Pros vs. Cons
Weigh your coverage options
Medicare Supplement vs Advantage Plan-- Which coverage is best for you?
When it comes to comparing Medicare Supplement vs Advantage, what are you looking for in your plan? What plan fits your budget? Are predictable costs important to you? Is access important to you? These are just a few of the questions you should ask yourself as you continue comparing Medicare Advantage vs Supplement to find a plan that suits your preferences best. We will help you find the best Medicare plan. In my opinion, there is no “best” plan, rather, what plan is “best” for you, and your health coverage preferences? Let’s briefly review the two plan types before we begin comparing Medicare Supplement vs Advantage.
Remember: Choosing between these two plan paths will provide you with the most direction when it comes to which Medicare plan type to choose. Yes, you can look at both plan paths and shop rates, plan details, etc.
Compartmentalize how each “plan path” functions so you’re able to compare the two. You are in essence comparing “apples to oranges” here. Once, you have a solid grasp of each, we can then compare each plan type against the same plan types to determine which insurance product is going to suit you best.
PROS
CONS
Which Medicare plan type gives you a true "advantage"?
I try to be as objective as I can when offering my independent Medicare advice on this site, but there comes a point when my clients and new Medicare beneficiaries deserve more insight. Such as, “What would I pick if I were 65, knowing what I know as a broker?” Answer: Medicare Supplement Plan + stand-alone Medicare Prescription Drug Plan (Part D).
To be fair to both Medicare plan types, let’s compare a Medicare Supplement vs Advantage plan in a hypothetical scenario as if I’m looking at these plans for myself. In this comparison of plans, we need to assume a few things in order for the example to be comparable. It’s too complicated to compare all costs. We will assume:
– The 2024 Part B Premium is $174.70 in each scenario since its hypothetically the same person comparing each plan in any given scenario. Even if the Part B premium is drafted out of your Social Security check, it should still be considered part of the total cost of your Medicare plan. Annual total is $2096.40 for both examples ($174.70 x 12). Consider this a sunk cost for the comparison– Medicare Advantage vs Supplement.
– Assume the copays for the medications in the pharmacy are the same for each of the two Part D plans in this comparison to keep things equal for the sake of this example (Let’s say $25 a month in copays). This is not necessarily accurate, but there are far too many variables and “what ifs” when it comes to prescription copays. We will assume 3-4 generic drugs costing $25 per month in the pharmacy to make it a flat $300 a year ($25 x 12 months = $300 copay estimate for the year).
– In this example, let’s also assume I see my primary physician a couple times a year as well as my specialists a half dozens times a year. Also, assume one major medical event to be conservative with our estimates when comparing these two plan types (ie. joint replacement/outpatient surgery of some type, CT scan, MRI, outpatients appointments, physical therapy, etc.
If I were to go with a Medicare Supplement vs Advantage plan?
Medicare Supplement Cost Breakdown – If I were choosing between the two plan types, I would personally choose a Medicare Supplement Plan. I would prefer to pay slightly more out of pocket for a Plan G knowing all I have to pay is the monthly premium and the annual Part B deductible of $240 (2024) a year for Medicare approved medical care in a calendar year. Yes, the premiums are likely a little more expensive than Medicare Advantage Plans. Let’s say $120 a month for Plan G. So my out of pocket costs for 12 months would be my premium of $1440 ($120 x 12) + Part B deductible of $240 (2024). Let’s not forget the $174.70 per month for the Part B which is a sunk cost but that is $2096.40 for the year. I recommend to add an additional Part D Prescription Drug Plan for another, say $34 a month or $408 for the year (avg. Part D cost in 2024). As we stated before, the monthly copays for my prescriptions would be $25 at the pharmacy per month or $300 for the year. My out of pocket cost for my Part B Premium ($2096.40), Medicare Supplement Plan G ($1440), the Part B deductible of $240, Part D plan premium ($408), and the prescription copays ($300) would equal $4484.40 for the entire year or an estimated cost of $373.70 per month.
This would be a fairly predictable number for me to budget around since I would know my out-of-pocket medical expenses are fixed after the initial $240 deductible a year. No copays for the primary care or specialist appointments, the MRI, the CT scan, the outpatient surgery, outpatient appointments, or physical therapy-all picked up after the $240 deductible. Again, once the Part B deductible is paid ($240), the rest of the my Medicare covered medical procedures are picked up the rest of the year with my Plan G (with any insurance carrier’s Plan G). A good estimate of my monthly Medicare coverage is going to cost me around $373.70 a month.
How the Medicare Supplement Plan functions in this scenario – With Medicare and my Medicare Supplement Plan, I have access to my primary care doctor I’ve had the last 10 years, other primary care doctors if I choose, and all my local specialists. Even though they may be in different medical groups, I can see any physician that takes Medicare with this plan because there is not a network for Medicare with a Medicare Supplement Plan. Medicare is primary and the Supplement is secondary. I can see anyone who takes Medicare and “any insurance companies” Medicare Supplement plan will follow and pick up the additional costs.
