Key Differences Between Medicare Advantage and Medicare Supplement

Medicare Advantage and Medicare Supplement plans are very popular because they offer more options and flexibility than original Medicare coverage.
By Tanya M.
Updated May 23, 2022
key differences medicare advantage medicare supplement
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If you're new to Medicare or you want to find out how you can reduce your out-of-pocket expenses and maximize your overall coverage via Medicare Plans, you'll want to learn more about Medicare Advantage and Medicare Supplement coverage.

These two plans are unique and are not the same as the original Medicare. They are additional policies that extend coverage and provide more security. Private companies offer them and have specific use requirements and premiums.

Medicare Advantage and Medicare Supplement plans are very popular because they offer more options and flexibility and help protect you from financial issues resulting from instances where your original Medicare doesn't provide coverage.

What is Medicare Advantage?

Medicare Advantage Plans are sometimes referred to as Medicare Part C or even as MA plans offered by approved Medicare providers. These private companies offered combinations or bundles of Medicare options such as hospital insurance covered under Part A or Part B, which is Medicare medical insurance. In addition, they also offer Part D, which is the prescription plan provided by Medicare. 

Medicare Advantage Attributes

The Medicare Advantage Plan is so attractive because it offers coverages that regular Medicare beneficiaries wouldn't receive. The Medicare Advantage Plan also has specific attributes, including the following.

  • Various out-of-pocket expenses

  • Specific rules for services

  • In-network requirements

Although some consider these drawbacks, they can counteract those minor drawbacks with plenty of additional benefits not offered by traditional Medicare benefits, including the following. 

  • Customized packages for treatment needs

  • Specific coverage for wellness services

  • Potential transportation coverage

  • May cover OTC drugs

While some may find direct coverage plans through Medicare enough to meet their needs, some may need specialized or tailored packages to help them treat and manage certain conditions and illnesses and cover the costs of specific aspects related to seeking treatment.

What to Expect

Private companies offering Medicare Advantage Plans receive a fixed monthly amount from Medicare. In turn, the companies providing those plans are bound by specific rules to provide coverage. Remember that those rules can vary yearly, so it's essential to stay informed to avoid getting caught off guard. 

As mentioned, you'll likely need to seek services from an in-program provider. Sometimes they make exceptions, but this isn't always the case. When it comes to getting a prescription, you can rest easy because most Medicare Advantage Plan providers also include Medicare Part D - intended to cover prescription drug costs.

If your provider doesn't offer Part D, you have the option to get a separate Part D; however, certain rules apply. If you join a different Part D plan and join a Medicare Advantage HMO or PPO, you'll be dis-enrolled. Your status then defaults to original Medicare coverage.  

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What is Medicare Supplement Insurance?

Medicare Supplement is also known as Medigap. As the name implies, these plans intend to cover the out-of-pocket costs leftover from current Medicare coverage. These plans are also sold by private companies and are not offered directly through Medicare. On average, original Medicare covers 80% of costs, and the rest is an out-of-pocket expense paid by the patient.

Another highlight of Medigap coverage is the other costs they offer, such as unexpected hospitalization if you're traveling abroad. This type of policy would cover what your Medicare coverage won't. Without this plan, however, you wouldn't receive coverage for this scenario.

What to Expect

There are a few things to know and expect when you enroll in Medigap coverage. First, you must enroll in Medicare Parts A and B to be eligible for Medigap coverage. There's also a separate monthly premium you must pay to secure this coverage. So, in other words, you must pay for your Medicare part B. 

In addition, this type of coverage offers plenty of advantages. Primarily, it's easy to get and guarantees your coverage even if there's a developing health condition. You must also buy a separate policy for a spouse, as these policies won't cover two people. 

You also need to know that you can't have both Medigap and Medicare at the same time. There are also some other instances where your Medigap coverage isn't applicable for the following. 

  • Eyeglasses

  • Private nursing

  • Hearing aids

  • Dental 

  • Vision

  • Long-term care

When you decide the change your Medigap coverage, you'll need to drop an old policy with one caveat. You might need to pay the penalty if you enroll out of the enrollment period. This late enrollment fee is also assessed for going over 63 days without drug coverage. 

Aside from a few drawbacks, there are also some more great benefits. Some of the most attractive is the ability to keep your current medical provider, more drug coverage, and low to no out-of-pocket expenses. 

Points to Consider

There are some essential points to consider and information to know when learning how to cover yourself with Medicare and private provider plans adequately. One crucial fact is that you need to enroll in a program within a seven-month window.

