Turning 65 means finally qualifying for Medicare. But deciding between Medicare Advantage or Medigap can leave you puzzled. This comprehensive guide explains the key differences between Medicare Advantage and Medigap to help you determine the right plan.
Let’s first review Medicare essentials:
- Original Medicare coverage consists of Part A hospital coverage and Part B medical coverage run by the federal government.
- Medigap (also called Medicare Supplement Insurance) helps pay Original Medicare out-of-pocket costs like coinsurance and deductibles. These are sold by private insurers.
- Medicare Advantage (also called Part C) allows private insurers to provide Medicare benefits through all-in-one plans.
Now let’s compare Medicare Advantage and Medigap in more detail.
Difference Between Medicare Advantage and Medicare Supplement Plan
Medicare Advantage and Medigap have some significant differences:
- Medicare Advantage bundles Parts A, B, and usually D into one policy. Many plans also cover extras like vision, dental, and hearing.
- Medigap pays a portion of Parts A and B out-of-pocket costs like deductibles and coinsurance. It does not cover Part D prescription drugs.
- Medicare Advantage premiums range from $0 to $100 a month. Plans have out-of-pocket maximums that cap your spending.
- Medigap premiums range from around $100 to over $200 monthly depending on coverage. It allows you to pay Medicare deductibles and coinsurance amounts rather than copays.
- Medicare Advantage only covers in-network providers except in emergencies. Referrals are often required to see specialists.
- Medigap lets you see any provider nationwide that accepts Medicare. Referrals are not needed to see specialists.
- Medicare Advantage usually bundles in Part D prescription drug coverage with set copays and coinsurance.
- Medigap does not cover prescription drugs. You need to get a separate Part D Plan if you want drug coverage.
- Medicare Advantage only covers emergencies and urgent care when traveling outside your plan’s service area.
- Medigap allows you to get care from any Medicare provider throughout the entire U.S.
Medicare Advantage Pros and Cons
Medicare Advantage offers advantages but also some downsides:
- Often $0 premiums
- Out-of-pocket spending limits
- May cover dental, vision, hearing
- Includes prescription drug coverage
- Some plans cover fitness benefits
- Limited to in-network providers
- Referrals needed for specialists
- Pre-approvals required for some services
- Difficulty getting care when traveling
- Drug formulary restrictions
For many, the extra benefits and lower copays make Medicare Advantage Plans the better choice. But the restrictions may be problematic for some beneficiaries.
Medigap Pros and Cons
Similarly, Medigap has both good and bad points:
- Freedom to choose any healthcare provider nationwide
- Use any hospital including top specialty facilities
- No referrals needed to see specialists
- Smooth claims process without pre-approvals
- Reliable coverage when traveling
- No prescription drug coverage
- Won’t cover vision, dental, hearing, fitness benefits
- Higher monthly premium costs
- Must pay Medicare deductibles and 20% coinsurance amounts
- No annual limit on your out-of-pocket medical costs
The choice depends on your healthcare priorities. Medigap provides flexibility while Medicare Advantage offers more affordability.
Medicare Advantage vs Medigap Cost Comparison
Cost differences to consider include:
- Premiums – Medigap premiums are higher, while many Medicare Advantage Plans have $0 premiums.
- Deductibles – Medigap covers Medicare deductibles, which are $226 per year for Part B in 2023. Many Medicare Advantage Plans have no deductibles.
- Coinsurance – Medigap covers the 20% Part B coinsurance. Medicare Advantage Plans usually have 10-50% coinsurance.
- Copays – Medicare Advantage features copays for services. With Medigap, you pay the Medicare 20% coinsurance amount.
- Out-of-pocket limit – Medicare Advantage has a yearly limit around $8,300. Medigap does not limit your out-of-pocket costs.
- Drug costs – Medigap does not cover prescription drugs. Medicare Advantage includes Part D coverage.
Depending on your healthcare needs, Medigap or Medicare Advantage may provide more affordability. Do a side-by-side comparison of total costs.
Should You Choose Medicare Advantage or Medigap?
There are several key factors that determine whether Medicare Advantage or Medigap is the smarter choice:
- Providers – If you want to keep seeing specific doctors, check if they accept both plan types.
- Prescriptions – Do you take expensive drugs? Medigap may allow more Part D Plan options.
- Travel habits – Medigap provides reliable nationwide coverage.
- Budget – Your total costs may be lower with Medicare Advantage. Or you may prefer Medigap’s predictable copays.
