You may have heard of Medicare Advantage and Medicare Supplement Insurance (also known as Medigap), but you may not know exactly what they are. And more specifically, you may wonder what the difference is between them.
In short, Medicare Advantage and Medigap are both health insurance plans offered by private insurance companies to Medicare beneficiaries. But which is best for you depends on a variety of factors. First, you need to understand each type of plan.
What’s the Difference Between Medicare Advantage and Medigap?
The main difference between Medicare Advantage and Medigap is how they each work with Original Medicare:
- A Medicare Advantage plan unifies the basic coverage received from Medicare Part A and Part B (Original Medicare) into a single policy and typically includes drug coverage, as well. Additional benefits, such as dental, vision, and/or hearing coverage, may also be included.1
- A Medigap plan is used in combination with Original Medicare. It covers some of your out-of-pocket expenses such as coinsurance, copayments, and deductibles.2
Important reminder: You cannot have a Medicare Advantage plan and a Medigap plan at the same time. You must choose whether to keep your Original Medicare coverage and add a Medigap plan or opt for a Medicare Advantage plan.
About Medicare Advantage
To purchase a Medicare Advantage plan, you must first be enrolled in Medicare Parts A and B. Medicare Advantage plans cover the same services as Original Medicare, but often also include prescription drug coverage. Many Medicare Advantage plans also include additional benefits. 1In 2021, most plans offer fitness and dental benefits and 68% of plans include dental, vision, hearing and fitness benefits.4
Medicare Advantage plans come with a variety of premiums, copays, coinsurance and other out-of-pocket costs. And similar to employer health plans, you can choose from HMO (Health Maintenance Organizations), PPO (Preferred Provider Organizations) and POS (Point of Service) plan types. There are also plans available for people with special health needs and those enrolled in Medicaid programs.5
Since Medicare Advantage plans include provider networks, it’s a good idea to first review plans to see if you can keep your current doctors and pharmacies.6
Your choices in Medicare Advantage plans continue to grow. Between 2020 and 2021, the number of available plans increased from 3,148 to 3,550.The average person with Medicare in 2021 has access to 33 different plans.4
Like Medicare Advantage, you must first be enrolled in Original Medicare to enroll in a Medigap/Medicare Supplement plan.2
Medigap plans do not provide additional Medicare coverage. Instead, they cover the out-of-pocket costs—or “gaps”—left by Original Medicare, such as copayments, coinsurance, and deductibles.2
There are 8 different types of Medigap plans available for new Medicare enrollees, each identified by a letter.The table below shows what percentage the plan covers for each costs well as the out-of-pocket limits for applicable plans. There are also two plans (C & F) that are available only to people who were eligible for Medicare before January 1, 2020.7
|Part A coinsurance and hospital costs up to an extra 365 days after Medicare benefits are used up||100%||100%||100%||100%||100%||100%||100%||100%||100%||100%|
|Part B coinsurance or copayment||100%||100%||100%||100%||50%||75%||100%||100%†||100%||100%|
|Blood: first 3 pints||100%||100%||100%||100%||50%||75%||100%||100%||100%||100%|
|Part A hospice care coinsurance or copayment||100%||100%||100%||100%||50%||75%||100%||100%||100%||100%|
|Skilled nursing facility care coinsurance||100%||100%||50%||75%||100%||100%||100%||100%|
|Part A deductible||100%||100%||100%||50%||75%||50%||100%||100%||100%|
|Part B deductible||100%||100%|
|Part B excess charge||100%||100%|
|Foreign travel exchange up to plan limits||80%||80%||80%||80%||80%||80%|
|Out-of-pocket limit*||$6,220 ||$3,110|
|Based on 2021 costs | *Enrollees in high-deductible Plan G and Plan F must pay for their Medicare-covered costs up to the deductible amount before the plan begins to pay. | †Plan N pays 100% of the Part B coinsurance, excluding copayments of up to $20 for some office visits and up to $50 for ER visits that don’t lead to inpatient admission. For residents of Massachusetts, Minnesota and Wisconsin, Medigap plans are standardized separately.7 |
Medicare Advantage and Medigap: The Differences
Now that we’ve explained the key differences between Medicare Advantage and Medigap, let’s talk about the smaller differences that further separate the two.
