Medicare Advantage vs. Medigap – The Difference

When it comes to understanding the various types of Medicare programs, it may get a bit confusing. There are multiple types, with each type containing hundreds of pages of information on Medicare.gov. That’s why we decided to do the work of pulling all the basics of Medicare Advantage and comparing it with Medigap to make the process easier for you.

First, let’s look at Medicare itself. It was created with four parts that are designed to cover the entire medical spectrum users might need. These parts are called A, B, C, and D. Part A deals mostly with hospital care. Plan B will help pay for regular doctor appointments and different procedures. Part D is mainly for prescription drugs.

While these three parts are great, they don’t cover everything. You might have large deductibles and co-pays, which aren’t covered by Parts A, B, and D. That’s Part C’s job. Part C comes in one of two options you can use to help protect yourself against an incident that might cost you a ton of money later.

The first of these options is called Medicare Advantage. It’s an additional coverage option that will protect you against unplanned medical expenses. The majority of medical and health care can be costly, especially if you had an accident or major illness. The other option you can choose from is called Medicare Supplement Insurance, otherwise known as Medigap.

What is Medicare Advantage

Medicare Advantage was created to fill in the gaps by offering better coverage for a lower price. Medicare Advantage makes the process simpler. Rather than enrolling in Parts A, B, C, and D, you would instead choose the private insurance you want. Most services are covered under a premium payment and Part B. It offers everything seniors need, every Medicare Part, and does so with a more affordable price.

One of the benefits of Medicare Advantage is that it works much like private health plans, including PPO and HMO network plans, through personal insurance. It covers a lot more than you’d expect from Medicare, including Medigap. Any lab work, surgery, hospital, and office visits are typically covered.

You’ll still have to do your homework before deciding the plans you want. For example, one may have prescription coverage, yet they do not allow you to see a specialist without a referral from a doctor. So, you’ll have to find the different rules that apply to the plan you choose and pick one that fits what is best for your situation.

Another example of what may not be covered is out-of-network care. Some parts may pay it still, but many will not. It is not cost effective to go outside of the network.

What is Medigap?

Medicare Supplement Insurance, also called Medigap, was created for the sole purpose of helping seniors pay for other benefits that might have high costs that could cause financial strain. In this way, it’s a protective measure. You never know when you’ll get hit with sickness or when an accident will happen. Medigap will then charge the patient a premium for this service.

To make matters even more frustrating, Medigap itself has many different options to choose from. You can pick from Plans A, B, C, D, F, G, K, L, M, and N. Each one includes the basic standard Medicare among other programs you can choose to help complete your health care needs. You can go through and select the options you want or need the most.

Medigap Plan F is a mixture of all or most of the parts and is the most expensive. If you want all the options to protect yourself fully, then F is the way to go. Many enroll in Plan F to simplify the process. The problem with this is, Plan F is a limited commodity. It won’t be available to new Medicare enrollees by the end of 2019.

While that might seem like too much trouble, people enrolled in Plan F rarely see any co-pay or deductible. This plan is more costly every month; the coverage is more in-depth for anything that might happen medically. Many feel that this is a necessary precaution to preserve their retirement and savings.

One final thing to remember about Medigap is that your insurance will cover you no matter what state you reside. If you’re out of town or spend your winters in Florida, if your doctor accepts Medicaid, you’re good to go. However, if the doctor you see doesn’t take Medicare, then you will be responsible for the full cost, as Medigap won’t cover expenses outside of the network.

Key Differences Between Medigap and Medicare Advantage

You cannot legally sign up for both Medicare Advantage and Medigap. You’ll have to look at each plan and decide what you want and need the most. Both are great at offering most things customers need. Your decision will come down to your specific needs and the cost you can afford. Of course, most people want more service for less money.

Medigap Medicare Advantage
How it relates to Original Medicare Parts A & B Mostly pays all of Part A & B out-of-pocket costs as a private supplemental coverage Provides Part A & B directly in place of Medicare through a private health care plan
Premium Costs Costs vary by age, health history, or both. Can run as hight as $200 a month. All enrollees pay the same premium if any regardless of age or health history.
Out-of-pocket costs Minus the premium has low to no costs In-network medical deductibles and copays depending on the plan.
Choice of doctors and hospitals Free choice in provider as long as the facility or provider participates in Medicare. HMOs: Plan providers only.
PPOs: Any provider, but out-of-network providers are more costly.
When you can enroll First six months after you sign up for Part B and are at least 65 years old. In most situations after that six months, you can be turned down or charged extra for pre-existing conditions. When you first enroll in both Medicare A and B and annually thereafter during Open Enrollment (Oct. 15-Dec. 7).
Part D (drug) coverage Part D is not included. You must buy a separate drug coverage plan. Most plans include Part D coverage.


Cost

When comparing plans, you may notice that Medigap is generally more expensive with higher premiums than Medicare Advantage. Ultimately, you’ll pay less out-of-pocket and co-pay expenses than Medicare Advantage. However, Medicare Advantage costs less overall and will extend over more needed services. Costs associated with each plan may influence part of your choice. However, take into consideration your lifestyle as well.

Choices & Lifestyle Influencers

You have many choices with both Medicare Advantage and Medigap.

Many seniors in the U.S. do not live in the same area all year round. Many enjoy seasonal travel and often live multiple places throughout the year. Meaning they live somewhere in the north and travel south each winter. Since they live or travel out of their area, they need a plan they can take with them.

If you travel or have specific lifestyles, keep these things in mind when comparing the two plans.

Both plans have their pros and cons, and they are both designed to help protect you from massive healthcare costs you might have. Health insurance is all about being thoroughly prepared, so if you’re looking for the right plan to cover your needs.

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