Are Medicare Supplements Worth It? Options, Differences & When Do You Need Them?

By Myles Leva


Last Updated: June 13, 2022


Not all Medicare supplement plans are equal.

Healthcare coverage is a serious issue, and there is some confusion as to the differences in coverage.

First of all, what does Original Medicare cover?

Original Medicare covers Part A and B, meaning hospital insurance and medical insurance. Within part A, there is coverage for:

  • Inpatient hospital care
  • Skilled nursing facility care
  • Hospice care
  • Home health care

Within part B, coverage includes:

  • Services from doctors and other qualifying medical practitioners
  • Outpatient care
  • Home health care
  • Durable medical equipment (this includes some items like wheelchairs and walkers)
  • Some preventative services

Of course, there may be some healthcare services that you’re thinking about which don’t fall under the above categories. That’s where Medicare supplemental coverage comes in. So, let’s go over the supplemental options available to you.



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

Medicare supplement plans and Medicare Advantage plans are different types of supplemental Medicare coverage.

Medicare Advantage is a private plan approved by Medicare but provided by a private company.

Put simply, Medicare Advantage bundles up parts A, B, and D of Medicare. So, they provide hospital insurance, medical insurance, and drug coverage at once. The latter, drug coverage (Part D) is not covered by Original Medicare.

Medicare supplemental insurance, or “Medigap”, is a form of extra insurance that you can buy from a private provider.

The idea is the private insurer helps pay your share of costs in the Original Medicare. While these policies are sold privately, like Medicare Advantage, they are standardized and assigned a letter (Plan D, E, F, etc.) in most states.

However, each lettered plan’s benefits are the same, regardless of which private insurance company sells it.



How Do I Choose Between Medicare Advantage and Medigap?

Both Medicare supplement plans offer what their umbrella term suggests, supplemental insurance on top of Medicare. But the choice of which one you want is entirely up to you.

Overall, Medicare Advantage is the choice that will save you money. However, its coverage isn’t as comprehensive as that of Medigap.

If you are currently in good health and have few medical expenses, Medicare Advantage may suffice for you. However, ask yourself if you’re willing to be accepted by a more limited choice of doctors, and if you may end up moving to another state in the near future for any reason.

If you have a history of medical conditions, or currently have medical conditions, particularly if they are very costly, Medigap Medicare supplement plans will be more useful. They come with a relative lack of restrictions and include more coverage overall.

Let’s look into the specific reasons why…



Which Medicare Supplement is Most Comprehensive?

Medigap, which includes Original Medicare plus the Medigap supplement, has higher premiums, but no co-pays.

You retain your choice of doctors and don’t require referrals to see specialists. You are also covered anywhere in the US. However, it doesn’t include prescription drugs and some routine healthcare services may not be covered. For prescription drug coverage, you must either get a Medicare drug plan or another form of insurance that includes it.

Medicare Advantage Plans are a separate form of Medicare coverage. Premiums are typically lower, but they come with co-pays.

One big issue is that you may be restricted to a certain network for your coverage. You may also require referrals to see a specialist. However, plans often include prescription drugs from healthcare providers in your network, and you may get benefits for some routine healthcare, such as vision and hearing tests.

In general, you always need to pay attention to the details of any insurance policy. However, given the overall differing levels of coverage, you will want to pay even closer attention to any prospective Medicare Advantage policies.

To avoid any nasty surprises, we suggest you read into the No Surprises Act which passed on January 1st, 2021. Before the act, it was very possible to lack coverage for care from an out-of-network provider, even with the possibility of being charged unknowingly.

Overall, the most comprehensive Medicare supplement plan is Medicare Supplement Plan F. It includes the Medicare Part B deductible, which both Plan G and Plan N lack.

Unfortunately, the availability of policies and their coverage differ greatly by state. In addition, few states allow you to switch between Medicare Advantage and Medigap year-round, or even specifically during enrollment periods.

How Much Life insurance Do you Really Need?



Conclusions on Medicare Supplements

Supplementing your Original Medicare coverage may be a good idea for you. It’s also a time-sensitive choice once you reach 65, so it’s worth considering the state of your health and the healthcare coverage you want ahead of time.

Overall, Medigap plans are more expensive but more comprehensive than Medicare advantage plans. If you really want to save money, make sure you consider all the consequences first.

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