Understand the differences between Medicare Advantage and Medicare Supplement Insurance (Medigap) plans.
The federal government’s Original Medicare program helps with the cost of health care for most Americans over the age of 65. Inpatient stays in a hospital, physician services, ambulance transportation, medical tests, and preventive screenings are typically covered by Original Medicare Part A (hospital insurance) and Part B (medical insurance).
There are additional out-of-pocket health carecosts not covered by Original Medicare, including:
Medicare beneficiaries have two options to help make up for some of these gaps in coverage: They can enroll in a Medicare Advantage Plan (Part C) or a Medicare Supplement Plan (Medigap).
Medicare Advantage vs Medigap:
Because you can’t be enrolled in a Medicare Advantage Plan and Medigap at the same time, it’s important to understand the differences between these two options when choosing your Medicare coverage.
When you choose a Medicare Advantage Plan, you’re enrolling in a plan delivered by a private insurance company to receive your Medicare benefits as an alternative to the federal government’s Original Medicare program. The Medicare Advantage insurance companies are contracted by Medicare to deliver these plans that must meet guidelines established by the government. You must be enrolled in Medicare Parts A and B to join a Medicare Advantage Plan.
All Medicare Advantage plans must provide the same coverage as Original Medicare Parts A and B.
Medicare Advantage plans may also provide additional coverage, such as:
Benefits, deductibles, coinsurance, and cost-sharing vary, depending on the plan.
If you decide to keep Original Medicare instead of opting for a Medicare Advantage Plan, you can buy a Medigap policy. Medigap plans are sold by private insurance companies and help pay for out-of-pocket costs related to Original Medicare Part A and Part B deductibles, copayments, and coinsurance. Some Medicare supplement plans may also provide emergency medical care coverage when you travel outside of the country.
Here’s a quick comparison of the differences between Medicare Advantage and Medigap. Because plans vary in costs and benefits, be sure to review the details of any plan before you choose the right plan for you.
|Medicare Advantage||Medicare Supplement Insurance (Medigap)|
|Where do I purchase this plan?||Private insurance companies||Private insurance companies|
|Are Part A and Part B coverage provided by Original Medicare?||No||Yes|
|Is there a monthly premium?||Some plans have low or no monthly premiums.||Yes|
|Is there a Part B deductible?||It varies by plan. Some may have a Part B deductible.||Yes, except for those who purchased Medigap Plan C or Plan F prior to January 1, 2020.|
|Is there a Part B premium?||Yes, although some plans may cover part or all of the premium for you.||Yes|
|Is there prescription drug coverage?||It varies by plan. Most provide prescription drug coverage, or you can enroll in a Medicare Part D prescription drug plan.||No. You may enroll in a Medicare Part D prescription drug plan.|
|Are routine dental, hearing, and vision services covered?||It varies by plan. Most provide dental, hearing, and vision coverage.||No|
|Are extra benefits included?||Some plans may provide fitness benefits, nonemergency medical transportation, acupuncture, chiropractic services, and in-home support.||Some plans may provide emergency medical care when traveling internationally.|
|Do I have to use providers within a network?||It depends on the plan. Some require you to use providers within their network. Others may allow out-of-network providers but at a higher cost. Some plans have no network restrictions.||You may use any hospital or doctor in the United States that accepts Medicare.|
|Does each plan offer standardized benefits?||No. While each plan must offer Part A and Part B coverage, all other benefits vary by plan.||Yes. Each plan within the same letter category offers the same basic benefits.|
|Do I have out-of-pocket costs?||Most plans require coinsurance or cost-sharing.||Generally, coinsurance and cost-sharing for Part A and B expenses are covered.|
|Does the plan renew automatically?||Yes||Yes, as long as you pay your premiums.|
|Can I make changes to my plan?||Changes to coverage can be made during two open enrollment periods (January 1 to March 31 and October 15 to December 7).||You have a six-month Medigap open enrollment period that starts when you’re aged 65 and enrolled in Part B. After this, you may not be able to buy a Medigap policy, or it may cost more due to your health.|
|Who does this plan work best for?||Those who want more coverage than Original Medicare Those who want access to a network of providers or have no preference for certain providers||Those who expect to have frequent health care treatments and want out-of-pocket costs covered Those who travel often and want coverage in other states and out-of-country|
Once you’ve decided whether Medicare Advantage or Medigap is right for you, you must select the specific plan you wish to purchase.
There are various types of Medicare Advantage Plans, including:
You can compare Medicare Advantage Plans using Medicare’s online tool.
There are 10 categories of Medigap plans (A, B, C, D, F, G, K, L, M, and N). Each plan within a letter category offers the same basic benefits, regardless of the insurance company selling the policy. You can choose the letter plan that works best for you and compare Medicare Supplement plans according to price and additional benefits.
For example, Medigap A plans cover Part A coinsurance and hospital costs, Part B coinsurance, Part A hospice care coinsurance, and the first three pints of blood. Plans within Medigap Plan B cover the above plus the Part A deductible.
This applies in all states except Massachusetts, Minnesota, and Wisconsin, which standardize their Medigap plans differently.
Most Americans qualify for Medicare at age 65. Individuals younger than age 65 who have received certain disability benefits for at least two years or have end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease), may also be eligible. You can confirm your eligibility using the Medicare online eligibility tool.
Medicare enrollment is handled by Social Security:
Roseann Birch has worked in the insurance industry for more than 35 years. In 2006, she moved to selling insurance and, by 2009, Birch made Medicare her area of expertise after observing the struggles of older adults to understand Medicare. Although many adults age 65 and older are eligible for Medicare, nearly just as many don’t understand how it works.
Birch has learned the ins and outs of Medicare and its variations and supplements to help beneficiaries and their families understand benefits. She finds there is often misinformation and makes it her mission to clear up the confusion so that everyone can enjoy the full extent of Medicare benefits.