Medicare Advantage vs. Medicare Supplement plans

See how your options impact your out-of-pocket costs

Out-of-pocket costs are a big issue when it comes to choosing a Medicare plan. No plan pays for everything. Premiums, copays and deductibles are usually paid directly by members. Let’s take a look at how your plan options may impact what you’ll need to pay out of pocket for your healthcare.

How Original Medicare works

Original Medicare does not include coverage for prescription drugs or routine dental, vision and hearing care. If you choose Original Medicare, you can pay for those things out of pocket, or you can purchase a stand-alone prescription drug plan and a Medicare Supplement plan to beef up your coverage. These added plans help reduce your out-of-pocket costs, although you’ll pay a separate premium for each.

  • Medicare Part A helps cover hospital care, skilled nursing facilities, and some home health services. Most people who paid Medicare taxes while working don’t have to pay a monthly premium for Part A.
  • Medicare Part B helps cover medical services including doctor’s visits and preventive services. The 2019 monthly premium for Part B is $135.50, which can be deducted from your Social Security payments. (Higher-income earners pay more.)
  • Medicare Part D helps cover prescription drug costs. Costs for Part D depend on things like the plan you choose and what type of prescription drugs you require.
  • Medicare Supplement (Medigap) plans can help pay out-of-pocket costs that Medicare doesn’t, including copays, deductibles and co-insurance.*

How Medicare Advantage plans work

Medicare Advantage (MA) plans (also known as Medicare Part C) combine doctor, hospital and, in many cases, even drug coverage into one plan. Most MA plans also include coverage for routine dental, vision and hearing care, as well as other services. These plans are offered by private insurers who contract with the federal government. They are required by law to provide—at minimum—all the benefits of Original Medicare, with the exception of hospice care.

While you can’t add a Medicare Supplement plan to a Medicare Advantage plan, the added benefits MA plans provide help make up the difference when it comes to out-of-pocket costs. One great feature is the security of an annual limit on out-of-pocket costs, after which you pay nothing for covered services.

Medicare Advantage is growing in popularity

The trend is undeniable. Between 2008 and 2018, Medicare Advantage enrollment grew from 9.7 million, or 22% of all Medicare beneficiaries, to nearly 20.4 million, or 34% of Medicare beneficiaries.1

By 2028, more than 41% of Medicare members are expected to choose Medicare Advantage plans.2

*Costs for Medicare Supplement plans vary by the state you live in and the plan you choose. Medicare Supplement plans can only be paired with Original Medicare.

Sources

  1. “A Dozen Facts About Medicare Advantage,” Gretchen Jacobson, Anthony Damico, and Tricia Neuman, Kaiser Family Foundation, last accessed June 2019, kff.org/medicare/issue-brief/a-dozen-facts-about-medicare-advantage/, opens new window
  2. “4 in 10 Medicare beneficiaries expected to be on Medicare Advantage plans by 2028,” Eli Richman, last accessed June 2019, fiercehealthcare.com/payer/4-10-medicare-enrollees-expected-to-be-medicare-advantage-by-2028, opens new window

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