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Medicare Advantage Vs. Medigap: What’s the Difference?

Jun 13, 2022

While Original Medicare covers the basics, it may not cover everything you need. In fact, many Medicare-eligible individuals are surprised to learn that even with Original Medicare they are still left with gaps in coverage and 20% of the costs. Medicare Advantage and Medigap plans can help cover the gaps left behind by Original Medicare. Find out the differences between Medicare Advantage Vs. Medigap plans and which one may be the right choice for you.

What is Medicare Advantage?

Medicare Advantage, also known as MA or Medicare Part C, is an alternative way for Medicare beneficiaries to receive their Original Medicare benefits. These plans are offered through private insurance companies and provide all the same benefits as traditional Medicare (Part A and Part B) while often including prescription drug coverage and other benefits not covered by Original Medicare.

Medicare Advantage plans have become increasingly popular among Medicare-eligible individuals due to their comprehensive coverage and competitive pricing. They also provide a protective annual out-of-pocket cost maximum, which limits how much you pay for medical services each year.  Depending on the type of MA plan you choose (HMO or PPO) you may be limited to a specific network of doctors and specialists and may not be covered outside of your service area.

What is Medigap?

Unlike Medicare Advantage, Medigap or Medicare Supplement plans provide coverage in addition to your Original Medicare benefits.  These plans are designed to be used in conjunction with Original Medicare (Part A and Part B) to fill in coverage gaps, including copayments, coinsurance, and deductibles.

Medicare supplement plans are not limited to a network of providers allowing beneficiaries to choose any doctor or specialist that accepts Medicare.  They are also not limited to a geographical location and can be used anywhere in the United States and may even provide coverage while traveling overseas.  These plans are often attractive to those who have preferred hospitals or physicians they would like to use or travel often. Medicare supplement plans do not provide prescription drug coverage or extra benefits.

Medicare Advantage Vs. Medigap

Although Medicare Advantage and Medicare Supplement plans may seem similar in that they both provide coverage to fill in the gaps left by Original Medicare, they operate differently and provide different advantages and disadvantages. It’s also important to note that Medicare Advantage and Medicare Supplement plans can not be used together.

MA plan Advantages

  • One low monthly premium.  Some plans may not include a deductible.
  • Combines Medicare Part A, B, and often D under one plan
  • May include extra benefits not covered by Original Medicare

MA plan Disadvantages

  • Limited to a specific network of hospitals and doctors
  • May need referrals and approvals for specialists
  • No coverage outside of your geographical location or while traveling

Medigap Advantages

  • Access to all providers that accept Medicare
  • Fewer out-of-pocket costs
  • Coverage across the United States and may cover oversea travel

Medigap Disadvantages

  • Higher monthly premiums
  • Does not include prescription drug coverage
  • Multiple different plans to navigate

How to Choose the Right Plan

When choosing between a Medicare Advantage or Medigap plan there is no right or wrong choice.  The best choice is one that fits your specific healthcare needs.  Here are a few areas to consider when reviewing plan options:

Costs

Take a look at the costs associated with each plan.  What are the premium, deductible, copays, and coinsurance amounts?  Does the plan include prescription drug coverage or will you need to purchase that separately? Even though a plan may have an enticing monthly premium you may end up paying more out-of-pocket in other areas.  If this seems overwhelming, an Independent Insurance Agent specializing in Medicare is a great resource to walk you through the costs of each plan.

Doctors

Consider whether you have a preferred doctor or require a lot of specialists.  Medicare Advantage plans have a set network of doctors to choose from while a Medicare Supplement plans allow you to be seen by any doctor that accepts Medicare.  Referrals and authorizations may also not be needed.

Travel

Consider whether or not you will be traveling frequently as part of your post-retirement lifestyle.  If so, consider how long and whether you might need care during those times.  Most Medicare Advantages only cover a certain geographical location while Medicare supplement plans cover all across the United States and sometimes even internationally.

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