Medicare Advantage and Medigap are two great ways that a Medicare beneficiary can offset out-of-pocket costs. One policy is more expensive than the other and includes extra benefits. The other is less expensive but has more restrictions.
If you aren’t having all your needs met by Original Medicare (Parts A and B), but are eligible for Medicare, you may be wondering what the wisest decision is: Medicare Advantage, or Medicare Supplement Insurance (Medigap). It can be difficult to tell which will provide the comprehensive health care you need, at a cost you can afford. The reality is, Medicare Advantage and Medigap can’t be used together, and you can’t have both at once. So, when it comes to choosing, it’s important to understand how both plans function with Original Medicare.
Medicare Advantage is an alternative to Original Medicare and provides the same benefits as Parts A and B, on top of possible additional benefits such as prescription drug, dental and vision coverage. Meanwhile, Medigap plans tend to have higher premiums associated but can assist with out-of-pocket expenses associated with Original Medicare, including but not limited to deductibles, copayments, and coinsurance. While Medigap is used in combination with Original Medicare, Medicare Advantage plans aren’t.
There are 10 standardized Medigap plans available in most states, which offer varying benefits. Costs depend on location and what plan you choose. Medicare Advantage costs vary by plan too. While some plans come with a $0 monthly premium, remember that you must keep paying your Part B premium anyway. Deductibles, coinsurance, and copayments can also vary, but you might find lower costs than Original Medicare offers for these. And, unlike Original Medicare, Medicare Advantage plans have annual out-of-pocket limits: once the limit has been reached, your plan covers all costs moving forward.
Medigap is accepted anywhere Medicare is, so you can visit a wide range of healthcare providers. Meanwhile, Medicare Advantage plans typically operate under HMO or PPO formats like group or individual health insurance plans, meaning network restrictions may come into play. It’s best to make sure your doctor of choice is in the network covered by your Medicare Advantage plan before committing.
Roughly 75% of older adults in the US take at least one prescription drug daily. Medicare Part D prescription drug coverage is included in many Medicare Advantage plans, but Medigap, on the other hand, offers no such coverage. If you decide to buy a Medigap plan for other reasons, you can buy a standalone Part D private prescription drug plan to use in conjunction with Original Medicare.
If traveling is on the menu, Medigap plans can come in handy as they don’t restrict you to a provider network and are accepted by any provider who takes Medicare, with some even offering foreign travel exchange coverage for emergency care abroad. Meanwhile, Medicare Advantage plans tend to be too restrictive to use outside of their set networks.
When it comes to Medicare Advantage, this is one of the most asked questions we get as the number of options under each plan can be quite overwhelming. There’s no right or wrong answer, as it depends on what type of coverage you’re needing. For example, with Medigap plans, you’ll have to carefully go over your Original Medicare coverage to understand where you need to “plug the holes” with Medigap.
Though with the Medicare Advantage Plan it’s likely that you’ll receive more extensive coverage than Original Medicare plus Medigap as they encompass all parts of Original Medicare along with the gaps you’d need supplemental coverage for. Medicare Advantage carriers can oftentimes offer incentives like zero plan premiums, zero copayments, and no deductibles.
More than 17 million enrollees are estimated to have signed up for Medicare Advantage plans.
Between December 2015 and December 2016, the national Medigap enrollment increased from 12.3 million to 13.1 million beneficiaries.
Every year from January 1st to February 14th, those over 65 can make changes to their Medicare plan. Only those who have private Medicare Health Plans can make changes. Under Federal Law, if you disenroll from a Medicare Advantage Plan, you are not entitled to enroll in a Medigap Plan. Though State Laws vary and may offer you additional rights including one that allows you to register within a Medigap Plan.