Medicare Advantage vs Medigap, If you will be soon signing up for Medicare or if you are enrolled now, you’ve likely discovered the out-of-pocket expenses you will need to pay, even though Medicare provides fairly comprehensive coverage.

These out-of-pocket expenses are the result of the deductibles, coinsurance, and copayments that are a part of Original Medicare’s Part A, Part B, and Part D.

For seniors who are healthy and are not concerned by occaisional out-of-pocket expenses, Medicare Advantage or Medigap may not seem necessary. But, for the majority of seniors who have one or more health issues and not a lot of budget breathing-room, Medicare Advantage (Medicare Part C) or Medigap, could be a financial lifesaver.

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Certainly, anyone who is about to enroll in Medicare, may feel frustrated because they are not confident if Medicare is going to offer the healthcare coverage they need, and as such, some important decisions will need to be made.

Generally, the most important decision before you is whether to sign up for Medicare Advantage or Medigap (Medicare Supplement insurance).

In this article we will drill down into Medicare Advantage vs. Medigap and point out the pros and cons of each product, to help you decide which product is right for you.

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Original Medicare Coverage

Even though Medicare has been around since 1965, many seniors are not aware of the intricacies of the program. In fact, most individuals wait until shortly before they’re eligible to get educated about the program and what it does and does not cover. Knowing this, our first goal is to point out the pros and cons regarding Original Medicare:

What Is and Isn’t Covered under Original Medicare

Covered by Medicare Part A

  • Inpatient care in the hospital
  • Hospice care
  • Home health care
  • Skilled nursing facility care
  • Nursing home care (only for skilled nursing – not custodial care)
  • Long-term care hospitals

Not covered by Medicare Part A

  • The first $1,556 for each benefit period
  • The first $389 for hospital expenses for days 61-90 in the hospital
  • Dental care unless required for other specific procedures
  • Costs for medications administered outside a hospital facility

Covered Under Medicare Part B

  • Physician costs for medically necessary and preventive services
  • Ambulance services
  • Mental health services
  • Durable medical equipment
  • Limited outpatient prescription drugs

Not Covered Under Part B

  • Most retail prescription drugs 
  • Dental care
  • Dentures
  • Elective or cosmetic surgery
  • Acupunture
  • Hearing aids and exams
  • Routine foot care

Important Note: You will quickly discover that your out-of-pocket expense can accumulate each year because of the Part A and Part B deductibles. Additionally, both Part A and Part B have copays and coinsurance that can accumulate during the year depending on the number of visits to your doctor or ER, and admission to the hospital. Therefore, your two best methods to mitigate these out-of-pocket expenses are by adding a Medigap Plan to supplement your Part A and Part B coverage OR choosing a Medicare Advantage Plan (Medicare Part C) to replace your Part A and B coverages.

Original Medicare plus a Medigap Plan

Although almost 60% of seniors and people under 65 with disabilities enroll in Medicare Part A and Part B, over 80% of them enroll in a Medigap plan, Medicaid (if qualified), or Medicare Advantage plan.

The only reasonable method in deciding which will best serve your circustances and budget it to compare each plan by learning what they offer or don’t offer.

Keep reading because this article is going to provide you the importan up-to-date information and help you make an informed decision about your healtcare coverages.

Considering a Medicare Plan?

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Medigap or Medicare Supplement insurance is designed to supplement the coverages provided by Medicare Part A and Part B. It will not supplement Medicare Part D prescription drug coverage should you elect to buy it.

Although Medigap Plans are offered by private insurance companies who have been approved by Medicare, Medicare controls the minimum coverages that must be offered in every plan. Additionally, in all but a few states, the 10 Medicare Supplements plans that are currently offered are “standardized”.

This means that the Plan G sold by company A is exactly the same as a Plan G sold by company B. The insurance companies set the prices for the plans they offer, not Medicare. Additionally, the insurance companies are allowed to offer additional benefits that are not a part of the actual plans they offer.

The most important term to remember when comparing a Medigap plan vs. Medicare Advantage is the term “supplement.” This means that Medigap works with Medicare Part A and B and does not replace Medicare Part A and Part B.

Since it is a “supplemental insurance policy,” individuals who purchase a Medigap plan must continue to pay their Part B premium to Medicare and then the Medigap premium to the insurance company of their choosing.

Easy Comparison of all Standardized Medigap Plans

When you attempt to compare the standardized Medigap plans that are available in your area, the best method is to compare them side-by-side and take into consideration the premiums charged for each plan.

