Suppose you aren’t having all your needs met by Original Medicare (Parts A and B) but are eligible for Medicare. In that case, you may be wondering what the wisest decision is: Medicare Advantage or Medicare Supplement Insurance (Medigap). It can be challenging to tell which will provide the comprehensive health care you need at a cost you can afford.

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What is Medicare Supplement Insurance (Medigap)?

Medicare Supplemental Insurance, widely referred to as Medigap, is a health insurance supplemental policy commonly used by 65 and over. It can also be helpful for those who have Social Security, disability, or Railroad Retirement benefits, even if they are not over the age of 65. 

While Medicare typically covers between 40%-80% of medical costs, having a fixed or limited income can make that gap impossible to pay. 

Medigap supplemental insurance helps fill that financial gap in your Medicare insurance to allow you to reduce out-of-pocket costs.

Key Differences Between Medigap & Medicare Advantage

Medicare Advantage is an alternative to Original Medicare. It provides the same benefits as Parts A and B, on top of possible additional benefits such as prescription drugs, 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 are not.

Plan Costs

There are ten standardized Medigap plans available in most states, which offer varying benefits. Costs depend on the location and what program you choose. Medicare Advantage costs vary by plan too. While some policies come with a $0 monthly premium, remember that you must keep paying your Part B premium anyway. Deductibles, coinsurance, and copayments can also vary. Still, 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.

Providers

Medigap is accepted anywhere Medicare is so that 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. Therefore, it’s best to make sure your doctor of choice is in the network covered by your Medicare Advantage plan before committing.

Choice of Physicians

While both plans have their limits, the choice of physicians can play a critical factor in choosing between Medigap or Medicare Advantage. Medicare Advantage has a limited selection of physicians and facilities within their network, so it’d be wise to check if your chosen physician is within the network if you have a chronic condition. Note that you may not be covered at all with out-of-network visits, depending on the Medicare Advantage plan. Depending on the Medigap policy, you may have a bit more flexibility.

Prescription Drugs

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 different reasons, you can buy a standalone Part D private prescription drug plan to use in conjunction with Original Medicare.

Travel

If you’re planning travel, 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.

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Medigap vs. Medicare Advantage Comparison Chart

The reality is, Medicare Advantage and Medigap can’t be used together, and you can’t have both at once. So, it’s essential to understand how both plans function with Original Medicare when it comes to choosing.

Medicare Advantage Medicare Supplement
Can make changes Two open enrollment periods per year One period per lifetime unless there are special circumstances
Monthly premium As low as $0 Usually has a monthly premium
Part B deductible May not have a deductible Must pay unless you got Plan C or F before January 1, 2022
Part B premium Must pay Must pay
Prescription drugs Generally covers Does not cover
Routine dental, routine hearing, routine vision May cover Does not cover
Networks that restrict providers Yes No
Standardized benefits No Yes
Copayments and coinsurance Usually has copayments and coinsurance May cover all copayments and coinsurance

 

Pros and Cons of Medicare Advantage and Medigap Plans

Medicare Advantage

More than 17 million enrollees are estimated to have signed up for Medicare Advantage plans.

  • Medicare Advantage has lower premiums but comes with copays.
  • Medicare Advantage has a cap on out-of-pocket expenses.
  • Medicare Advantage HMOs, you can visit only providers in your plan. With Medicare Advantage PPOs, you can visit any provider with higher costs for out-of-network providers.
  • You may need referrals for specialists.
  • Annual Open Enrollment period.
  • Many Medicare Advantage plans include Part D.
  • There is no coverage if you are traveling outside of the United States.

Medigap

Between December 2015 and December 2021, the national Medigap enrollment increased from 12.3 million to 13.1 million beneficiaries.

  • Medigap has higher premiums but no copays.
  • Medigap has low to no out-of-pocket costs.
  • Ability to choose any doctor or hospital that participates in the Medicare program.
  • No referrals are necessary.
  • Enroll when you sign up for Medicare at age 65.
  • Need to sign up for Part D drug coverage separately
  • Coverage outside of the United States is possible.

Medicare Supplement Insurance Plan Benefits

The first massive benefit of Medigap is its ability to fill in the “gaps” between Medicare Plan A and B, giving beneficiaries more comprehensive coverage. Medicare Supplement Insurance Plans also cover an extensive amount of Original Medicare out-of-pocket costs.

While premiums tend to be higher than Medicare Advantage, remember that they result in little to no out-of-pocket costs. It also gives you access to more flexibility in terms of physician care. Generally speaking – whichever facility that accepts Medicare will also take Medigap. 

Medicare Advantage Plan Benefits 

This Medicare Plan A and Plan B extension are very popular as it replaces Original Medicare while remaining affordable. It has lower premiums than Medigap, and if you hit the maximum out-of-pocket costs, many plans will cover you for the rest of the year! 

Most Medicare Advantage plans include prescription drug coverage, which Medigap does not. Best of all, you qualify for Medicare Advantage once your Original Medicare kicks in! 

Can I Switch From Medicare Advantage to Medicare?

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 cannot enroll in a Medigap Plan. State Laws vary and may offer you additional rights, including one that allows you to register within a Medigap Plan.

How to Enroll in Medicare Supplement Plans (Medigap)?

During your 6-month open enrollment period, you will generally get the best prices and more choices among Medigap policies. This can be done through your state, even if you have health problems. After this enrollment period, you may not be able to buy Medigap. If you can, it will likely cost more due to past or present health problems.

How to Enroll in Medicare Advantage (Medicare Part C)?

The Medicare Open Enrollment Period is an annual period when current Medicare users can switch, drop, or add a new part of their Medicare coverage, including Medicare Advantage. The Medicare open enrollment period begins on October 15th and ends on December 7th. During this time, you can shop for the best coverage for your needs. Note that if this is your first year on Medigap, OEP is not open to you. 

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