My Medicare Supplement Plan does not require referrals. Physicians may require them within certain specialties, however, I can see my cardiologist, dermatologist, orthopedic, ENT physicians all directly without needing to see my primary care doctor for a referral first. If I’m diagnosed and need treatment and want to use physicians outside my local area such as UCD, UCSF, Stanford, UCLA, the Mayo Clinic, John Hopkins, I can since they all take Medicare with a Medicare Supplement Plan. Also, my network is the United States as Medicare is primary when I choose to go with the Medicare Supplement Plan route.
Maybe I plan on traveling and want coverage anywhere in the United States– not just emergency coverage. I’m covered the same in my residence in California as I would be anywhere in the country. I may not need to seek care at the large research based facilities I mentioned above. I may not need to use my Medicare Supplement Plan coverage when traveling. However, knowing I’m covered and that I have the option to do so is worth it to me. How much is control of your Medicare, predictable out-of-pocket costs, and your peace of mind worth?
If I were to go with a Medicare Advantage vs Supplement?
Medicare Advantage Plan Cost Breakdown – The Medicare Advantage Plan may appear much less expensive from a monthly standpoint ($0 premium and up depending on your county). To make a fair comparison, let’s use the least expensive Medicare Advantage Plan at $0 a month. The Part D Prescription Drug Plan is included in this $0 premium plan as a “bundle” and with the Part B premium of $174.70 and pharmacy copays of $25 a month being assumed equal for the comparison, the initial thought is out of pocket costs are $2396.40 at this point. (174.70 Part B x 12 = $2096.40 Part B costs for the year) + ($25 x12 = $300 copays for the year).
So if I’m not paying for my medical plan or my prescription plan since it’s a $0 premium Part C Plan, then what’s the catch? Well, the catch is that the limited network of physicians and out-of-pocket max (OOPMax). The OOPMAX for 2023 tops out at $10,000+ for Medicare Advantage Plans (Range is typically $3400-$7550 but varies by plan county to county and state to state). This means I’m subject the copays, co-insurance, and deductibles that could reach as high as $10,000+ (depending on your plan).
This is not to say you pay the first $7550 of your medical expenses (OOP max is not a deductible). Rather, you may have a deductible of, say $250-$1000, then a $350 copay per day in the hospital for days 1-5, $40 copay for each specialist visit, MRI $200, $200 CT scan, etc. As you can see, the costs can vary depending on if and how often you use the plan. Bottom line– if you don’t use the plan for a year, only have prescription copays, and your annual out-of-pocket is that $2278.80 as shown and calculated above. The extreme opposite of that is you could have a tough year with many medical complications and may max the plan out at $7550, which would put your possible out-of-pocket for the year at $9828.80. The avg. monthly cost could range from $189.90 -$819. These figures are only an hypothetical estimate of comparing zero use of the MA HMO $0 monthly plan premium compared to maxing out the plan with an OOP Max of $7550 (includes the “sunk” cost of the Part B premium of 174.70 per month, $300 in Rx copays as well). I can run specific numbers for you if you’d like to compare specific plan in your county/region.
How the Medicare Advantage Plan functions in this scenario – So, we now know it could be about half the price of the Medicare Supplement Plan route if the plan was not used at all, or potentially more than twice the cost if maxed out for the year. This variability of cost is one downside to Medicare Advantage Plans, however, I believe the true downside to the Medicare Advantage Plan is being subject to the specific Medicare Advantage Plan’s network (ie. HMO limited access to physicians).
I’m the type of person that wants choices and some control over who I can see and where I can go if I needed to make a major medical decision for treatment or a diagnosis. If I were in a Medicare Advantage Plan I would likely start by searching my primary care doctor. I may find a plan he/she takes in network. From there I would check my specialists.
The truth is, you may find all you doctors on a plan or you may find none of them. The next year the plan could change since it has the ability to do so each year. Plans leave services areas (counties) all the time, as I see turnover of Medicare Advantage Plans entering and exiting counties every single year. Yes, you can just enroll in another plan, but it’s very frustrating for my clients who get comfortable in a plan and the following year it changes or cancels on them. You’ll be able to enroll in another Medicare Advantage Plan or get guaranteed-issue into a Medicare Supplement Plan if you are ever cancelled on. The most frustrating process is as having to restart the search to find coverage for the new year.
In this style of a Medicare Advantage Plan HMO, I would be subject to referrals for most of my medical needs. Whether I know it or not, I will likely have more difficulty getting the services I deserve as a patient – not because my physician thinks so, but because the HMO is structured to conserve and cut costs- hence, the $0 premium they may offer to entice you to enroll. I may need to jump through a hoop or two before receiving certain medical services in a timely manner. Bottom line- there is a lot less predictability, out-of-pocket costs, and less control of your medical care with a Medicare Advantage Plan- espcially an HMO. There are PPO’s, but if you want the true flexibility of what most people think of when looking at PPO plans, go with Medicare and a Medicare Supplement Plan G– it’s better than the Medicare Advantage PPO Plan. You’ll pay more upfront monthly, but have much less risk of out-of-pocket costs throughout the year as well as access to all Medicare providers and physicians.
