This is one of the most commonly-asked questions by people who are turning 65. The question assumes that you understand that there IS a difference in these two types of Medicare plan options. They are certainly very different and, if comparing the two, be careful about comparing based on price, benefits, etc. because it is simply not comparing “apples to apples”. My recommendation would be to first decide which “direction” you want to go (Medicare Supplement or Medicare Advantage) and then from there, deciding which company/plan you want to go with.
So, what are the differences in the two types of plans? Here are the primary differences between Medicare Supplement (also called Medigap) and Medicare Advantage plans:
- First of all, the nature of the plans varies. Medigap plans, or Medicare Supplement plans, are designed to work with Medicare. They fill in the “gaps” in Medicare. Medicare Advantage plans, on the other hand, replace Medicare instead of supplementing it. They work independently and become your coverage by themselves.
- The 2nd main point of variation between the two types of plans is doctor availability. With Medigap plans, you can go to any doctor that takes Medicare. If they take Medicare, they are required to take any of the standardized Medicare Supplement plans (regardless of company). Medicare Advantage plans are network-based plans. These plans are either PPOs or HMOs, in most cases, and you must stay within a prescribed network of participating doctors/facilities. These networks are typically regionally-based.
- The next difference between the plans is the cost-sharing structure. Medigap plans are designed to fill in most, or in some cases all, of the gaps in Medicare. So, there are, in the case of Plan F for example, no out of pocket costs. Medicare Advantage plans, however, have an elaborate system of co-pays and deductibles for different services/procedures.
- Another difference between the two plan types is availability to change plans. Medigap plans allow you to change at any time of the year, for any reason. Medicare Advantage plans only allow changes to coverage during the annual enrollment period which is Oct. 15-Dec. 7 each year. Also, and very importantly, if you take a Medicare Advantage plan when first eligible for Medicare, and then at a later time, wish to switch to a Medigap plan, you will have to “qualify medically” to move from a Medicare Advantage plan to a Medigap plan. If you have any pre-existing conditions, this may be difficult to do.
Overall, both plans are certainly viable options for someone on Medicare. However, our general recommendation would be towards the actual Medicare Supplement (Medigap) plans based on their stability, flexibility and comprehensive coverage. Medicare Advantage plans may make more sense in very urban areas or to low-income populations. But on the whole, Medigap plans will give the most comprehensive coverage for a reasonable price with lasting stability.
If you have any questions about this information or want to compare Medigap plan options, call us at 877.506.3378 or visit our website.