What is Medigap?

Medigap (otherwise known as Medicare supplement insurance) is extra health insurance that you buy from a private insurance company to pay health care costs not covered by Original Medicare. Examples of these costs typically not covered by Original Medicare include copayments, coinsurance, and annual deductibles.

What is Medicare Advantage?

Medicare Advantage plans (also known as “Part C” or “MA Plans”) are Medicare-approved, private companies that pay your Medicare costs. These companies are then reimbursed by Medicare itself. They are an “all-in-one” alternative to Original Medicare

Medicare Advantage Plans cover all of Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage, unlike a Medicare supplement insurance (Medigap) policy, and there are many different types of Medicare Advantage plans to suit different needs. Medicare Advantage plans covers everything Original Medicare covers except hospice care — Original Medicare covers hospice care even if you’re in a Medicare Advantage Plan, thereby making it unnecessary in Medicare Advantage Plan coverage.

In all types of Medicare Advantage Plans, you’re always covered for emergency and urgent care. Medicare Advantage Plans must offer emergency coverage outside of the plan’s service area (but not outside the U.S.).

Essentially, you have both in a real sense.

Medicare Advantage is Original Medicare but with extras, such as dental care, eyeglasses, or wellness programs. Original Medicare is a stand-alone health insurance provided by the federal government.

The difference is the administrator: Medicare is paid by the federal government. Medicare Advantage is essentially Medicare outsourced to a private entity that pays on behalf of Medicare.

You need only one: only Original Medicare or only Medicare Advantage. Once you have become Medicare-eligible and enroll, you can choose to get your Medicare benefits from Original Medicare, the traditional fee-for-service program offered directly through the federal government, or from a Medicare Advantage Plan, a type of private insurance offered by companies that contract with Medicare (the federal government).

Think of Medigap (or Medicare Supplement Plans) as something in addition to Original Medicare OR a Medicare Advantage Plan. You must have either Original Medicare or Medicare Advantage in order to purchase Medigap. Medigap can be used with either equally.

Medigap covers the difference, or “gap,” between the expenses reimbursed to providers by Medicare Parts A and B for the preceding named services and the total amount allowed to be charged for those services by the United States Centers for Medicare and Medicaid Services (CMS).

  • Both Medigap and Medicare Advantage Plans cover Original Medicare’s out-of-pocket expenses
  • Both offer additional benefits than stand-alone Medicare
  • Each Medigap plan offers a different combination of benefits

  • Medigap does not cover prescription drugs. You’d have to purchase a stand-alone Plan D plan to cover prescription drugs. This is by federal regulation once the federal government implemented Plan D in 2006.
  • Most Medicare Advantage Plans cover prescription drugs.
  • Medigap plans don’t make any decisions about what to cover. They don’t have networks of doctors or hospitals. All they do is pick up a specified share of your medical bills that Medicare doesn’t pay, such as Part A or Part B deductibles or copays.
  • Medigaps cover specific services such as copays and costs not covered by Original Medicare like hospital stays, skilled nursing facility stays, home health care, ambulance, durable medical equipment, and doctor charges.
  • Medicare Advantage Plans can be thought of as Original Medicare with added benefits.

  • Medicare Advantage Plans must cover all of the services that Original Medicare covers.
  • If you’re in a Medicare Advantage Plan, Original Medicare will still cover the cost of hospice care, some new Medicare benefits, and some costs for clinical research studies.
  • In all types of Medicare Advantage Plans, you’re always covered for emergency and urgently needed care.
  • Medicare Advantage usually includes prescription drug coverage.
  • You can tailor your specific health needs to your health insurance plan, thereby lowering costs for yourself as you only pay for the coverage you need.

  • Medicare Advantage Plans cover all Medicare services.
  • Some Medicare Advantage Plans also offer extra coverage, like vision, hearing and dental coverage.

  • Medicare Advantage plans typically come with deductibles and copays.
  • Medicare Advantage plans have an annual out-of-pocket limit (Original Medicare does not), potentially having all your medical bills covered for the rest of the year if you meet your limit.
  • Medicare Advantage plans only work with doctors, hospitals, and other providers within the plan’s network.

Once you are enrolled in Medicare, you can join, switch, or drop a Medicare Advantage or Part D plan once a year during the annual open-enrollment period, which runs from Oct. 15 through Dec. 7.

Medigap insurance companies in most states can only sell you a “standardized” Medigap policy set by the federal government. Each standardized Medigap policy must offer the same basic benefits, no matter which insurance company sells it. All plans offer the same basic benefits but some offer additional benefits. This allows you, the consumer, to personalize your coverage based on your needs.

Medigap plans are available in 10 standardized benefits packages, which vary according to how much of your expenses they will pick up. The more expenses the plan will pick up, the higher its premium. To be clear, you pay the insurance company that sold you Medigap coverage a premium, which can vary with the different policies AND can vary from company to company. It’s best to shop around for the best price and service when buying Medigap policies.

The most popular plan is F, which pays for almost everything Medicare doesn’t, including the 15 percent excess charge that you can be billed by doctors who don’t accept Medicare as payment in full.

