When it comes to Medicare, choosing the right supplemental coverage for your needs can feel overwhelming. Two of the most common options—Medigap and Medicare Advantage—offer very different benefits. While Medigap has long been seen as the “safe” choice for those worried about future health issues, more retirees are now considering a switch to Medicare Advantage. Why? The answer often comes down to long-term savings, flexibility, and evolving health needs.

Understanding the basics

• Medigap (also known as Medicare Supplement Insurance) helps cover out-of-pocket costs not paid by Original Medicare, like copayments and deductibles. It typically comes with higher monthly premiums but fewer surprise costs.
• Medicare Advantage (Part C) is an all-in-one alternative to Original Medicare, often including prescription drug, dental, and vision coverage. It usually has lower premiums but may involve more cost-sharing when you use services.

The financial case for Medicare Advantage

A recent Alight Retiree Health Solutions white paper compares the long-term costs of Medigap and Medicare Advantage. The analysis assumed that a person’s health would decline over time—a common concern among retirees.

The conclusion? Unless you’re already sick at age 65, Medicare Advantage tends to offer significant savings over the years. Even if you develop health issues later, the money saved in premiums during your healthier years can more than offset the higher out-of-pocket costs that may come later.

What about switching back?

One common concern is the ability to switch back to Medigap later in life. Medigap plans are not always guaranteed to accept you if you apply after your initial enrollment period—unless you live in a state with more lenient rules.

Some states, like New York, allow you to switch back to Medigap without medical underwriting, meaning you can’t be denied coverage based on your health. This flexibility can make Medicare Advantage a more attractive starting point, especially if you live in or plan to move to one of these states.

Real-life scenarios

To help you make informed decisions, consider several scenarios:

• Healthy at 65 with a family history of cancer: Medicare Advantage may be a smart choice early on, with the option to reassess later.
• Managing a chronic condition like diabetes: Medicare Advantage still offers savings, especially if care is well-managed.
• Multiple health issues: Medigap might offer peace of mind, but the cost difference should be carefully weighed.

Peace of mind vs. savings

Ultimately, the choice comes down to your personal priorities. Some people value the predictability and peace of mind that Medigap offers, even at a higher cost. Others prefer the flexibility and savings of Medicare Advantage, especially if they’re healthy and want to make the most of their retirement budget.

Know your state’s rules

Before making a switch, it’s essential to understand your state’s rules about Medigap enrollment. Some states make it easier to move between plans, while others are more restrictive. This information can significantly impact your decision-making process.

Bottom line

If you’re healthy at 65 and looking to save money, Medicare Advantage may be the better financial choice—even if your health changes later. But always consider your personal health, financial situation, and state regulations before making a decision.

Help is available

Choosing a plan that aligns with your financial and health care needs can feel overwhelming, but you don’t have to do it alone. Alight Retiree Health Solutions offers personalized support to help you compare options and choose coverage that aligns with your needs. Our services are provided to you at no additional cost. You only pay for the plans you enroll in.