Medigap vs Medicare Advantage

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Original Medicare (A & B) will cover many of your doctor and hospital costs. However, Medicare A & B has coverage gaps. Generally, Original Medicare will only pay about 80% of your Medicare related hospital and doctor bills, leaving you responsible to pay the remaining 20%. These costs include copayments, coinsurance, deductibles, etc. that you are responsible for paying. This 20% is known as the Coverage Gap. It’s difficult to predict how much out-of-pocket costs will be, so many retirees choose to purchase additional insurance to cover this gap.

It’s important to consider your options when choosing the right plan for your specific needs. If you are enrolled in Medicare A & B you can purchase a Medigap plan or a Medicare Advantage plan. But note that if you decide to sign up for Medicare Advantage (Part C) plan, you cannot sign up for Medigap, and vice-versa.

What is Medigap?

Medigap is private health insurance also known as Medicare Supplement. A Medigap policy can help pay for some of the costs that aren’t covered by Original Medicare, including copayments, coinsurance, and deductibles. Medigap Insurance may also cover the cost of health care while traveling outside the United States.

Example: After a brief stay in the hospital Bob receives a medical bill for $10,000. Bob’s  Original Medicare (A&B) pays the hospital $8,000 or 80% of the bill. Because Bob has Medigap coverage he will not have to pay anything out of pocket toward this bill. Bob’s Medigap plan will pay the remaining $2,000 or 20%.

Medigap is designed to fill the coverage gaps in Original Medicare. Original Medicare and Medigap each pay their share of a beneficiary’s health care costs. Thus, Medigap supplements Original Medicare but does not replace it. Medigap plans are guaranteed renewable; the Medigap insurance companies cannot drop coverage for you because of a health condition.

Note: If you sign up for a Medigap policy, you still need to be enrolled in Original Medicare (A & B) and you must continue paying your Part B premium.

With a Medigap plan there is normally an inexpensive monthly premium.  Your monthly premium is determined by a number of factors, such as the zip code of your primary residence and whether or not you use tobacco products.

What is Medicare Advantage?

Medicare Advantage (Part C) is an optional type of Medicare health plan offered by private companies and limited to a local network of Doctors, Hospitals, and Specialists.

Medicare Advantage plans are required to provide all Medicare Part A and Medicare Part B benefits (except hospice care). The additional benefits vary among the individual private health insurers.

Medicare Advantage plans may require you to pay monthly premiums, annual deductibles, co-payments, and co-insurance and may charge different out-of-pocket costs (maximum $6,700 anually) with different rules for how you get services (like whether you need a referral to see a specialist or which doctor or facility will accept your insurance. Usually you are not allowed to receive care outside your network except in a hospital emergency).

These rules can change each year. Doctors, hospitals, and specialists frequently leave networks such as HMOs, PPOs, and others, so continuity and familiarity can be an obstacle to your care. Most Medicare Advantage plans don’t offer coverage outside the USA.

medicare open enrollment

Choosing a Medigap Plan

There are 10 standardized Medigap plans available and all must follow federal and state laws designed to protect you. All plans have to be clearly labeled “Medicare Supplement Insurance,” and insurance companies can only sell the 10 standardized policies, which are identified with one of the following letters: A, B, C, D, F, G, K, L, M, and N.

All 10 Medigap plans offer the same basic benefits, but some plans have extra benefits, so you should review each policy carefully with your agent and select the one that best fits your needs.

Every insurance company is allowed to decide which Medigap plans it wants to sell, so all 10 policies may not be available in your area of residence. Note that Medigap plans are standardized differently in Massachusetts, Minnesota, and Wisconsin.

When to sign up for a Medigap policy

The no-hassle best time to sign up is when you first qualify for Medicare part B.

Your Open Enrollment Period for Medicare Supplement plans begin the month that you turn 65 and you are enrolled in Medicare Part B, and lasts for six months. In addition, people age 65 or older have a guaranteed right (and cannot be turned down regardless of disability or health status) to buy a Medicare Supplement (Medigap) policy within six months of enrolling in Medicare Part B.

If you wait and do not enroll in a Medigap plan during your Open Enrollment Period, then the private insurance company may “underwrite” the plan, and the insurance company can either refuse or accept the applicant based on the results. Insurance companies can also adjust the plan premium based on your health status, so you may end up paying more than if you had signed up during your enrollment period. This is why many people choose to enroll in Medigap when they are first eligible. However, if you have missed your Medigap enrollment period and have pre-existing conditions, you may still qualify for a Medigap plan. Many private insurance companies are now accepting applicants with some specific pre-existing conditions. To see if you qualify, contact a agent.

To find affordable Medigap plans in your area click here.

Choosing a Medicare Advantage Plan

There are many types of Medicare Advantage plans available, and you can usually select one of the following plans:

  • Health Maintenance Organization (HMO)
  • Preferred Provider Organization (PPO)
  • Private Fee-for-Service (PFFS)
  • Medical Savings Account (MSA)

Some Medicare Advantage plans offer additional benefits, such as routine vision, dental, or prescription drug coverage. Availability and costs of plans may differ by provider and location. Medicare Advantage plans may require you to pay monthly premiums, annual deductibles, copayments, and coinsurance.

In contrast with the 10 standardized Medigap plans, Medicare Advantage plans have varying rules (for example, many plans require you to choose a primary care physician who’s in their network, not necessarily your doctor of choice).

To plan for which option best fits your health needs, start researching the various Medigap and Medicare Advantage plans available in your area, and learn exactly what each of them offers and compare costs with value.

Still have questions? agents are available to answer your Medicare questions and can help you choose the right plan for your health needs. Speak with our licensed agents to discuss your options.

You may request a call to have a licensed professional contact you at your convenience.