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Medicare isn't quite giving you the coverage you need, and you’re wondering if there's another option. You may have heard of Medicare Advantage and Medigap, but what exactly are they? And perhaps more importantly, what's the difference between them?

The first question is easy to answer. In short, Medicare Advantage and Medigap are both collections of health insurance plans available to recipients of Medicare. These plans are designed and offered up by private insurance companies and approved by Medicare and/or the Department of Insurance.

The second question is not so easy to answer. The best way to describe the differences in Medicare Advantage vs. Medigap is:

  1. A Medicare Advantage plan provides all of the basics of Medicare along with some additional benefits. A Medicare Advantage plan will combine the coverage received from Part A and Part B of Original Medicare.

  2. A Medigap plan is used in combination with Medicare. It supplements Medicare coverage with some more benefits. With Medigap, you will keep Original Medicare and use those benefits along with your Medigap coverage.

Put simply, Medicare Advantage offers many advantages that regular Medicare may not. And Medigap fills in some of the coverage “gaps” left by Medicare. You cannot have a Medicare Advantage and a Medigap plan at the same time and, in fact, it’s illegal for an insurance company to sell you both.

There are many more subtle differences between Medicare Advantage and Medigap. In this article, we’re going to dissect those differences.

Because of the differences, and because each person has different medical needs and budgets, it’s important to fully understand the aspects of both Medicare Advantage and Medigap before making any purchases.

The Basics of Medicare

Before diving into Medicare Advantage vs. Medigap, let’s first outline some basic information about Medicare. To understand Medicare Advantage and Medigap, you must first understand the four different parts of Medicare. 

Medicare Part A is your hospital coverage. Medicare Part A covers hospital stays, nursing care and even some home health services and hospice care. When you enroll in Social Security, you are automatically enrolled in Part A.

Medicare Part B is medical coverage. This part pays for a portion of your doctor visits, medical equipment, outpatient procedures and care, x-rays, lab tests, mental health treatment and ambulance services. Medicare Part B is optional. However, you may pay a higher premium if you did not enroll during the Initial Enrollment Period. The combination of Part A and Part B is known as “Original Medicare.” 

Medicare Part C is what’s known as Medicare Advantage. Medicare Advantage is a collection of plans offered by private insurance companies and approved by Medicare. It provides you with all the benefits that are included in Part A and Part B of Original Medicare.

Medicare Part D is a prescription drug plan. Part D is also optional and is only available to those enrolled in either Part A or Part B. Like Medicare Advantage, Part D plans are offered through private insurance companies and approved by Medicare.

Medicare Advantage 

In order to purchase a Medicare Advantage plan, you must first be enrolled in both Part A and Part B. By law, Medicare Advantage plans must cover the same services as Original Medicare. But Medicare Advantage plans also include some extra benefits not covered by Original Medicare. Depending on the plan, these extras can include coverage such as vision, dental or prescription drugs.

In addition to offering different coverage options, Medicare Advantage plans may also come with some alternative payment terms and restrictions to Original Medicare.  

Just as with traditional health insurance plans, Medicare Advantage plans come in the forms of HMO (Health Maintenance Organizations), PPO (Preferred Provider Organizations) and POS (Point of Service). 

There are also Special Needs Plans (SNP), which are designed for people with specific diseases, and Medical Savings Account Plans (MSA), which combine a high-deductible plan with a bank account where Medicare deposits money. 

In total, there were 1,945 Medicare Advantage plans available on the market in 2015.

Medigap

Unlike Medicare Advantage, Medigap is not one of the four parts of Medicare. But similar to Medicare Advantage, you must first be enrolled in Original Medicare in order to enroll in a Medigap plan. 

The intention of Medigap plans, also called Medicare Supplement plans, is not to provide more coverage in addition to what Medicare covers, such as vision, dental, eyeglasses or hearing aids. Instead, the focus is on covering the out-of-pocket costs, or gaps, left by Medicare, such as copayments, coinsurance and deductibles. 

There are 10 different types of Medigap plans, each identified by a letter. The table below illustrates the coverage makeup of each plan.

 

Medigap BenefitsMedigap Plans
ABDGKLMNCF1
Part A coinsurance and hospital costs up to an extra 365 days after Medicare benefits are used up100%100%100%100%100%100%100%100%100%100%
Part B coinsurance or copayment100%100%100%100%50%75%100%100%2100%100%
Blood: first 3 pints100%100%100%100%50%75%100%100%100%100%
Part A hospice care coinsurance or copayment100%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*



$5,880$2,940



Based on 2020 costs | Plans C and F are available to those who were eligible for Medicare before January 1, 2020. Contact an agent for more information about these plans 1 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. | 2 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.

