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Comparing Medicare Advantage to Medigap

Medicare…Medicare Advantage…Medigap…what do these terms mean and what’s the difference?

Let’s first go over the basics of Medicare, which describes as a “fee-for-service health plan that has two parts.” Part A is hospital insurance and part B is medical insurance. After you pay a deductible, Medicare pays its share of the approved amount and then you pay the remaining coinsurance and deductibles.

But how can you get help paying those coinsurance and deductible amounts? That’s where Medicare Supplemental Insurance—also known as Medigap—comes in.

Medigap details and requirements

Medigap policies are sold by private companies, and some cover services that Original Medicare doesn’t. When you buy a Medigap policy, it pays whatever is left to pay after Medicare covers its share of Medicare-approved health care costs. That said, there are some requirements and important-to-knows:

  • You must have Medicare Part A and B to purchase a Medigap policy.
  • One policy covers one person. You’ll have to buy separate policies for you and your spouse.
  • The Medigap price could change depending on what age you sign up for the plan.
  • Medigap policies aren’t allowed to include prescription drug coverage. That’s covered by Medicare Part D (prescription drug plan).
  • Medigap policies generally do not cover long-term care, vision, or dental care, hearing aids, eyeglasses, or private-duty nursing.
  • It is illegal for anyone to sell you a Medigap policy if you have a Medicare Advantage Plan, unless you decide to switch back to original Medicare.

Medicare Advantage Plans vs. Medigap

So, what is a Medicare Advantage Plan? Also referred to as Medicare Part C, a Medicare Advantage Health Plan allows you to enroll in a private health insurance plan through a company that contracts with Medicare. These plans provide all of your Part A (hospital insurance) and Part B (medical insurance) benefits and usually your Medicare Part D (prescription drug) benefits. A few need-to-knows:

  • Medicare Advantage Plans can sometimes offer extra coverage like vision, hearing, and dental.
  • These plans can charge different out-of-pocket costs and might have different rules for how you get services. You might need to get a referral for a specialist or see doctors that belong to the plan.
  • The rules can change each year
  • Medigap policies can’t work with Medicare Advantage Plans and you are not allowed to pay Medicare Advantage copayments, deductibles, and premiums with your Medigap policy.

Several choices available to you

Most clients we have who are 65 or older choose one of three options when it comes to Medicare:

  1. Medicare
  2. Medicare with Medigap that covers the Medicare copays and deductibles
  3. Medicare Advantage (private insurance)

There are pros and cons to each of these plans depending on your needs. You should consider things like your state of health, the possibility of a large hospital bill (with lots of out-of-pocket copays and other costs), and whether you’re comfortable choosing from a pre-selected network of health care providers and doctors. Also keep in mind that Medigap coverage likely has a higher monthly premium, while Medicare Advantage Plans might have lower premiums but higher out-of-pocket costs.

Bottom line is that this decision requires some analysis of your situation and needs. Review the site carefully and call us with questions. We’d be happy to guide you through this decision to determine what coverage is best for you!