What Is Better: Medicare Advantage or Supplement?

Navigating healthcare choices in the United States can be complex, especially when considering options beyond basic coverage. Understanding the different avenues available through the federal Medicare program is important for comprehensive health benefits. These choices extend beyond standard government-provided Medicare, offering ways to tailor coverage to individual health and financial circumstances. The pathways for receiving care and managing costs differ significantly, making an informed decision valuable.

Understanding Original Medicare

Original Medicare, the foundational government health insurance program, consists of two primary components: Part A and Part B. Part A, Hospital Insurance, generally covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health services. Most individuals do not pay a monthly premium for Part A if they or their spouse paid Medicare taxes for at least 10 years. However, a deductible applies per benefit period, which was $1,676 in 2025. Coinsurance amounts also apply for extended stays in hospitals or skilled nursing facilities.

Part B, Medical Insurance, covers medically necessary services from doctors and other healthcare providers, outpatient care, durable medical equipment, and certain preventive services. Part B typically involves a monthly premium, which can vary based on income. In 2025, the standard monthly Part B premium was $185, with an annual deductible of $257. After meeting the deductible, individuals are responsible for 20% coinsurance for most Medicare-approved services. Original Medicare does not include coverage for routine dental, vision, hearing, or outpatient prescription drugs.

Medicare Advantage Plans Explained

Medicare Advantage Plans, also known as Part C, offer an alternative way to receive Medicare benefits through private insurance companies approved by Medicare. These plans provide all benefits of Original Medicare Part A and Part B, often bundling additional services. Plans often include prescription drug coverage (Part D), and may offer extra benefits like routine dental, vision, hearing services, or fitness programs.

Medicare Advantage plans vary by provider networks and referrals. Health Maintenance Organization (HMO) plans typically require members to choose a primary care physician and obtain referrals to see specialists, limiting care to a specific network. Preferred Provider Organization (PPO) plans offer more flexibility, allowing members to see out-of-network providers for a higher cost and generally not requiring referrals for specialists.

The cost structure for Medicare Advantage plans includes the Part B premium, along with potential additional monthly premiums for the Advantage plan itself. Plans also feature their own deductibles, copayments, and coinsurance for services, which can differ from Original Medicare. Medicare Advantage plans feature a yearly out-of-pocket maximum. Once this limit is reached, the plan covers 100% of costs for covered Part A and Part B services for the remainder of the year. This limits annual spending, unlike Original Medicare which has no out-of-pocket maximum.

Medicare Supplement (Medigap) Plans Explained

Medicare Supplement Insurance, commonly known as Medigap, is sold by private insurance companies and works in conjunction with Original Medicare, rather than replacing it. These plans help cover out-of-pocket costs Original Medicare does not, such as deductibles, copayments, and coinsurance. When an individual has both Original Medicare and a Medigap policy, Medicare first pays its share of the approved amount for covered healthcare costs, and then the Medigap policy pays its share.

Medigap policies are standardized across most states, labeled with letters A through N. Plans of the same letter offer identical basic benefits regardless of the insurance company. However, the premiums for these standardized plans can vary between insurers. Individuals with a Medigap policy pay a monthly premium to the private insurance company in addition to their Medicare Part B premium.

A key advantage of Medigap plans is the flexibility they offer in choosing healthcare providers. As long as Original Medicare covers the service, individuals can see any doctor or hospital nationwide that accepts Medicare, without network restrictions or referrals to specialists. Medigap plans do not include coverage for prescription drugs, routine dental, vision, or hearing care. Individuals with Original Medicare and a Medigap plan typically need separate Part D coverage for prescription drugs.

Prescription Drug Coverage (Part D)

Medicare Part D helps beneficiaries cover the cost of prescription drugs. These plans are offered by private insurance companies approved by Medicare. If an individual has Original Medicare and a Medigap plan, a separate Part D plan is typically required.

Most Medicare Advantage Plans include prescription drug coverage, often referred to as Medicare Advantage Prescription Drug (MA-PD) plans. In these cases, a separate Part D plan is not needed or allowed. Part D plans have their own cost structures, including monthly premiums, annual deductibles, and copayments or coinsurance for prescriptions. The maximum annual deductible for Medicare Part D was $590 in 2025. Part D plans use a formulary, a list of covered prescription drugs. Formularies vary between plans, and drugs are often categorized into tiers, with lower-tier drugs having lower out-of-pocket costs. It is important to review a plan’s formulary to ensure that necessary medications are covered. In 2025, the coverage gap, sometimes called the “donut hole,” was eliminated, and an out-of-pocket spending cap of $2,000 for covered drugs was implemented.

Key Considerations for Decision-Making

Choosing between Medicare Advantage and Medicare Supplement plans involves evaluating individual health and financial circumstances. Consider an individual’s health status and anticipated medical needs. Those expecting frequent medical care might prioritize predictable costs and comprehensive coverage, while those with fewer anticipated needs might consider plans with lower monthly premiums.

Budget and overall cost tolerance are also key. Medicare Advantage plans often feature lower or no additional monthly premiums beyond the Part B premium, but they may have copayments, coinsurance, and a yearly out-of-pocket maximum. Medigap plans involve a separate monthly premium, but they significantly reduce out-of-pocket costs for services covered by Original Medicare. This means balancing higher fixed premiums with potentially lower point-of-service costs.

Doctor and hospital preferences, along with network restrictions, are crucial. Original Medicare with a Medigap plan allows individuals to see any doctor or hospital nationwide that accepts Medicare, without network restrictions or referrals. Medicare Advantage plans, particularly HMOs, often operate with specific provider networks, which might limit choices or require referrals. Individuals valuing broad access may find Medigap more suitable.

Travel habits also influence the decision. Original Medicare and Medigap coverage extends across the United States without network limitations, providing flexibility for domestic travelers. Medicare Advantage plans may have regional networks, which could affect access to care when traveling outside the plan’s service area for non-emergency situations. Finally, consider the desire for additional benefits beyond standard medical coverage, such as routine dental, vision, hearing, or fitness programs. Medicare Advantage plans frequently include these extra benefits, whereas Medigap plans do not, requiring separate purchases.

Enrollment and Switching

The Initial Enrollment Period (IEP) is a seven-month window around an individual’s 65th birthday, beginning three months before the birth month, including the birth month, and extending three months after. During this period, individuals can enroll in Original Medicare (Parts A and B). If not automatically enrolled, apply through the Social Security Administration.

After enrolling in Original Medicare, individuals can choose a Medicare Advantage Plan or a standalone Part D Prescription Drug Plan through private insurance companies. The Annual Enrollment Period (AEP), also known as Open Enrollment, occurs each year from October 15 to December 7. During the AEP, individuals can switch between Original Medicare and Medicare Advantage, change Medicare Advantage plans, or enroll in or change Part D plans.

Special Enrollment Periods (SEPs) allow changes to Medicare coverage outside standard enrollment periods due to specific life events, such as moving or losing other coverage. For Medigap plans, a crucial period is the Medigap Open Enrollment Period, which lasts for six months and begins the first month an individual is age 65 or older and enrolled in Medicare Part B. During this time, insurers cannot deny coverage or charge more due to pre-existing health conditions. Outside this period, guaranteed issue rights are limited, meaning insurers may deny coverage or charge higher premiums based on health status.