Medicare Advantage and Medigap: The Differences

Now that we’ve explained the similarities and 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 is slightly limited by the plan type, whether it is HMO or PPO. You might also need a referral from a primary care physician before seeing an in-network specialist.  

Medigap: You are free to visit any doctor or facility that accepts Medigap and you don’t need referrals to see specialists. 

Prescription Drug Coverage

Medicare Advantage: Most plans include coverage for prescription drugs.

Medigap: Medigap plans do not include coverage for prescription drugs. Medicare Part D prescription drug plans would have to be purchased separately.

Out-of-Pocket Expenses

Medicare Advantage: You can expect to pay for deductibles, copayments and coinsurance just as with traditional health insurance. However, Medicare Advantage plans must have an annual out-of-pocket limit. 

Medigap: Medigap can cover most out-of-pocket expenses associated with Original Medicare, depending on the plan.

Cost of Monthly Premiums

Medicare Advantage: Some plans require a monthly premium, and some do not. There are even certain plans that will help pay for your Medicare Part B premium.

Medigap: Premiums will vary based on age and location. In addition to the Medigap premium, you will also have to pay your Original Medicare Part B premium and your Part D premium.

Date You Can Enroll

Medicare Advantage: You are free to enroll in Medicare Advantage upon enrolling in Original Medicare as well as during annual open enrollment. 

Medigap: You must be at least 65 years old to purchase Medigap (there are under 65 plans in 27 states) and you should enroll within six months of acquiring Part B. You can also apply for enrollment anytime, but you may face rejection based on your health history.

Change of Benefits

Medicare Advantage: The benefits of a Medicare Advantage plan may change from one year to the next. If you choose to disenroll because of any changes, you can do so during the Annual Election Period or the Medicare Advantage Disenrollment Period. 

Medigap: The benefits of a Medigap plan do not change and they are “guaranteed renewable” as long as premiums were paid on time and in full. 

Coverage Boundaries

Medicare Advantage: Because they usually operate under a network of doctors and facilities, Medicare Advantage plans generally limit you to one location and your benefits cannot travel with you. This excludes emergency and urgent care.

Medigap: Because Medigap is accepted anywhere Medicare is, you can find doctors and medical facilities in all 50 states — plus some international locations — ready to provide you coverage.   

Buying Medicare Advantage and Medigap Plans

Purchasing a Medicare Advantage or Medigap plan can be easy. At HealthMarkets, you can browse available plans, get a quote or locate a licensed agent near you for Medicare Advantage and Medigap plans.

 

Medicare Advantage plans made up 26% of all benefit payments in the fiscal year 2015.

Medicare Advantage vs. Medigap: Which is Right for You?

Just as with traditional health insurance, the best Medicare Advantage or Medigap plan for someone else might not be the best plan for you. So how do you choose?

A Medicare Advantage plan might be best for you if: 

-You enjoy the convenience of getting all your medical coverage from one source.

-You want to pay less for monthly premiums.

-You wish to acquire some benefits not covered by Original Medicare, such as dental, vision or prescription drugs. 

A Medigap plan might be best for you if:

-You enjoy the freedom of being able to visit any physician or facility you wish. 

-You wish to have more predictable costs and avoid any surprise out-of-pocket bills. 

-You do a lot of traveling or live in more than one location throughout the year. 

If you’d like to learn more about your options for Medicare Advantage or Medigap or need help deciding which is best for you, just give us a call at (855) 839-8126. We have more than 3,000 licensed agents happy to help you find the best plan for your needs.

HMIA002411

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Sources:

"What's a Medicare Advantage Plan? - Medicare.gov." 2012.
Young, Chris. “Medicare vs. Medicare Advantage: How to Choose.” US News and World Report. 15 Oct. 2014.
 
"117 Medicare statistics to know - Becker's Hospital Review." 2015.
 
How to Compare Medigap Policies” Medicare.gov. 2015.
Barry, Patricia. “Medigap Covers Some of Medicare’s Out-Of-Pocket Costs.” AARP Bulletin. April 2014.
"117 Medicare statistics to know - Becker's Hospital Review." 2015.
 

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