Medicare provides a valuable tool to those who reach retirement age, but Original Medicare is often not enough. That is, it provides for some basic needs for healthcare, but it leaves people vulnerable to high medical costs and out-of-pocket expenses. That’s why it is often beneficial to choose Medigap and Medicare Advantage Plans.
Both Medicare Advantage and Medigap are types of private insurance products with different coverage options. It is not possible to purchase both – you can have just one of these. To help you see the differences, let’s break down these two types of policies.
What Is Medicare Advantage Plan?
Medicare Advantage plans replace Original Medicare. They provide a different level of coverage that is often over and beyond what Original Medicare offers. Medicare Advantage is also known as Part C coverage. It aims to help you purchase insurance better suited to your needs than what Original Medicare offers. It’s important to know that this type of insurance coverage comes from a third-party provider, not from Medicare itself.
About 42% of people who have Medicare use a Medicare Advantage Plan (according to data from 2021). That’s about 26 million people.
Medicare Advantage plans differ from each other based on what the provider offers. Most plans include coverage for hospital stays, doctor’s office visits, and many include prescription drug coverage. Some may also cover other types of care, such as vision and dental insurance, that Original Medicare does not.
What Are the Pros and Cons of a Medicare Advantage Plan?
There are advantages and benefits to purchasing a Medicare Advantage plan for your coverage needs.
- It is often possible to obtain additional coverage under an Advantage plan than you would obtain through Original Medicare. That includes important coverage for vision, dental, and hearing that most seniors need to have.
- Many times you’ll save money with lower to no premiums on this type of plan compared to other options.
- There are also built-in limits on what you have to pay for out of pocket expenses like hospital stays and medical coverage, unlike Original Medicare that has no maximum cap of what you might pay.
- Some include added benefits including free gym memberships.
- If you choose an Advantage plan, you’ll need to stick to the medical providers covered under that plan. That may mean you’ll need to choose the plan wisely based on its providers, or you’ll need to accept the medical providers (including doctors, hospitals, and specialists) provided by the plan.
- You may need to reside within a specific geographical area to access some plans.
- It’s harder to switch back from your Medicare Advantage Insurance policy back to Original Medicare if you decide to do so.
- Your plan may change over time and that could impact your coverage down the road.
What Is Medigap Insurance?
Medigap insurance doesn’t replace Original Medicare. Rather, it helps fill in the gaps left by Original Medicare, providing people with additional coverage.
Medigap insurance, sometimes called Medicare Supplemental Insurance, is quite different than Medicare Advantage plans. It’s also sold by third-party companies and not through the Federal government. This type of insurance can cover many health care costs that Medicare does not cover, and that’s what makes it beneficial to some people who select this option.
For example, Medigap coverage can provide coverage for deductibles you would have to pay out of pocket if you just had Original Medicare. It may also provide coverage for medical needs when traveling overseas.
Consider the importance of just Medicare deductibles and coinsurance. If you are admitted into the hospital, you may have coverage to cover most of your stay costs after you pay the deductible. Medigap helps to cover that deductible, so you do not have to pay for it. Also, during your hospital stay, you may be billed for specialist services, such as an anesthesiologist may apply fees. If that is the case, and Medicare does not cover them, the Medigap plan may.
What Are the Pros and Cons of Medigap Coverage?
It’s up to you to determine what type of coverage is best suited for your needs. As you do, consider the pros and cons of this coverage option:
- Medigap plans cover most or all of Medicare additional fees for you, reducing what you have to pay for any of your care.
- You have a six month enrollment period when you first become eligible, giving you ample time to make decisions.
- You receive an additional 365 days in the hospital without having to pay extra for it as you would with Original Medicare.
- Some Medigap plans cover other services that go beyond other types of coverage, such as foreign travel, gym membership options like the Silver Sneaker program, and excess charges.
- You can use Medigap throughout the country without any location restrictions.
- The premiums for Medigap can be somewhat higher than other types of coverage.
- You may not be able to enroll after that 6 month enrollment period.
