Medicare Advantage vs. Medicare Supplement

Table of Contents:

  1. Medicare Advantage: An Alternative to Original Medicare
  2. Medicare Supplement: Original Medicare and More
  3. Health Insurance Post-2020

Medicare is trusted by millions of Americans, but it doesn’t cover every healthcare need — far from it. That’s why healthcare reform is a hot button topic each election cycle and it’s why most Medicare beneficiaries choose to supplement their Original Medicare (Parts A and B) coverage or replace it altogether. 

Here are just a few of the healthcare costs Original Medicare won’t cover:

  • Prescription drugs
  • Routine vision, dental, and hearing exams
  • Glasses, dentures, and hearing aids
  • Orthopedic shoes
  • Long-term care

Just over 1 in 5 Medicare beneficiaries receive additional federal support through Medicaid. Others select coverage from private insurers through either Medicare Advantage (Part C) or Medicare Supplement (Medigap) plans. 

Medicare Advantage: An Alternative to Original Medicare

Medicare beneficiaries first gained access to supplemental, private insurance in the 1970s. The program was not formalized, however, until the Balanced Budget Act of 1997. This legislation created what was then called Medicare+Choice. In 2003, Medicare got its biggest overhaul yet from the Medicare Prescription Drug, Improvement, and Modernization Act (MMA). Passing in the House by just one vote, the MMA created Medicare Part D for prescription drug coverage and renamed Medicare+Choice to Medicare Advantage. 

Enrollment in Medicare Advantage soon began to rise on a year-over-year basis. Today, more than a third of Medicare beneficiaries are enrolled in a plan. Most Americans can enroll, but the availability and popularity of Medicare Advantage varies from county to county and state to state. In Alaska, for example, fewer than 1% of eligible residents are enrolled in a Medicare Advantage plan. The Congressional Budget Office predicts that 47% of beneficiaries will be enrolled in Medicare Advantage by 2029. This is in spite of the fact that most beneficiaries opt for Original Medicare during their first year of eligibility. 

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Most Medicare Advantage plans provide access to benefits that are not covered by Original Medicare. In addition to coverage for necessities like vision and dental care, these often include additional incentives like fitness and nutrition benefits. 90% of plans offer coverage for prescriptions. On average, beneficiaries who choose a Medicare Advantage plan with drug coverage pay a lower monthly drug premium ($34/month) than beneficiaries who get this coverage through Part D ($41/month)

Medicare Supplement: Original Medicare and More

While Medicare Advantage plans are an alternative to Original Medicare, Medicare Supplement (or Medigap) plans work differently. As their name implies, these plans are an addition to original Medicare coverage rather than a replacement. What’s more, Medicare Supplement coverage does not typically provide any new benefits. These plans instead make it easier to pay for healthcare services that Original Medicare already covers. Medicare Supplement beneficiaries rely on their plans to help manage their out-of-pocket costs like deductibles and copayments. After all, Original Medicare does not place a cap on these costs. 

Providers offer ten different Medicare Supplement plans. Each is represented by a letter and — while costs will vary — their coverage is consistent from state to state. Regardless of state, any provider who accepts Original Medicare will accept Medicare Supplement. This makes Medicare Supplement less restrictive than Medicare Advantage plans that limit beneficiaries to specific provider networks.

Health Insurance Post-2020

The COVID-19 pandemic has amplified some calls for sweeping changes to health insurance in America. Since March, nearly 5.5 million Americans have lost their employer-sponsored coverage due to layoffs. This record figure could potentially hasten efforts to introduce a public option for citizens of all ages. 

President Trump, for his part, redoubled efforts to end the Affordable Care Act late last month. His administration has once again asked the Supreme Court to review a Texas case from 2017 that is considered “by far the most serious challenge to date for the 10-year-old health care law.” If successful, this move would mean more than 20 million additional uninsured Americans. 

Former Vice President Joe Biden, Trump’s likely opponent in November, has focused on healthcare in a number of recent campaign ads. He continues, however, to make it clear that he would not support any of the existing proposals for “Medicare for All.” If elected, he has pledged to make more incremental changes to Medicare by lowering the eligibility age to 60.