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Medicare Supplement Insurance or Medicare Advantage. Which is right for me?

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Jul 24, 2020 | 4 min read

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Which is right for me – Medicare Supplement or Medicare Advantage?

Both Medicare Advantage and Medicare Supplement Insurance plans are designed to help protect you from the potentially unlimited out-of-pocket costs that

Original Medicare could pass onto enrollees, though they do this in different ways. Which plan is the better option for you depends on several factors including your needs, preferences and budget. Read on for information that could help you in your decision making process.

What is the difference between Medicare Advantage and Medicare Supplement Insurance plans?

Medicare Advantage Plans are somewhat similar to managed care plans—like an HMO or PPO—you may have had through an employer. When you sign up for one of these plans you are signing over the administration of your Medicare benefits to a private insurance company that is obligated by law to provide both Part A and B benefits. These plans tend to be comprehensive, offering not only Medicare Parts A and B coverage but prescription drug benefits (Part D) as well and often extra benefits such as dental and vision coverage. Choosing a Medicare Advantage plan bundles all your health care benefits into one policy and could greatly limit your exposure to large out-of-pocket expenses, though you may be responsible for somes additional costs in the form of deductibles and copays or along the way.


Medicare Supplemental Insurance plans help to cover the medical expenses that Original Medicare doesn’t pay. This includes the 20% of overall costs related to services such as inpatient hospitalizations, skilled nursing care, home health care, hospice care and medically necessary services and supplies that are not covered under Medicare Parts A and B. It also includes Part A and B deductibles, excess charges and blood transfusions. Some Medicare Supplemental Insurance plans also cover foreign travel emergency care. Medicare Supplement Insurance plans do not cover prescription drug coverage, so this will need to be purchased as a separate policy.

Depending on the plan I choose, how do I access care?

If you choose a Medicare Advantage plan you will typically need to access your care from a list of preferred providers within the plan’s network. When permitted, receiving care outside of this network could cost you more. Medicare Advantage plans administer your care and some options could be delayed or denied depending on authorization procedures. It is advisable to research the size and quality of a particular plan’s provider network before choosing a Medicare Advantage plan.


Medicare Supplemental Insurance plans offer a greater freedom of choice, as they cover any provider that accepts Medicare and are not involved in managing your care. With a Medicare Supplemental Insurance plan you can access any provider that accepts Medicare without authorization or a referral. These types of plans are often appealing to people who enjoy traveling, live in more than one place or prefer flexibility with choosing their doctors/hospitals. Medicare Supplement Insurance plans do not cover prescription drugs, so a separate policy would be required for this benefit.

What option has lower monthly premiums?

When comparing the most popular Medicare Advantage or Medicare Supplement Insurance plan options, Medicare Advantage plans more often have lower monthly premiums, with many plans having no monthly premiums at all. Typically, Medicare Advantage plans with more network flexibility options—similar to PPO plans— will have slightly higher monthly premiums, generally in the $30-60 range. The average monthly premium for Medicare Advantage plans is $38. Monthly premiums for Medicare Supplemental Insurance plans could range from under $100 - $300 and vary by plan type, insurance carrier and state.

How are Medicare Supplement Insurance and Advantage plans regulated?

The Centers for Medicare and Medicaid Services offers a star-based quality rating system to provide enrollees with additional information about the plans offered in their areas. The system assigns Medicare Advantage plans ratings of 1 to 5 stars, with 1 representing poor performance and 5 stars representing the highest quality of healthcare services. You can compare health coverage choices and plan Star Ratings through the online Medicare Plan Finder tool available at Medicare.gov.

Since Medicare Supplement Insurance plans are standardized by the government there is no star rating system for them. These types of plans help pay a specified amount of your medical bills that Medicare doesn’t cover. So if you choose plan G you will receive the same benefits, no matter what insurance company you go with.

How does the approval process differ?

Medicare Advantage plans are not allowed to use medical underwriting in the approval process, which means that almost anyone with Medicare Parts A and B can qualify for any plan and will pay the same rates. Those applying for Medicare Supplement insurance coverage during the open Enrollment Period—which is the first 6-months after your turn 65 and qualify for Medicare Parts A and B—are also not subject to medical underwriting. Once the Medicare Supplement Open Enrollment Period has passed Medicare Supplemental Insurance providers are allowed to use medical unwriting in the qualification process, which means an individual with pre-existing health conditions can be denied coverage or charged higher premiums.

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