Medigap vs Medicare Advantage

A very common question today for Seniors regards the debate of a Medigap vs Medicare Advantage plan coverage. In many areas, there could be hundreds of options available. How do you choose? What’s the difference? Which plan’s best for you? This will discuss the similarities and differences of these two unique products.

If we look at Original Medicare, it has two parts: Part A and Part B. Part A has no premium at this time. Part B has a monthly premium, and if you’re joining Medicare it’s approximately $100 or more, depending on your income. After we’ve made the decision to accept Medicare Part A and Part B, the next choice is, we need to decide if we’re going to supplement our Medicare or transfer our Medicare benefits to a Medicare Advantage company.

To look at that more closely, if you have benefits from work, either as an employee or a retiree, you’re probably going to need to have Medicare parts A and B, but your plan description will tell you exactly.

The other choice when supplementing your Medicare benefits is a Medigap Plan. That is truly a Medicare supplement where you have Medicare plus your Medigap, and that does a really good job in eliminating any surprises in your medical cost.

The other option is to transfer your Medicare benefits to a Medicare Advantage Plan, and in many areas, the benefits are extremely rich and very cost-effective.

The other option may not be available to you but it’s for folks with Medicaid. In many cases, the State will contract with a Medicare Advantage company to take those responsibilities away from the State, so they can just pay one monthly premium to take care of you.

As you may know, there are many companies that offer both Medigap and Medicare Advantage Plans. Some companies offer just Medigap Plans, while others offer Medicare Advantage Plans. So really, what’s the difference?

To compare and contrast Medicare coverage that is available, that’s Medicare and Medigap vs Medicare Advantage, they must be discussed in generalities.

If we look at the most important things to many folks, it’s the doctor. With Medicare and a Medigap plan, Medicare will pay any licensed physician and any hospital for that matter, so you have no restrictions, as opposed to the Medicare Advantage Plan, you need to make sure that your physician and your hospital is on the network. In metro areas, that’s usually not a big deal. But for Medicare Advantage Plans in the rural areas, you need to be very careful prior to using the service because you might get stuck with the bill.

When it comes to co-pays, the Medicare and the Medicare Supplement Plans have no co-pay (Except for Plans M & N). They have no deductible and no out-of-pocket charges. The reason being is your paying a monthly premium to make those go away, as opposed to Medicare Advantage, you will pay a small co-pay to see your primary care physician, maybe a little bit bigger co-pay to see a specialist, and may be as much as $15,000 for a hospital stay. You’d pay 20-50% for a diagnostic test, but your out-of-pocket maximum for the year would be capped or limited at $16,000.

Now, for a Medicare and a Medigap, you need to get a prescription drug plan separately. That’s Plan D of Medicare. As to the Medicare Advantage Plans, the drug programs are usually included. Now, why would somebody get a Medigap Plan? Well, some of the reasons are freedom of choice. Use any doctor, any hospital in the United States, you don’t have to worry about co-pays or deductibles, and you don’t necessarily need a referral to use a specialist.

The most popular reasons for somebody using a Medicare Advantage Plan are typically premium, especially if you’re in the rural areas, it can significantly save you money. If you’re in the metro areas, a lot of times, most all of the doctors and all of the hospitals are on the plan. So you can save some money on a monthly basis by selecting a Medicare Advantage Plan.

With so many people wishing to choose their own doctor, Medigap Plans in this case are the clear winner. You have the flexibility of travelling anywhere in the country and provided the doctor or speciality simply accepts Medicare, you can use your Medicare Supplement plan. And it does not matter which company your purchase it from, as they will accept a Blue Cross Blue Shield Medicare supplement as well as one from say, Mutual of Omaha.

The on-going debate of Medigap vs Medicare Advantage will likely continue for years to come, or for as long as either of these remains popular and readily available, especially during the changing times of health care in the United States.