The freedom to choose your own doctors and hospitals
Medicare Advantage: Your choice of physicians and facilities may be limited to the plan’s network, whether it is HMO or PPO. You might also need a referral from a primary care physician before seeing a specialist.6
Medigap: You are free to visit any doctor or facility that accepts Medicare, and you don’t need referrals to see specialists.8
Prescription drug coverage
Medicare Advantage: Most plans include coverage for prescription drugs.1
Medigap: Plans do not include coverage for prescription drugs. Medicare Part D prescription drug plans must be purchased separately.2
Medicare Advantage: You can expect to pay for deductibles, copayments, and coinsurance, just as with traditional health insurance. Medicare Advantage plans also have an annual out-of-pocket limit that varies depending on the plan you choose.9
Medigap: Depending on the plan, Medigap can cover most out-of-pocket expenses associated with Original Medicare, excluding Part B deductibles. Depending on the plan chosen, there may or may not be an out of pocket limit.7
Cost of monthly premiums
Medicare Advantage: When you have a Medicare Advantage plan, you will continue to pay your Medicare Part B premium. Some plans include additional monthly premiums and some do not. There are even certain plans that will help pay for your Medicare Part B premium.9The average premium for a 2021 Medicare Advantage plan that includes prescription drug coverage is approximately $21.10
Medigap: When you have a Medigap plan, you will continue to pay your Medicare Part B premium and you’ll have a separate premium for your Medigap plan.2 Your Medigap premium will vary based on the plan, your age, location, and the insurance provider you select.8
Date you can enroll
Medicare Advantage: You are free to enroll in Medicare Advantage upon enrolling in Original Medicare. There is also an Annual Enrollment Period in the fall. From October 15 to December 7, Medicare beneficiaries can switch from Original Medicare to Medicare Advantage, change Medicare Advantage plans, or change from a Medicare Advantage plan back to Original Medicare (Parts A & B).11
Medigap: You can first enroll in Medigap during your initial 6-month Medigap Open Enrollment Period, which occurs within six months of acquiring Medicare Part B. If you sign up during this time, you will not be charged more or denied coverage based on age or health conditions.12 You can also apply for enrollment anytime, but you may face higher premiums or rejection based on your health history.12
Change of benefits
Medicare Advantage: The benefits of a Medicare Advantage plan may change from one year to the next.1
Medigap: The benefits of a Medigap plan do not change and are “guaranteed renewable” as long as premiums are paid on time and in full.13
Medicare Advantage: Because they usually operate under a network of doctors and facilities, Your Medicare Advantage plan may limit you to in-network providers who are close to your home.14 This excludes emergency and urgent care.1
Medigap: Because Medigap is accepted anywhere Medicare is, you can find doctors and medical facilities in all 50 states, plus international locations with some plans.8
Medicare Advantage plans made up 39% of all benefit payments in the fiscal year 2020.14
Medicare Advantage vs. Medigap: Which is Right for You?
A Medicare Advantage plan might be best for you if:
- You enjoy the convenience of getting all your medical coverage from one source.1
- You want to pay less per month. Some plans have $0 premiums.9
- You wish to have additional benefits on the same policy such as dental, vision, or prescription drugs.1
A Medigap plan might be best for you if:
- You enjoy the freedom of being able to visit any physician or facility that accepts Medicare.8
- You’d rather pay more for your premium to lower out-of-pocket costs when receiving care.2
- You often travel outside the U.S. or live in more than one location throughout the year.7
Take our online Medicare quiz now to help you determine which plan could be best for you.
HealthMarkets Helps With Medicare Advantage and Medigap Plans
HealthMarkets can quickly help you find the Medicare plan that best fits your needs. Need help deciding? Answer a few quick questions to see whether a Medicare Advantage or Medigap plan is a better choice for you.
Then, use FitScore® to help you find and apply for a Medicare Advantage plan that fits your needs. You can compare plans and choose plans that include your current providers. We can also help you find a Medigap plan that supplements your Original Medicare.
1. U.S. Centers for Medicare and Medicaid Services. Retrieved from https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/medicare-advantage-plans/how-do-medicare-advantage-plans-work. Accessed December 17, 2020. | 2. U.S. Centers for Medicare and Medicaid Services. Retrieved from https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap. Accessed December 17, 2020. | 3. U.S. Centers for Medicare and Medicaid Services. Retrieved from https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap/medigap-medicare-advantage-plans. Accessed December 17, 2020. | 4. Kaiser Family Foundation. October 29, 2020. Retrieved from https://www.kff.org/report-section/medicare-advantage-2021-spotlight-first-look-data-note/. | 5. U.S. Centers for Medicare and Medicaid Services. Retrieved from https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/medicare-advantage-plans. Accessed December 17, 2020. | 6. U.S. Centers for Medicare and Medicaid Services. “Understanding Your Medicare Advantage Plan.” December 2019. Retrieved from https://www.medicare.gov/Pubs/pdf/11941-Understanding-Your-Medicare-Advantage-Plan.pdf. | 7. U.S. Centers for Medicare and Medicaid Services. Retrieved from https://www.medicare.gov/supplements-other-insurance/how-to-compare-medigap-policies. Accessed December 17, 2020. | 8. U.S. Centers for Medicare and Medicaid Services. Retrieved from https://www.medicare.gov/what-medicare-covers/your-medicare-coverage-choices/how-original-medicare-works. Accessed January 28, 2021. | 9. U.S. Centers for Medicare and Medicaid Services. Retrieved from https://www.medicare.gov/your-medicare-costs/costs-for-medicare-advantage-plans. Accessed December 17, 2020. | 10. U.S. Centers for Medicare and Medicaid Services. Retrieved from https://www.cms.gov/newsroom/press-releases/trump-administration-announces-historically-low-medicare-advantage-premiums-and-new-payment-model. Accessed January 28, 2021. | 11. U.S. Centers for Medicare and Medicaid Services. Retrieved from https://www.medicare.gov/sign-up-change-plans/joining-a-health-or-drug-plan. Accessed December 17, 2020. | 12. U.S. Centers for Medicare and Medicaid Services. Retrieved from https://www.medicare.gov/supplements-other-insurance/when-can-i-buy-medigap.Accessed December 17, 2020. | 13. U.S. Centers for Medicare and Medicaid Services. Retrieved from https://www.cms.gov/Medicare/Health-Plans/Medigap. Accessed December 17, 2020. | 14. Kaiser Family Foundation. April 22, 2020. Retrieved from https://www.kff.org/medicare/issue-brief/a-dozen-facts-about-medicare-advantage-in-2020/.
HealthMarkets’ FitScore intends to identify plans that fit your needs. You should carefully review official plan materials.