Medicare Advantage vs Supplement - Can I move plans?
Lastly, and most importantly, if you have been in a Medicare Advantage Plan and want to move over to a Medicare Supplement, you may never be able to do so. It depends. Going the other direction from a Medicare Supplement Plan to a Medicare Advantage Plan is simple. No health questions asked. However, going from a Medicare Advantage Plan to Medicare Supplement Plan is not guaranteed like the manipulative Medicare agents and commercials may make you think (it’s only guaranteed-issue when you first enroll and one time after your first year in the MAPD plan or you happen to get lucky and your Part C plan cancels coverage in your area and grants you a SEP with guaranteed-issue rights to the Medicare Supplement Plan).
The fall AEP is “open” to move from drug plan to drug plan and from Advantage Plan to Advantage Plan , but it is not “open” to moving from an Advantage Plan to Medicare Supplement Plan, guaranteed! You will be subject to medical underwriting (if outside your first year in the plan and possibly up to 24 months with certain insurers) and they can deny you because of pre-existing conditions. If you are outside an enrollment period that doesn’t give you guaranteed-issue rights to the plan, such as IEP/SEP (ie. no health questions asked) it will be difficult to move plan types if you’ve had any recent medical procedures. Medicare Supplement Plans can deny you coverage through medical underwriting outside a guaranteed-issue period.
The same reason you may be frustrated with a Medicare Advantage Plan (limited access/cost/referral issues) is likely the same reason you will not be accepted in a Medicare Supplement Plan. You likely had a major medical issue, didn’t have access to who you wanted, may have paid out-of-pocket costs more than expected for the care. Maybe you hit the out-of-pocket Max and no longer want to be subject to potentially thousands of dollars out-of-pocket. Now you want to move to a Medicare Supplement Plan for accessibility and predictable out-of-pocket costs the following year. Well, for the same reason you want to move, is likely the same reason the Medicare Supplement Plan companies will likely deny you coverage based on your medical history.
Mentor One Insight
If the Medicare Supplement Plan route is the right for you – go with Medicare Supplement Plan G if enrolling after 01/01/2020 (with the lowest cost premium for your age in your ZIP code). If prior to 01/01/2020 you may have Plan F (which was the best plan prior to 01/01/2020). Add a stand-alone Prescription Drug plan (Part D) and review the Rx plan it each year to find the best plan for your individual set of prescriptions (lowest premium and lowest copays for your prescriptions).
Plan N is another plan that I believe works well for clients looking for a slightly cheaper Medicare Supplement Plan. It may have more variable costs (such as the $20 copay for office visits, but it will allow you to have the same access to physicians as Plan G. Remember, Medicare is the “truck” and you’re just deciding which “trailer” of coverage you want to follow it to cover your Medicare medical expenses. See Medicare Roadmap in the Medicare Toolbox to visual this “truck” and “trailer” example!
If the Medicare Advantage Plan route is the right for you – If you decide to go with a Medicare Advantage Plan, go with the lowest premium plan if available ($0 premium). If you are going to risk the $4500-$10,000 out of pocket max, then go with the lowest monthly premium (if considering HMO and it’s available). If you are going to subject yourself to limited networks and possible high out of pocket expenses when you use the plan, save the most you can with the lowest premium plan that works with your preferred medical network and prescription copays. Remember, it’s a “bundled” plan, so you’ll want to select the best combination of medical coverage and drug coverage combination since you can’t piece them together or “customize” the plan. There’s an argument to made for comparable premiums with MA plans if it’s a PPO plan, which provides you out of network access when needed (however, at higher OOP costs).
Most importantly, you need to also know that as a broker, I’m compensated much more for brokering a Medicare Advantage Plan for a client than a Medicare Supplement Plan and a Medicare Prescription Plan combined!. Yes, even $0 premium plans pay me a much larger commission– almost double! This means I have no incentive or conflict of interest to recommend a Medicare Supplement Plan over a Medicare Advantage Plan other than it being the better plan type/design for my clients.
Why are the commissions higher for a cheaper plan? Well, technically, when you sign over you Medicare to the Medicare Advantage Plans private Medicare plan, that specific insurance carrier is then paid by Medicare a monthly amount to offer you the Medicare benefits, and is therefore, compensated by the government as they are now your primary Medicare insurance. The insurance companies are paid enough by Medicare for absorbing risks of coverage in a Medicare Advantage Plan that they are able to offer incentives for agents/brokers to sell them (ie. $0 premium plans) and still make it very profitable for them. The way in which they control costs is based on their network and certain cost cutting restrictions such as referrals and certain authorizations for medical procedures.
Conclusion: There is always a way to justify one plan type/design over another because each person’s medical preferences and budgets are different. As long as you know the rules, how the plans function, and why you chose that plan path, that’s all I can ask as a broker helping you with your plan enrollment. Transparency is key! The final decision is always up to you. As you broker, I’ll do my best to keep you updated with your future options if your needs change throughout the years. We can cover all the if/thens during our phone conversation if you have more questions.
