How Medicare Advantage and Medicare Supplement plans stack up to build the best coverage for you

Does you calendar have an important date soon approaching? If your 65th birthday is close, this exciting time can signal a change in your health insurance and how you will get medical care moving forward.

While most Americans are automatically enrolled in Medicare Part A, it alone may not cover all of your healthcare costs. Parts B, C and D are voluntary programs that provide additional coverage. Medicare Supplement plans, often called Medigap, are not part of Medicare but they can play an important role to help bridge the gaps in your Medicare coverage. It is important to understand the key differences between options including enrollment, access to services, costs and benefits, and how they stack up to build the best coverage for you.

The Traditional Stack

When you’re first eligible to enroll in Original Medicare Parts A and B, you can stack on Part D prescription drug coverage. This traditional approach can leave you with out-of-pocket costs for deductibles, copays and coinsurance. That’s where a Medicare Supplement plan can be stacked on to complete your coverage.

Medicare Supplement plans are sold by private insurance companies including Blue Cross and Blue Shield of Kansas. There are 10 plans and the level of coverage and cost varies. These plans require you to continue to pay your Part B premium and a separate premium for Medigap coverage. With a Medigap policy, Medicare will first pay its share of your medical expenses, and then your policy steps in to pay its share based on the supplement plan you select.

Medicare Advantage Stack

Medicare Advantage plans, or Part C, provide Medicare coverage through private health insurance companies including Blue Cross and Blue Shield of Kansas. MA plans typically include Part A, Part B and Part D. A Medicare Advantage (MA) plan usually offers valuable extras like dental, vision and hearing benefits and a gym membership.

These plans can be Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), or Private Fee-for-Service plans and are often available only in specific areas. With these plans, you may be limited to using a network of specific providers in order for the plan to cover your care.

Costs of these plans vary but you must be enrolled in both Part A and Part B to participate. Most plans will require you to continue to pay your Part B premium, in addition to the Medicare Advantage plan premium. Plans may have a deductible and charge you copays and coinsurance. Your annual limit on your out-of-pocket expenses is $6,700 (2020).

Key Differences Between Stacks

Access to Services

If you use Original Medicare with a Medicare Supplement plan, you can go to any doctor or hospital in the United States that accepts Medicare. A Medicare Advantage plan has a specific network in order for the plan to cover your care and networks may change. You can use a provider outside of the MA network, but you will likely pay more or all of the costs, except for emergencies. MA plans often require a referral to see a specialist.

Costs

Both Original Medicare and Medicare Advantage require you to pay your Part B premium. If you use the traditional stack, you’ll pay a separate premium to a private insurer for Medicare Supplement and a separate premium for a Part D plan. If you choose an MA plan you’ll pay a separate, but likely lower, premium to a private insurer. The MA plan may have Part D built in so you would not pay an additional premium for prescription drug coverage.

Medigap usually has a higher monthly premium, but could result in lower out-of-pocket expenses than some Medicare Advantage plans. Medicare Advantage plans, on the other hand, generally cost less and cover more services, which can be a better fit for your budget. Since Medigap out-of-pocket costs are typically much lower than Medicare Advantage costs, if you have lots of medical expenses, the higher Medigap premium may be a better deal.

Benefits

The traditional stack has a standard benefit package that covers medically necessary healthcare services plus Part D. Medicare Advantage offers a benefit package with everything Medicare covers and adds in dental, hearing, vision, health club memberships and other valuable extras.

How to Decide the Best Fit

If you have significant and expensive health problems, Medigap is better for you. The premiums are higher but the out-of-pocket costs are typically much lower compared to Medicare Advantage. If you are in good health and don’t anticipate lots of medical expenses, the Medicare Advantage plan premium can save you money. If you have a lot of prescription drugs, the Medicare Advantage plan which includes Part D can save you the stand alone Part D premium.

Meet Sally! Sally is a snowbird and spends part of the year in Arizona

Sally spends about half the year with her husband at their condo in Arizona. She is pretty healthy but has had few health issues. She has a doctor in her hometown and a doctor in Arizona. Sally chose to take Original Medicare Part A for hospital coverage and Part B for doctor visits. The Part B premium is taken out of her monthly Social Security check. She added a basic low cost Part D plan to help with the cost of her two prescriptions. Sally also added a Medicare Supplement Plan G to keep her out of pocket costs low. She knows that her coverage does not include dental, hearing or vision benefits and she is prepared to pay for these costs out of her budget.

What Sally pays:

  • Part B premium
  • Part D premium
  • Part D copays
  • Medicare Supplement premium
  • Part B deductible of $198

Meet Roger! Roger lives in the city and loves to play golf

Roger has a regular standing golf game every Tuesday morning with his friends. He has enjoyed good health and takes only one prescription drug. He sees his doctor annually. Roger chose to take Medicare Advantage because his regular doctor and hospital are part of his plan’s network. The prescription he takes has a low copay as part of his MA plan’s prescription drug coverage. Roger knows he will have a small copay each time he sees his doctor and is prepared to pay up to $6,700 maximum in-network out-of-pocket cost if he falls ill and needs medical care. He is looking forward to using the free gym membership as well as the vision, dental and hearing benefits included in his MA plan.

What Roger pays:

  • Part B premium
  • Part C premium
  • Prescription benefit copays
  • Medical benefit copays
  • In-network out-of-pocket maximum up to $6,700

Blue Cross and Blue Shield of Kansas is not connected with or endorsed by the U.S. Government or Federal Medicare Program.

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2 Replies to “How Medicare Advantage and Medicare Supplement plans stack up to build the best coverage for you”

  1. What happens if the $6,700 deductible is used up half way through the year? Does Medicare Advantage then pick up the costs for the rest of the year? Potentially, is an individual at risk of accumulating a large amount of deductible bills which keep building each year. The $6700 deductible amounts to $558 per month if a person had to set aside money to cover that expense. That amount is much higher than the premiums that would be paid monthly for what I consider to be a better plan with less overall risk.

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  2. I wish my BCBS would provide paid plans for our health overall like the Silver Sneakers I would totally take advantage of that if it were to be an option

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