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Discover the difference between Medicare Advantage and Medicare Supplement plans

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Medicare Advantage vs. Medicare Supplement: They're more different than they sound

Figuring out the ins and outs of health insurance plans is about as fun — and as clear — as figuring out your taxes. Medicare, with its many parts, plans, and supplements, can be among the most confusing of all. But it’s important to learn the main differences before you can dig into the details to find the right plan for your financial well-being.

Let’s get started by answering one of the most frequently asked questions around Medicare: “What is the difference between Medicare Advantage and Medicare Supplement?”

Medicare Advantage vs. Medicare Supplement

Medicare Advantage plans are health insurance plans that help you manage your health care by providing Medicare-covered benefits, as well as prescription drug coverage; dental, vision, and hearing benefits; and other services.

Sometimes called “Part C” or “MA plans,” Medicare Advantage policies are available through private insurance companies that must follow rules set by the government. But here’s where it can get a bit confusing: If you're enrolled in a Medicare Advantage plan, you’re technically still in the overall “Medicare” system, but your Medicare benefits come from the Medicare Advantage insurance provider rather than the federal government program.

Medicare Advantage plans cover Medicare Part A (hospital and skilled nursing care) and Medicare Part B (medically necessary supplies and preventive care) services, including emergency and urgent care. Many also include Medicare prescription drug coverage (Part D). Some Medicare Advantage plans may offer add-ons for vision, dental, hearing, or wellness bonuses.

Medicare Advantage is a main medical plan, like Medicare or an employer-based plan. You pay a copay or coinsurance, plus a low or $0 premium every month. It cannot be paired with Medicare Supplement plans, but it can be paired with Hospital Indemnity insurance. In fact, Hospital Indemnity and Medicare Advantage are often ideal partners because Medicare Advantage coverage may have gaps. All Medicare Advantage offerings have a yearly out-of-pocket maximum. After you reach it, Medicare Advantage covers the rest of the out-of-pocket costs, but until you reach that limit, it can be pricey. That’s where Hospital Indemnity riders come into play. They can offer comprehensive coverage by providing benefits that help eliminate the cost-share element of Medicare Advantage plans.

Medicare Supplement vs. Medicare Advantage

Medicare Supplement plans (aka, Medigap) don’t offer coverage themselves. They can be paired with original Medicare to help cover risks of unknown or unexpected costs. They cannot be paired with Medicare Advantage plans.

Medicare Supplement plans are designed to cover the cost-share that might result from original Medicare. Unlike Medicare Advantage, which has a primary payer per plan, Medicare Supplement plans come into play after Medicare has covered its share.

So in practical terms, the main purpose of a Medicare Supplement plan is to cover some out-of-pocket costs that aren’t paid in full by original Medicare Parts A and B. These might include deductibles, copays, and coinsurance. Since there is no limit on these original Medicare costs, they can add up fast.

Visit the Medicare Supplement insurance page to learn more.

Photo credit: iStock

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Medicare Supplement vs. Medicare Advantage

Understanding your insurance options in retirement

Kelly Rayburn, AVP national sales and distribution at Wellabe, and Olga Villaverde, from Lifetime TV’s The Balancing Act, discuss what Medicare Supplement insurance is and how it differs from Medicare Advantage.

Learn more about Medicare Supplement

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