Medicare Advantage and Medicare Supplement Comparison

  • Originally published February 25, 2011 , last updated December 30, 2015
Medicare Advantage and Medicare Supplement Comparison

The Medicare Modernization Act signed into law in 2003 by President Bush signaled the most sweeping changes in Medicare in 40 years. Not only did the act create Medicare Part D, the prescription drug plan, it also ushered in Medicare Part C, Medicare Advantage plans. Many agents have sat on the sidelines while Medicare Advantage plans multiplied. If you are active in the market, you may have lost clients to Medicare Advantage plans.

Should Medicare Advantage plans be considered competition for the traditional Medicare Supplement producer or an opportunity? At Senior Market Sales, we view Medicare Advantage as an alternative to Medicare Supplement and an opportunity. Consider the following differences:

 

Medicare Advantage

Medicare Supplement

Low monthly premiums, some as low as $0 and others as high as $60

Monthly premiums that typically range from $85-$150

All rates are the same per service area (normally county) regardless of age or sex

Rates are frequently attained age, meaning rates increase as the client grows older; gender distinct rates are common

Guaranteed Issue

Underwritten except when turning 65 or leaving an MA plan.

Co-pays when receiving treatment and maximum out-of-pocket expenses typically ranging from $2,500 to $5,000

Covers remainder of provider bill after Medicare pays on most popular Plan F, with variations depending on the plan

Benefit structure varies by plan

Standardized benefit plans

Annual plans that must be approved by CMS

Guaranteed renewable plans that fall under state insurance department oversight

Open enrollment periods and lock-in periods restrict when sales can be made

Sales can be made throughout the year

Can have networks such as HMO and PPO plans or no networks such as Private Fee-for-Service plans

Typically can go to any doctor or hospital; select plans provide lower rates for hospitals under contract


With the senior population expected to grow from 42.4 million in 2005 to 61.3 million in 2020 , sales of both Medicare Supplement and Medicare Advantage plans will grow. Who buys what depends greatly on the clients needs, health, income, and location. Clients who don't go to the doctor much might prefer the low premiums of a Medicare Advantage plan. Those who are very unhealthy might be forced into Medicare Advantage because it doesn't require underwriting. Medicare Advantage is much more popular in urban areas because of the available networks.

Medicare Advantage & Medicare Supplement by the Numbers

Category Overall Medicare Medicare Advantage Medicare Supplement
Total Enrollment 48,685,000 10,147,000 12,628,000
Age
Under 45 Years
4.0% 0.4% 0.6%
45-64 years 12.7% 2.8% 7.3%
65-74 years 45.2% 48.% 49.3%
75-84 years 28.1% 35.5% 32.4%
85 years or older 9.9% 13.3% 10.3%
Gender
Male
45.4% 41.0% 45.2%
Female 54.7% 59.0% 54.8%
Annual Income
$10,000 or Less
14.4% 6.2% 6.4%
$10,001 - $20,000 25.9% 23.3% 28.0%
$20,001 - $30,000 18.5% 19.7% 24.4%
$30,001 - $40,000 22.4% 27.4% 24.6%
$40,001 or more 18.8% 23.4% 16.9%
Area of Residence
Urban
76.% 70.3% 88.7%
Rural 23.6% 29.9% 11.3%
Health Status
Excellent
14.5% 17.2% 15.6%
Very Good 26.6% 31.1% 32.7%
Good 31.3% 32.3% 28.8%
Fair 18.6% 13.8% 16.6%
Poor 9.0% 5.7% 6.3%

 

Source: CSG Actuarial

Senior Market Sales, Inc. considers Medicare Supplement, Medicare Advantage and the Prescription Drug Plan all elements of Medicare Solutions. An agent in the senior market selling health coverage should be well versed in all three programs. It is important to know the differences between plans and it is good to have these plans in an agent’s portfolio.

Get certified to sell Medicare Advantage or contracted with one of our carriers call the SMS Medicare Solutions department at 1-877-645-0147.