  • In every state, you have a guaranteed right to buy a Medigap policy for six months, starting the first day of the month you are at least 65 and enrolled in Part B.
  • During this grace period, the insurance company is not allowed to turn you down or charge you more because you have a pre-existing condition. This is called “guaranteed issue.”
  • After that, you’re only entitled to guaranteed issue Medigap in specific situations, such as if your Medicare Advantage plan shuts down, you move out of its service area, your retiree plan shuts down, you joined Medicare Advantage at 65 but decide to switch back to original Medicare within a year, or your Medigap plan shuts down.
  • As long as you pay your premiums, Medigap CANNOT cancel your policy for any reason, including pre-existing conditions.

IMPORTANT TO REMEMBER: You are not allowed to have a Medigap and Medicare Advantage plan simultaneously. In fact, it’s illegal for someone to sell you Medigap if you have a Medicare Advantage plan and vice versa.

Medigap

Medicare Advantage

How it relates to original Medicare Parts A & B

Private supplemental coverage that pays all or most Part A & B out-of-pocket costs. Private health plan that provides Part A & B benefits directly in place of Original Medicare.

Premium

Average of about $150 to $200 a month. Can vary by age, health history, or both. $0 to more than $100 a month depending on the plan. All plan enrollees pay the same regardless of age or health history.

Out-of-pocket costs

Low to none (not counting premium). In-network medical deductibles and copays of up to $3,400 to $6,700 a year, depending on the plan.

Choice of doctors and hospitals

Any that participate in Medicare.

HMOs: Plan providers only.

PPOs: Any provider, but out-of-network providers cost more.

When you can buy

First six months after you sign up for Part B and are at least 65 years old. After that, in most states you can be turned down or charged extra for pre-existing conditions. When you first enroll in both Medicare A and B and annually thereafter during Open Enrollment (Oct. 15-Dec. 7).

Part D (drug) coverage

Not included. You must buy a separate Part D plan for this. Most plans include Part D coverage.

Quality information available

No. There are no standardized ratings for Medigap plans. Yes. Medicare.gov has star ratings (5 stars are the best). Consumer Reports has Medicare Advantage quality rankings from NCQA.

Cards in your purse or wallet

Three. 1. Red, white, and blue Medicare card. 2. Medigap card. 3. Part D card. Usually just one Medicare Advantage card. The red, white, and blue Medicare card can stay in your desk drawer.

Paperwork

Little to none. Medigap almost always automatically cuts a check to providers after Medicare pays its share. Some, because you pay deductibles and copays directly to providers.

Source: https://www.consumerreports.org/cro/news/2014/10/medigap-vs-medicare-advantage-consumer-reports/index.htm

Bear in mind these are generalities and market conditions can change at any time. Because Medigap and Medicare Advantage Plans change all the time, it’s hard to be precise.

Many people mistakenly believe Medicare is free. They believe someone else, such as the federal government or the state, pays for their health care. It’s this notion that leads to confusion.

In Original Medicare, the government pays Medicare’s share of your medical bills directly to doctors and hospitals. You can go to any doctor or hospital anywhere in the country that accepts Medicare reimbursement. That is nearly all of them.

When you visit a doctor or a hospital or use any other medical service you avail, you will still be required to pay some healthcare costs out of your own pocket. For instance, people on Original Medicare have a deductible for every hospital stay ($1,364 in 2019). They must also pay 20 percent of the cost of most kinds of outpatient treatments, including doctor visits. And unlike the private insurance you’re used to from your working years, Medicare does not have any limit on what you can spend out of your own pocket. The bills can mount up quickly, especially if you need costly treatments such as outpatient chemotherapy. You may have a retiree or TRICARE plan that helps pick up some or all of those costs.

If you don’t want to be responsible for every out-of-pocket expense Original Medicare does not cover, you have only two options:

  1. Medigap
  2. Medicare Advantage Plans

Bottom line, Medicare Advantage Plans cover more of your healthcare costs than Original Medicare. There is no downside to Medicare Advantage plans besides the additional costs associated with it. Typically, you have better service since Medicare Advantage plans are administered by private healthcare insurance companies that offer more personalized service. Most companies will answer all of your questions in detail and with patience since this is all complicated stuff.

Medigap plans cover specific services that Original Medicare does not cover. You are required to have Original Medicare with Medigap. You cannot have both Medicare Advantage Plans and Medigap, as the services would more or less be repetitive.

A Medigap policy is different from a Medicare Advantage plan, because those a Medicare Advantage plan is a way to get Medicare benefits, while a Medigap policy only supplements the costs of your Original Medicare benefits. It’s important to note Original Medicare doesn’t pay any of the costs associated with a Medigap policy or a Medicare Advantage plan. Both Medigap and Medicare Advantage plans must follow federal and state laws, which are designed to protect the consumer. One such regulation requires all Medigap policies must be identified as “Medicare Supplement Insurance.”

One never knows what curveballs life will throw at us. You could be healthy all the way into your 80s. Or you could get cancer, requiring extensive (and expensive) chemotherapy, exposing you to thousands of dollars of out-of-pocket expenses. Do you really want to potentially lose your lifestyle, your savings, and more if the worst does happen? It behooves you to supplement Original Medicare with either Medigap or a Medicare Advantage plan.

At MedicareGov Directory we care about your pocketbook. We strive to match you with the best medical coverage for your individual needs. We explain everything to you until it’s crystal clear. With the periodic changing and/or passing of laws that affect Medicare, Medigap, and Medicare Advantage plans, we keep abreast of all the changes so you don’t have to, and we’ll let you know if we think there’s a better plan for you. Contact MedicareGov Directory today to learn more!