Medigap vs. Medicare Advantage
Which Plan is Right for Your Needs?
Understanding their differences can help you decide.
When you’re looking to add to your Original Medicare coverage, it can be challenging to know where to start. One of the first things you can do is decide what type of plan might work best for your health needs and budget.
Breaking down the basic differences can help you decide which type of plan would work for you.
Medigap plan basics
When you get Original Medicare Parts A (hospital stays) and B (doctor visits), it only covers some of your expenses, and there’s no annual limit to what you could pay. That’s where a Medigap plan come in. You keep Original Medicare, while Medigap helps fill some of the gaps left to be paid, like deductibles and coinsurance.
Why Medigap might be a good choice
- Lower out-of-pocket medical costs. Medigap premiums are usually higher than Medicare Advantage, but out-of-pocket costs when you get care are typically much lower. A Medigap plan pays your Part A deductible and some or all of your Part B copays or coinsurance, as well as other Medicare-approved expenses.
- Additional provider access. All doctors who take Medicare accept these plans, and you don’t need a referral to see a specialist. The exception is Medicare Select plans, which have hospital networks, so be sure you understand your plan.
- Travel coverage. When you’re traveling in the United States, you can go to any doctor or hospital for non-emergency and emergency care, as long as they accept Medicare. Most plans also cover emergency care while you’re traveling outside the U.S.
- Standardized plans. Costs may differ according to insurance company and where you live, but the plan coverage is always the same between insurance companies. This means you don’t need to compare the plan benefits from company to company, which can make it easier to figure out which plan would work for you.
- Plan flexibility. If your health needs have changed or you are unhappy with your Medigap plan, you are not restricted to the open enrollment period to switch. You can change to a new Medigap plan any time of year, though you may be subject to medical underwriting.
Things to consider
- Plans have a higher premium. You pay a monthly premium for the plan, in addition to your Part B premium, versus many Medicare Advantage plans, which may have a low or $0 premium.
- Prescription drug coverage is not included. Medigap does not cover medications, so most people buy a separate prescription drug plan, or Part D, to manage drug costs.
- No additional benefits. You’ll have to buy a separate plan if you want coverage for dental, vision or hearing.
- Medical underwriting may be required. With a few exceptions, if you switch Medigap plans outside of your initial 6-month open enrollment period, the insurance company can review your medical records and doesn’t have to accept your application (known as medical underwriting).
Summary
Cost-wise, if you have a lot of medical expenses, Medigap could be a good option for you. The premiums are usually higher than Medicare Advantage plans, but out-of-pocket costs are typically lower. This also means more predictable costs, if you’re trying to budget.
Medigap gives you dependable monthly costs and flexibility with the doctors you can see.
Medicare Advantage Basics
Medicare Advantage combines hospital stays, doctor visits and usually prescription drugs under one plan with one insurance company. Some Medicare Advantage plans also include basic dental, vision or hearing coverage. Many plans have low or $0 monthly premiums, but you pay for copays and deductibles.
Why Medicare Advantage might be a good choice
- Low or $0 monthly premium. Generally, you pay a low or $0 monthly premium. But you will continue to pay a Part B premium to Original Medicare.
- Prescription drug coverage. Most Medicare Advantage plans include Part D prescription drug coverage (sometimes called MAPD plans), so no need to buy a separate drug plan.
- Additional benefits. Basic dental, vision and/or hearing coverage is included in many plans, as well as additional benefits that promote healthy lifestyles.
- Easy to change plans. Every year during open enrollment, you have the option to change plans. And you can join a Medicare Advantage plan even if you have an underlying condition – there’s no medical underwriting.
Things to consider
- Less predictable out-of-pocket costs. When you use services, you pay for costs such as deductibles, coinsurance and copays. This can lead to varying costs, depending on your health needs each year.
- Network restrictions. Most Medicare Advantage plans have either HMO or PPO provider networks, so it’s important to understand your plan’s network in order to get the care you need at the lowest cost. You may need a referral to see a specialist, and doctors may leave or join a network anytime during the year.
- Limited travel coverage. Emergency care is covered for travel within the United States, but usually not outside the U.S.
- Plans are not standardized. Unlike Medigap, Medicare Advantage plans are not all the same when it comes to coverage. Some have additional benefits, and costs vary between insurance companies. There are many plans to choose from.
Summary
If you are relatively healthy, don’t have a lot of medical expenses and you don’t travel a lot, Medicare Advantage could be a good choice for you. These plans can be a good option if you want all-in-one medical and drug coverage with low or $0 monthly premiums. But your monthly and annual expenses can vary, depending on how much care you receive.
Medicare Advantage usually covers medical expenses and prescription drugs, and often come with vision and/or dental coverage.
More resources
