Medigap vs. Medicare Advantage – which option is right for you? This is certainly a topic that
has been covered extensively before, but with the end-of-year annual election period coming up, it is a good time to revisit the distinguishing characteristics of these plans. To do that, we’ve broken it down into four overarching areas in which the two types of plans are different.
If you aren’t familiar with the terminology, Medigap plans, or Medicare Supplements as many people call them, are plans sold by private insurance companies that fill in the ‘gaps’ in Medicare. They act secondary to Medicare’s primary coverage.
Medicare Advantage, on the other hand, are not Medicare supplements. They do not supplement Medicare; on the contrary, they take the place of Medicare as primary coverage. They are sold through private insurance companies, but they are regulated by and approved (annually) by the Centers for Medicare and Medicaid Services (CMS).
So, how do these two types of Medicare cover differ?
Plan usability is, and should be, at the forefront of any decision you make about a Medicare plan. Some doctors/hospitals have chosen to not participate in either Medicare or Medicare Advantage plans (or in some cases, both). That said, Medicare can be used anywhere nationally that takes Medicare, so there is not an actual network. Whereas with Medicare Advantage plans, there is a contractual network in most cases, and the networks are regionally based typically. Overall, there are significantly fewer problems using a Medigap plan in terms of doctors taking the plan or where you can use the plan. If your doctor takes Medicare, they are required to take the Medigap plan that you have.
Moving on to coverage, Medigap plans are considerably more comprehensive than Medicare Advantage plans, as far as coverage goes. The top level of Medigap plan pays everything that Medicare A & B do not cover. Medicare Advantage plans use a system of co-pays and deductibles.
That brings us to premium. Medicare Advantage plans, while they are lower coverage, do also have lower premiums. In some cases, the premiums are even $0 (they use the Medicare Part B premium, which you still have to pay, to offset the costs for the private insurance company). Medigap premiums range widely, depending on your age, zip code, and in some cases, health status.
The future of Medicare plans, in general, is something that has caused much anxiety for people who are over 65 or will be on Medicare soon. While there has been much debated in the last several years regarding Medicare and Medicare supplement plans, the majority of aspects of Medicare/supplement plans have not changed. Medigap really has not been touched at all, other than a 2010 restructuring of the standardized plans. Medicare Advantage, on the other hand, was involved in the PPACA, cuts to the Medicare Advantage program helped fund health care reform. As of now, though, both program still exist and are going strong. With 11,000 Medicare-eligibles aging in to Medicare every day, there is a constant influx of new people onto these plans.
One additional consideration related to the future, particularly if you are comparing the two plan types, is that you do have to qualify medically to get a Medigap plan outside of your initial 6-month open enrollment window. In other words, if you choose a Medicare Advantage plan initially, then wish to return to Medicare with a supplement, you do have to qualify to get the Medigap plan. So, this is certainly something to consider when you take the long view of your health and medical coverage.
If you have any questions about this information or would like to discuss your specific situation, you can reach us at 877.506.3378 or online at Medicare-Supplement.us.