This begins the three months before the month of the eligibility data, or 65th birthday, and up to three months after your birthday. This action is to ensure you avoid any penalties. Not every plan or combination of plans is suitable for everyone. You need to assess your current needs and lifestyle to select the healthcare plan that best meets your needs accurately. 

For example, suppose you have a chronic illness or an ongoing condition that requires close monitoring and treatment. In that case, you'll likely need a plan that allows you to tailor it to your specific needs to help avoid significant out-of-pocket expenses. In this case, you would do best with a Medicare Advantage plan. There are many companies out there providing these plans, and you can find one that works ideally for what you need to help you stay healthy and financially stable. 

If you're generally healthy but want to make sure you get hospitalization coverage in the event of a serious medical condition or accident. Still, you also want to make sure you're covered for doctor's visits; then, original Medicare might be the right choice. In addition to regular Medicare, you'll also have access to Part D for prescription coverage within the given enrollment period.

If you choose to go with Original Medicare, you'll have the option to get Medigap coverage to cover the rest or most of the out-of-pocket expenses Medicare doesn't cover. This course of action helps you save money and ensure you can get the treatments you need when you need them.

Types of Medicare Advantage Plans

There are a few different Medicare Advantage Plans, also known as Medicare Part C, to choose from when you're deciding on your coverage. One of the most common is the Health Maintenance Organizations or HMOs. This type of coverage provides benefits when you choose a healthcare provider in their outlined network. If you need care from a specialist, you may need to get a referral from your primary doctor for the coverage to become effective. 

Another popular option is the PPO or Preferred Provider Organizations. They work much the same as the HMO; however, there is a slight difference in that choosing an in-network provider isn't a requirement for coverage, and you may not need a referral to see a specialist. 

The Special Needs Plan is specially designed to allow patients with specific care needs to tailor the plan to ensure good coverage. This is a superb choice in instances where patients have diabetes, autoimmune issues, and more. 

An MSA or Medical Savings Account allows you to approach your healthcare coverage from a different perspective. If you are healthy but want to ensure, you have funds to cover future medical expenses, you might consider this option. It allows the covered individual to deposit money into an account that is much like a checking account. You use these savings to pay for health-related costs before you meet your deductible. 

Types of Supplement or Medigap Plans

This type of coverage isn't as comprehensive as the Medicare Advantage Plans, but it protects the enrolled from having to pay out-of-pocket expenses their original Medicare doesn't cover.

For instance, if you go to your doctor for a checkup, Medicare Part B covers up to 80% of the visit. Without Medigap or Medisup coverage, you'd be liable for paying the remaining 20% of the bill when you pay at your visit. However, if you have Medigap, it likely pays for the rest, so you don't have to worry about forking out money at the appointment to cover the bill. 

Going the Medicare plus Medigap insurance route is highly beneficial for people who have disabilities or know they require intensive medical treatment in the coming years. This is a good option because this type of coverage offers protection from excessive bills from expensive hospital stays, surgeries, and costly treatments for certain conditions.

If you plan to have major surgery in the future, you wouldn't want to pay the 20% rest of a $100,00 procedure and hospital stay. If you have Medigap and Medicare combined, you'll be able to afford the treatment without facing financial ruin or strain. Securing both plans is a great way to help those with declining health for predispositions to health problems get the care they need without having to worry.

Currently, there are ten types of policies to choose from in the Medigap lineup. Keep in mind that some of these policies aren't available in all states, so work with a qualified agent to help you sort through the options you're eligible for to help make the process easier. The agents at PolicyScout are experts in assisting coverage seekers in discovering which types are available to them according to their location and other essential details. 

Residents of Wisconsin, Massachusetts, and Minnesota have completely separate plans to consider. However, if you're in one of the states offering these plans, you'll need to examine each coverage closely because they are all different. Some have specific exclusions that may make them an ineffective choice. Additionally, the cost for each plan also varies, so it's essential to consider your budget to avoid financial strain. 

Other things to know about selecting a Medigap plan include learning that the premiums can vary from state to state. Coverages may stay the same but may not be offered in every state. There's so much to consider, so make sure you stay informed. 


Be aware that no matter which reroutes you choose - Medicare Advantage Plan or Medigap, you'll have to continue to pay for your Medicare Part B coverage the entire time. Medicare Advantage Plans and Medigap or Medisup plans are entirely different. The best course of action is assistance from a licensed insurance specialist with a top insurance plan provider like PolicyScout.

We can help analyze the factors necessary to find the right type of coverage. The information you get enables you to avoid pitfalls and surprises when you need medical treatment or require a medical service. Consider choosing one of these plans to help cover future health expenses and protect your savings and income.