- You still need to consider adding Part D coverage for prescription medications as Medigap, and Original Medicare do not offer these. There may also be the need to purchase a separate dental and vision plan if you desire.
Plans differ in what they cover, and some may not cover all deductibles. Keep in mind that you have options to choose a plan that covers most of the big things, including through Plans F, G, and N.
Medicare Advantage vs Medicare Supplement
Now that you have a bit of a background in these types of coverage options, it’s important to choose which Medicare supplement or Advantage plan is best for you. To do this, it is important to remember that the individual insurance company or provider needs to be considered – as each health care insurance provider’s policy may be slightly different. Let’s break down some of the differences here, and remember, you can work with a licensed insurance agent to personalize policies to meet your needs.
Bundled plans in Medicare Advantage vs gap coverage in Medigap
Medicare Advantage provides a new plan for you to replace the federal Medicare program. That means you’ll no longer have access to Original Medicare, but it also means you’ll be purchasing a policy that may better match your specific needs. Most Medicare Advantage plans can help to meet your needs in terms of all aspects of Original Medicare (Parts A and B) and will also include prescription drugs. Some also include more comprehensive coverage such as dental coverage and vision coverage.
A Medicare supplement plan, by contrast, keeps Original Medicare in place and then works to fill in some of those additional costs that Medicare lacks. A Medicare supplement plan helps fill in deductibles and out of pocket costs for hospital stays and big costs such as chemo therapy treatment, outpatient surgery, MRIs, and others. It may also help you with travel overseas.
Which offers the best value?
When you consider Medicare Advantage vs Medicare Supplement in terms of costs, it is very important to factor in your current needs and the likely needs you will have in the coming years. Here are a few things to remember.
- Medicare Advantage may be beneficial overall for most people who want to bundle prescription drug coverage, hospital, and doctor care. Overall, Medicare Advantage is the most affordable option.
- Medicare Supplement coverage may be more expensive, but it is also the most comprehensive coverage. Medicare Supplement insurance plans are also highly beneficial to individuals who want to travel.
What About Prescription Drug Coverage?
Prescription drug plans are an important part of the process of selecting between Medicare Advantage vs Medicare Supplement. Most people need prescription drug coverage.
- Many Medicare Advantage policies include prescription drug coverage, though not all.
- Most Medicare Supplement plans do not include prescription drug coverage. To get drug coverage, you need to purchase a separate policy. This is readily available through private insurance companies.
What About Doctor and Network Coverage?
It’s also important to consider Medicare plans based on who you wish to see for your medical needs. When considering your Medicare options, consider:
- Medicare Supplement plans do not have coverage restrictions. They allow you to visit most providers as long as that provider accepts Medicare. If that is the case, Medicare coverage is likely to apply.
- When it comes to Medicare Advantage, you may need to choose a health care provider within the plan provided by the insurer. Medicare Advantage HMO policies may mean you have to choose a primary care doctor within the networks they offer.
Factors to Keep in Mind with Advantage and Medicare Supplement Coverage
When it comes to making a choice in a Medicare Supplement insurance plan or going with Medicare Advance plans, consider:
- What Medicare pays for what you need, including prescription drug benefits, hospital insurance, and specialized services.
- What Medicare benefits do you want more flexibility with? Medigap insurance plans may provide better access to health care providers you choose, for example.
- Think about your future needs, too, including Part D drug coverage, for ailments you have now and what you are at risk for later.
- Consider the Medicare open enrollment period is for the first six months of your eligibility. Beyond that time, you typically may not be automatically guaranteed to be approved.
How to Get Help Choosing Coverage
There are so many things to consider when selecting coverage, such as your health status, availability of other health insurance, and the private insurers in your area. You may be on a fixed income and just need some help choosing. Before you make a choice, turn to a reputable licensed insurance agent who can provide you with guidance and support. it’s best to find an agent who represent many different carriers and options so you know you’ll get the best coverage for your specific situation. You’re welcome to reach out to me directly for any assistance with your Medicare questions and enrollment.