Difference between medigap and medicare advantage plans

Summary:

Contrary to popular opinion, Medicare Advantage and Medigap are two very different types of coverages — and you can’t have both. Here’s how to know which policy fits your needs.

If you’ve ever gone a few months (or even years) without health insurance, you’ll probably be relieved to know that once you turn 65, you can have coverage through Original Medicare for the rest of your life.

While Part A (hospital insurance) and Part B (medical insurance) pay for many health care costs, they don’t cover everything.

You will meet a deductible before the insurance policy kicks in — and after that, you’ll be responsible for other fees, like coinsurance (a percentage of certain costs). Also, Original Medicare doesn’t cover certain routine benefits such as vision, dental, and hearing care, so you may be paying more out of pocket than you think.

To help offset those costs, some people purchase either Medicare Supplement Insurance (also called Medigap, since it helps fill in the gaps in your coverage) or a Medicare Advantage plan (also called Part C). Each type works a little differently. Here’s how to know which one might be right for you.

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What is Medicare Supplement Insurance?

Medicare Supplement Insurance, aka Medigap, works alongside your Original Medicare. It helps cover the costs of certain services that Part A and Part B don’t pay for — things like foreign travel and excess charges (such as when a doctor doesn’t accept Medicare). It can also help cover the cost of your Part A deductible — which is $1,556 for 2022 — as well as the 20% coinsurance rates you’ll be charged for Part B coverage.

Given these costs, “I would say it’s essential to have a Medigap plan to cover some of those copayments,” says Caitlin Donovan, a spokesperson for the Patient Advocacy Foundation.

Even so, a 2021 report from the Kaiser Family Foundation found that about 17% of those with Original Medicare — that’s about 5.6 million people — don’t have supplemental coverage.

Keep in mind that Medicare Supplement Insurance doesn’t provide stand-alone coverage, so you’ll need to be enrolled in Original Medicare first. Medigap also doesn’t cover the cost of prescription medications. For that, you’ll need a third plan — Medicare Part D.

There are currently 10 different Medigap insurance plans: Plans A through D, F and G, and K through N — but Plans C and F are no longer available to people who joined Medicare after January 1, 2020.

Medigap insurance plans cover 100% of your Part A coinsurance costs (the percentage you pay for services after you reach your deductible), and most will cover 100% of your Part B coinsurance and copayment costs.

If you go with Medigap, remember that it will also have a monthly premium. The amount varies per plan, but it could be hundreds of dollars each month. Some plans also have deductibles and copays.

What is Medicare Advantage?

Medicare Advantage (MA) plans are an alternative to Original Medicare. They’re offered by private insurance companies. Under an MA plan, you’ll still get Parts A and B, but you’ll usually also have Part D, as well as other benefits such as routine hearing, vision, and dental services, all under one policy.

By law, Medicare Advantage plans cover the same types of care as Original Medicare — such as hospital services, doctor appointments, and lab tests, for example. But you may have to stay within network or seek a referral before the plan will pay for the costs, says Donovan. With Original Medicare, you can see any doctor who accepts it.

If you enroll in Medicare Advantage, your benefits will be administered through that private plan, which will replace your Original Medicare coverage. You also won’t be allowed to enroll in a Medicare Supplement plan or a stand-alone Part D plan.

Many Medicare Advantage plans don’t charge an additional premium above the usual Part B premium. You still may have a deductible, copays, and coinsurance, but MA plans generally put a limit on how much you have to spend each year (the out-of-pocket maximum).

Medicare Advantage vs. Medicare Supplement Insurance: Comparison chart

Here’s an at-a-glance look at some of the differences between Medicare Advantage and Medicare Supplement Insurance.

Can I buy Medigap and Medicare Advantage at the same time?

No. If you have a Medicare Advantage plan, you aren’t allowed to enroll in a Medigap insurance plan unless you’re also switching your Medicare Advantage plan back to Original Medicare. If you want to enroll in Original Medicare and buy a Medigap policy, you’ll need to contact your Medicare Advantage plan and ask if you can disenroll from it. You may be able to do so only during certain times of the year, known as “enrollment periods.”

Medicare Advantage vs Medicare Supplement comparison chart

Can I have Medigap and Medicare Part D at the same time?

Yes, you can have both policies. However, if you buy each policy from the same company, you may still be responsible for paying two separate premiums.

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