A Guide to Medicare Options: Medigap or Medicare Advantage?

Original Medicare does not cover all your potential medical needs, so as a Medicare recipient, you have the choice between Medicare Advantage or Medigap to help cushion your medical expenses and out-of-pocket costs. 

Perhaps you have heard more about Medicare Advantage from TV commercials or other advertisements; however, depending on your health needs, Original Medicare with a Medigap supplemental plan could be a more suitable option. 

In this guide, we will break down the two options (with a focus on Medigap) to help you determine if Medigap or Medicare Advantage could be the right fit for you. 


How Medigap Works

Medigap, or Medicare Supplement Insurance, is a private health insurance policy that helps seniors and others cover the costs of what Original Medicare (Part A and Part B) does not cover. 

When enrolled, Medigap helps cover costs that Medicare does not, such as copayments, coinsurance, and deductibles. 

Recipients may find Medigap appealing because it is accepted anywhere that accepts Medicare. That flexibility makes it easy to receive care while traveling or if you reside elsewhere for part of the year. 

In addition, preauthorization by your doctor for services covered by your Medigap insurer is not required. This helps ease the process of getting the treatment you need without delay. 


Here are some important considerations for understanding how Medigap works: 


1. You’ll Need to Be Enrolled in Original Medicare

To be eligible for Medigap, enrollment in Medicare Part A and Part B is required. 

  • Medicare Part A covers hospital services, and Medicare Part B covers common medical expenses such as doctor/specialist visits and preventative services like vaccinations, routine screenings (mammograms, colonoscopies, etc.), and your annual wellness appointment. 
  • For many, Medicare Part A becomes available to you when you turn 65 and you have paid into it for 10 years or 40 quarters. If you qualify, there is no premium for Part A. 
  • Part B requires enrollment unless you are already receiving Social Security benefits prior to age 65. It comes with a monthly premium ($174.80 in 2024).
  • Only after you have secured both Original Medicare coverages can you explore supplemental coverages such as Medigap. 

2. You Must Select and Purchase Your Plan

After you are enrolled in Original Medicare, you will then select and purchase a Medigap policy to supplement your Medicare coverage. 

  • These policies are standardized by the government, so the benefits are consistent across each plan. 
  • The distinction between plans is based on their pricing and some include extras like Silver Sneakers. 
  • Each plan is labeled with a different letter. The two most recommended plans in Northeast Ohio are Medigap Plan G and Medigap Plan N.

3. Budget for Your Monthly Premiums 

Your Medigap policy will come with a monthly premium payment. 

  • Therefore, it is important to take into consideration how much you will be paying in total for Medigap in addition to your Medicare Part B premium. 
  • Affordable Medigap insurance for seniors will be dependent on certain factors, such as your initial enrollment.  
  • After that initial phase, health factors and demographic areas can affect premiums if you choose to shop different insurance carriers thereafter. 

4. Consider All Out-of-Pocket Costs

When selecting the plan that is right for you, it is important to realize what your out-of-pocket costs may be for the services you utilize the most.

As noted before, Medigap helps to cushion your costs, so selecting the plan that covers the services you’ll use most often is important.

For example, Medigap coverage is strongly recommended if a Medicare recipient:

has had a liver of kidney transplant

is currently undergoing chemotherapy

resides/travels outside of their primary zip code 4-6 months out of the year.


Let’s take a closer look at the differences between Medigap and Medicare Advantage coverage options. 

 

Medigap vs. Medicare Advantage

 

1. Coverage Approach

Medigap: It’s supplemental insurance andworks alongside Original Medicare (Part A and Part B) and helps pay for certain out-of-pocket costs like copayments, coinsurance, and deductibles.

Medicare Advantage: Replaces Original Medicare and is an all-in-one alternative. These plans are approved by Medicare and offered by private insurance companies and typically include hospital (Part A) and medical (Part B) coverage, and drugs (Part D) and often include additional benefits not covered by Original Medicare. 

2.  Providers and Networks

Medigap: Generally, you can see any healthcare provider nationwide who accepts Medicare patients. There are no network restrictions.

Medicare Advantage: These plans often have networks of healthcare providers, and if you select a doctor or hospital within the network, you can reduce your costs. Going outside the network may result in higher costs.

3. Out-of-Pocket Costs

Medigap: While you pay a monthly premium for your Medigap policy, it may help cover more of your out-of-pocket costs when you receive healthcare services. However, a monthly premium is due whether you utilize services or not. 

Medicare Advantage: Plans usually have copayments, coinsurance, and deductibles, and they have a yearly limit on what you pay out-of-pocket. Once you reach this limit, the plan covers all costs for covered services.

4. Prescription Drug Coverage

Medigap: Doesn’t include prescription drug coverage. If you want this coverage, you need to enroll in a separate Medicare Part D plan.

Medicare Advantage: Often includes prescription drug coverage (MA-PD plans). These plans are a comprehensive option for those who want both medical and prescription drug coverage in one plan.

5. Flexibility

Medigap: Provides flexibility in choosing healthcare providers and specialists without referrals typically anywhere inside the United States. 

Medicare Advantage: May require you to use network providers and may have rules regarding referrals for specialists.


To Summarize: Choosing between Medigap and Medicare Advantage depends on individual preferences, healthcare needs, and budget considerations. By meeting with a licensed representative at My Medicare Network (a nongovernmental entity), you can compare and be advised which option is best for you and your own situation. 

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