- Health status – Your expenses will be lower with Medigap if you have complex conditions and hit the Medicare Advantage out-of-pocket limit each year.
Talk to a Medicare broker or advisor to discuss your situation and zero in on the right plan.
Choosing the Best Medigap Policy
If you determine Medigap is the right route, choosing the right policy involves:
- Comparing options during your Medigap open enrollment period when you first enroll in Medicare Part B
- Assessing plans available in your state – 10 standard plans are offered, labeled Plan A through Plan N
- Choosing a plan that covers your biggest Medicare out-of-pocket expenses
- Considering Plans F, G, and N for comprehensive coverage
- Researching prices across insurers for the same plan
- Picking an insurer with strong financial ratings
Work with an independent broker to find your perfect Medigap Plan providing the affordability and convenience you seek.
- Medicare Advantage Plans bundle Parts A, B, and usually D and restrict you to network providers.
- Medigap policies help cover Medicare out-of-pocket expenses but limit you to Original Medicare.
- Compare total costs including premiums, deductibles, coinsurance, copays, and drug coverage.
- Assess your healthcare priorities like provider choice, prescription needs, travel, and budget.
- If Medigap is best for you, carefully select a standardized plan that fits your coverage needs.
Don’t go it alone when navigating your Medicare options. Seek guidance to choose the right Medicare Advantage or Medigap Plan providing the optimal coverage and value.
We’re Here to Help
You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give the licensed insurance agents at Think65 a Call at (719) 301-1220. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.
Is Medicare Supplement more expensive than Medicare Advantage?
The cost of Medicare Supplement insurance, also known as Medigap, can be higher than the cost of Medicare Advantage Plans. However, Medicare Supplement generally offers more comprehensive coverage and allows you to see any doctor or specialist who accepts Medicare patients.
What is the difference between Medicare Supplement insurance and Medicare Advantage?
Medicare Supplement, or Medigap, is a private insurance policy that helps cover the gaps in costs that Original Medicare doesn’t cover. Medicare Advantage, on the other hand, is a type of Medicare health plan offered by private insurance companies that combines Part A and Part B coverage.
Can I have both Medicare Advantage and Medigap Plans?
No, you cannot have both Medicare Supplement and Medicare Advantage Plans at the same time. You need to choose between either having a Medicare Supplement Plan or a Medicare Advantage Plan.
Do Medicare Advantage Plans include prescription drug coverage?
Many Medicare Advantage Plans offer prescription drug coverage, known as Medicare Part D. However, not all Medicare Advantage Plans include this coverage, so it’s important to review the specific plan details for Medicare beneficiaries.
Which is the best Medicare Plan, Medicare Supplement or Medicare Advantage?
The best Medicare Plan for you depends on your specific needs and preferences. Medicare Supplement Plans offer more flexibility in choosing healthcare providers, while Medicare Advantage Plans may have lower costs and additional benefits. It’s important to compare the plans and consider your individual circumstances before making a decision.
Can I buy a Medigap policy if I have a Medicare Advantage Plan?
You cannot have both a Medicare Advantage Plan and a Medigap policy at the same time. If you have a Medicare Advantage Plan and want to switch to a Medigap policy, you will need to disenroll from the Medicare Advantage Plan and return to Original Medicare.
What types of coverage do Medicare Advantage Plans offer?
Medicare Advantage Plans offer the same coverage as Original Medicare (Part A and Part B), and often include additional benefits such as prescription drug coverage, dental, vision, hearing, and fitness programs. Some plans may also offer coverage for services not covered by Original Medicare, such as routine eye exams or chiropractic care.
What is the difference between Medicare Part D Plan and Medicare Advantage Plan?
Medicare Part D Plans provide prescription drug coverage, while Medicare Advantage Plans provide comprehensive health coverage that includes prescription drugs. Medicare Advantage Plans are offered by private insurance companies and replace the coverage provided by Original Medicare insurance plan.
Can I join a Medicare Advantage Plan if I have Medicare Part A and Part B?
Yes, if you have both Medicare Part A and Part B, you can enroll in a Medicare Advantage Plan. However, you must continue to pay your Medicare Part B premium, along with any additional premium that may be required by the Medicare Advantage Plan.
Can I return to Original Medicare if I have a Medicare Advantage Plan?
Yes, you can choose to return to Original Medicare if you have a Medicare Advantage Plan. However, you may not be able to re-enroll in the same Medicare Advantage Plan you had before, and you may not be guaranteed the same Medigap policy if you had one.