Medicare Supplement Chart 2022

To compare pricing for each plan available in your area, use the zip code instant quote below.

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Choosing a Medicare Advantage Plan

As was mentioned earlier in the article, the Medicare Advantage replaces Medicare Part A and Part B rather than being a supplement to Medicare and as such, are similar to a private health insurance plan.

Your plan generally has a yearly limit on total out-of-pocket expenses, typically around $8,000. Regardless of the plan, most services are covered after a small co-pay. Plans might offer an HMO or PPO network and all plans require that you continue to pay your Medicare Part B premium.

There are several different types of Medicare Advantage plans. Some plans require a referral to see a specialist, while others do not. Some plans only cover doctors who are in the HMO or PPO network, while others will pay for out-of-network care.

Each plan has different benefits and rules, so make sure you speak with a Medicare Solutions Team specialist so you can understand all of the nuances of the plans you are considering.

Choosing a plan with a low or no annual premium is important, but you need to know how much your copay and coinsurance could be. For example, if you’re looking for plans for hospital stays or procedures, you should examine how much you would spend annually so you can make the best decision.

Moreover, if you watch any TV from October through February, you’ll likely see commercials about zero premium Medicare Advantage plans and plans that will refund a portion of your Medicare Part B premium.

Additionally and generally more importantly, many Medicare Advantage plans offer important extra benefits not available in Original Medicare or Medigap plans:

  • Prescription Drug Coverage
  • Dental Coverage
  • Vision and Hearing Coverage
  • A Quarterly Benefit to pay for OTC health aids and supplements
  • Free membership in a Silver Sneakers gym in your area

Medicare Advantage Pros and Cons

As with any health insurance product, there are advantages and disadvantages that should be considered before applying for coverage.

Fortunately, almost every insurance product offers a 30-day free look that allows the policyholder to study the policy and if not satisfied, simply return it to the company for a complete refund of any premiums paid. Here are the pros and cons that an applicant should consider before completing an application for a Medicare Advantage plan:

Medicare Advantage Pros

Medicare Advantage Cons

  • Additional benefits like dental and prescription drug coverage
  • Medicare Advantage can be priced lower than Medigap and some plans have a zero premium
  • Plans have a maximum out-of-pocket limit allowing you to know the maximum amount of cost-sharing on your part
  • If you select an HMO plan you will be limited on which physicians and hospitals you can utilize
  • Many plans require you to select a PCP – Primary Care Doctor who coordinates all of your health care and must approve visits to specialists.
  • Medicare Advantage plans are designed for specific service areas. If you move outside your service area, you’ll have to purchase a new plan

Can I Switch from Medicare Advantage to a Medigap Plan?

Yes, a policyholder can switch from a Medicare Advantage Plan to Medicare with a Medigap policy. However, you’ll need to be aware of the certain periods you can do this that are established by CMS. There are special circumstances however, that allows a policyholder to switch outside of the established time period without having to pay a penalty.

The four periods when you can make a change without being penalized are:

  • Within three months of your Medicare Enrollment. Since the applicant is within the 3 month initial enrollment period, a change can be made very easily (kind of like buyer’s remorse).
  • During the Open Enrollment Period for Prescription Drug coverage. There are two chances when an individual can switch from Medicare Advantage and return to Original Medicare. The first time is during the OEP which runs annually from October 15th to Decemeber 7th.
  • During the Medicare Advantage Open Enrollment Period. From January 1 to March 31 each year, a person can switch from one Medicare Advantage plan to another or drop their Medicare Advantage plan altogether in favor of original Medicare. During this time, a person can also join a prescription drug plan and Medigap.
  • During Special Enrollment Periods. A special enrollment period may be granted to policyholders who need to make a change outside the normal enrollment periods without being charge a penalth. Typical special enrollment qualifications are: 1. moving to a new location 2. Moving back to the U.S. from another country 3. Moving into or out of a skilled nursing facility or long-term care facility 4. Being released from jail.

Medicare Advantage vs Medigap – Which is Best for Me?

If after doing some research, you cannot decide which plan is right for you, contact an independent Medicare Specialist like the insurance professionals at My Medicare Supplement Plan and speak with an experieced and reputable agent who will discuss your needs and circumstances and then offer a solution that will fit your budget.

Independent Medicare specialists like My Medicare Supplement Plan represent many of the highly rated Medicare providers but are not employed by them. This means these Medicare Specialists will put your needs first and foremost and will advocate for you during the purchase process.

Have Questions?

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DISCLAIMER:
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-Medicare to get information on all of your options.