Healthcare Educators


Understanding Medicare Advantage and Medigap – Which is Right for You

by | Jul 18, 2022

When you are eligible to sign up for Medicare, there are several decisions you will need to make. Original Medicare (Part A and Part B) will not cover everything, which could result in a costly gap in coverage. There are two ways to close that gap:

  • Medicare Advantage Plans
  • Medicare plus Medigap supplemental policies

You can’t have both at the same time so, it’s important to understand the differences. Your lifestyle, health, and finances may all play a role in deciding what is right for you.

What Medicare Advantage Covers

Medicare Advantage Plans (Part C) include benefits beyond Medicare Parts A and B. These plans are offered by private health insurance companies. Most services, such as office visits, lab work, surgery, and many others, are covered after a small co-pay. Some plans may cover additional services such as eyeglasses, routine dental care, and gym memberships.

Plans might offer an HMO or PPO network and all plans have a yearly limit on total out-of-pocket expenses. Most provide prescription drug coverage. Some may require a referral to see a specialist. Some may pay a portion of out-of-network care, while others will cover only doctors and facilities that are in the HMO or PPO network.

Medicare Advantage plans may have a $0 premium, or a lower premium compared to premiums for Medigap and Part D prescription drug policies. But it’s essential to check copays, coinsurance and other out of pocket costs, especially for expensive hospital stays and procedures in order to estimate your possible annual expenses. Since care is often limited to in-network physicians and hospitals, the quality and size of a particular plan’s network should be an important factor in your choice. For people with chronic diseases a Medicare Advantage plan with an out-of-pocket maximum may offer protection from large medical bills.

What Original Medicare and Medigap Cover

Original Medicare consists of Part A (hospital) and Part B (medical). It provides good basic coverage, but it only pays 80% of approved costs for hospitals, doctors and medical procedures. The other 20% of the bill is the insured’s responsibility. There is no cap on how much on the amount you may have to spend in one year.

Medigap plans are designed to fill these gaps in coverage and reimburse you for the expenses not covered by Parts A and B. For example, Original Medicare does not cover prescription drugs costs. You can supplement this coverage with a stand-alone Medicare Part D prescription drug plan and a Medigap supplemental insurance plan.

Signing up for Medicare gets you into Parts A and B, but you must take action on your own to buy these supplemental policies. A Medigap plan will not cover your spouse. You each need your own policy.

While supplemental plans may be the more expensive option, there are some advantages. Both Medicare and Medigap insurance plans cover you for any hospital or doctor in the U.S. that accepts Medicare, and most do. There is no need for prior authorization or a referral from a primary care doctor. Coverage includes the entire U.S., which may be considered essential if you travel frequently or spend part of the year in a different locale. This option is significant to those who have particular physicians and hospitals they want to use.

Choosing the Right Supplemental Plan

There are numerous supplemental plans available, each identified with a different letter that represents a standard level of coverage. The most popular choices are F and G, as they offer the most comprehensive coverage. However as of January 1, 2020, Plan F is no longer available to people newly eligible for Medicare. People who already have Plan F will be able to keep it, and people who were eligible for Medicare before 2020 but didn’t have a Medigap plan may still be allowed to get Plan F if they wish. The other supplemental plans offer progressively less coverage for lower upfront costs.

Making a Decision

Regardless of which option you pick, as you approach age 65, it’s important to know which enrollment deadlines apply to your circumstances in order to avoid costly penalties and gaps in coverage.

Comparing the coverage differences and costs between Medicare Advantage and Medigap plans can be daunting. If you qualify for Medicare but don’t know where to start, please contact us. Our knowledgeable and experienced team can help you make the right decision.