Medicare Advantage Vs Medigap: What Are the Key Differences?
Posted on 8th June 2023
Navigating the world of Medicare coverage options can be a daunting task. But understanding the key differences between Medicare Advantage and Medigap plans is essential for making informed decisions about your healthcare. After all, both types of plans offer valuable benefits.
What is Medicare and What Does it Cover
When Americans are talking about Medicare, they’re typically referring to Original Medicare of Part A and Part B. As a rule, Original Medicare pays 80% of the costs it approves from doctors, hospitals, and medical procedures. The other 20% is the patient’s responsibility (out-of-pocket).
Keep in mind that we’re talking about coverage that isn’t under the Affordable Care Act (ACA), which means that there isn’t a cap on how much a person may pay every year in co-payments.
Some healthcare needs, such as hearing aids, prescription drugs, dental care, and eyeglasses, aren’t covered by Original Medicare. However, there are two ways to get this type of coverage: sign up for a Medigap Insurance policy or sign up for a Medicare Advantage plan.
What is Medicare and What Does it Cover
When Americans are talking about Medicare, they’re typically referring to Original Medicare of Part A and Part B. As a rule, Original Medicare pays 80% of the costs it approves from doctors, hospitals, and medical procedures. The other 20% is the patient’s responsibility (out-of-pocket).
Keep in mind that we’re talking about coverage that isn’t under the Affordable Care Act (ACA), which means that there isn’t a cap on how much a person may pay every year in co-payments.
Some healthcare needs, such as hearing aids, prescription drugs, dental care, and eyeglasses, aren’t covered by Original Medicare. However, there are two ways to get this type of coverage: sign up for a Medigap Insurance policy or sign up for a Medicare Advantage plan.
What is Medigap and What Does it Cover?
About 81% of Original Medicare beneficiaries will supplement their insurance with Medigap, Medicaid, or employer-sponsored insurance. While supplementing Original Medicare with Medigap is expensive, there are several advantages to grouping these two together.
With that said, you should speak to a Medicare insurance broker at Medigap Seminars if you’re unsure whether Medigap insurance is right for you. They can help you figure out your options.
What Medigap plans cover in part or in whole:
20% of Part B coinsurance for physician visits and outpatient services.
Part A daily coinsurance for days 61 to 90 in the hospital for each benefit period.
Part A daily coinsurance for up to 60 lifetime reserve days.
Up to 365 more days in the hospital in your lifetime after Medicare is used up.
Coinsurance costs for hospice care.
First three pints of blood.
Some Medigap plans also cover the following:
Part A hospital deductible
Coinsurance costs for skilled nursing facilities.
Foreign travel emergencies.
If you choose to combine Medigap with Medicare, your plan will cover you for any doctor or hospital visit in the US as long as they accept Medicare. Plus, you won’t need a referral from a primary care doctor. Coverage includes the entire US and many foreign travel emergencies.
What is Medicare Advantage and What Does it Cover?
Let’s take a quick look at the other option, Medicare Advantage. Medicare Advantage is available from private, Medicare-approved insurance companies. They typically have no premium (or a low premium), and they cover doctors, hospitals, and prescription drug coverage.
In some cases, Medicare Advantage will cover things not covered by Original Medicare or Medigap, but there’s a catch. With Advantage, you can only use doctors or hospitals in your network, and you often have to get a referral from your primary care doctor for procedures.
Since Medicare Advantage plans are so varied, they can be difficult to compare against a typically standard Medigap plan. With that said, Medicare Advantage plans offer flexibility.
How to Choose Between Medigap and Medicare Advantage
Now that you know the basics of Medigap and Medicare Advantage, you can start looking at why you should or shouldn’t sign up for either. Here’s how to choose between the two.
Why You Should Combine Original Medicare and Medigap
You should consider combining Original Medicare and Medigap if you:
Plan on Traveling: Medicare Advantage has a limited service area, but under Medigap, you won’t have to pay out of pocket for the healthcare services you need while traveling.
Want to Be Seen by Any Doctor: Medigap gives you access to any doctor in any hospital that accepts Medicare, and the vast majority of American doctors/hospitals do.
Have a Chronic Condition: If you go to the doctor a lot, Medicare Advantage will cost you a lot of money. Under Medigap, people with chronic conditions save a lot of time.
Prefer to Play it Safe: If you’re diagnosed with a health condition later in life, Medigap coverage will ensure you’re covered, but it’s wishy-washy under Medicare Advantage.
From the hop, Medigap seems like the best Medicare option, but it isn’t for everyone.
Why You Should Combine Original Medicare and Medicare Advantage
You should consider combining Original Medicare and Medicare Advantage if you:
Can’t Afford Medigap: Medigap, while a great plan, can be too expensive for many Americans. In these cases, it’s better to purchase Medicare Advantage to stay covered.
Live in an Extended Network Area: If you’re close to plenty of doctors in your network, then there isn’t a need to upgrade to Medigap, especially if you don’t travel often.
Prefer Managed Care Plans: Medigap can feel very foreign to some people, but Medicare Advantage is familiar and similar to insurance they’ve used their whole lives.
Medicare Advantage, while offering fewer benefits, is still a great choice for beneficiaries.
Other Things You Should Consider for Both Healthcare Plans
Regardless of what plan you choose, you should consider the following things:
The Cost: Balance the cost of each plan with the amount of benefits you’re getting.
Lifestyle Factors: Your location and travel preferences determine coverage needs.
Convenience: Consider how far you have to travel to see a doctor or go to the hospital.
Broader Benefits: See how each plan has evolved during the enrolment period.
Everyone’s situation is different, but always consider your own before deciding to sign up.
In Conclusion…
There’s no one-size-fits-all answer when it comes to choosing between Medicare Advantage and Medigap plans. That’s why you need to carefully evaluate your personal healthcare needs and budget if you want to find the optimal plan that meets your unique circumstances.
