Check it out:
- Minimal Out-of-Pocket Spending
You won’t have much coinsurance or copays with a Supplement. Most of it is covered.
They are also fairly consistent from year to year. They do creep up in premium (see our blog “Beat the Medicare Supplement Creep”, but they rarely leap! The benefits are guaranteed to stay the same.
- Out-of-State Coverage
Supplements cover you the same whether you are in your home state or out. Vacation homes? Extensive trips? No big deal. You’re covered.
- No Networks
You are free to use any doctor or hospital that accepts Medicare without sacrificing your coverage.
- Higher Premium
An in-the-ballpark average Supplement price is about $110 per month premium. This is higher than most Advantage Plans.
- No Drug Plan
Drug plans are not built in. You have to get a stand-alone drug plan, which cost an average of $34.10 per month in 2016.
- High Out-of-Pocket Spending
Advantage plans have more of a pay-as-you-go approach. Higher copays, coinsurance, and unexpected costs are common.
Since Advantage plans are funded by government subsidy, benefits and premium costs tend to vary from year to year as a result.
- Out-of-State Coverage…Sometimes
Only in the case of emergency will you receive coverage out of your home state. Other than that, you’re on your own.
They have them…networks of preferred hospitals and doctors. If you don’t use those preferred providers, you might have less coverage or—depending on the plan—no coverage at all.
- Low to No Premium
The average premium is somewhere around 60 dollars a month. Some are even free!
- Built-in Drug Plan
The vast majority of Advantage plans include a drug plan. No hassle or extra premium for you!
As you can see, the Medicare Supplement route is more costly, but there are a lot of benefits that give you more peace of mind and—all in all—less hassle.
On the other hand, the Medicare Advantage route is more economic, but it has fewer benefits, leading to unexpected costs and stress.
But both do their jobs. They both limit the potentially high out-of-pocket spending that is left by Medicare alone. Whatever you choose, don’t leave yourself vulnerable. Medicare alone is never a good idea!
Turning 65 soon and not sure what to do? Click here to sign up for our free Medicare workshop. No high-pressure sales pitches here, just in-depth discussion about the ins and outs of Medicare!