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Medigap or Medicare Advantage?

Christian Worstell

by Christian Worstell | Published April 26, 2021 | Reviewed by John Krahnert

Medigap and Medicare Advantage are both insurance programs for people enrolled in Medicare, but the ways in which they work are very different from one another.

Medigap 

Medigap (also known as Medicare Supplement Insurance) is sold by private insurers to cover some of the out-of-pocket costs of Original Medicare. With Medigap, you’ll continue to use your Original Medicare benefits, but when it comes time to make a copayment, satisfy a deductible or pay out of your own pocket in other ways, your Medigap plan might pick up some of the cost for you. There are currently 10 standardized plans in most states that work in conjunction with Original Medicare.

A Medigap plan may be right for you if you are seeking increased cost predictability, fewer surprise out-of-pocket expenses and wish to have a health insurance plan that you can take with you wherever you go within the United States.

Medicare Advantage

Medicare Advantage plans work much like traditional health insurance plans. By law, these plans must provide at least the same minimal coverage as Original Medicare and may also offer additional benefits such as vision or dental coverage. Unlike Medigap plans, which help supplement your Original Medicare benefits, Medicare Advantage plans replace Original Medicare altogether. 

A Medicare Advantage plan may be for you if you wish to have some extra coverage such as dental, vision or prescription drug benefits. This option may also be for you if you do not do much traveling and will be able to maintain access to the health care providers of your choice.

Costs

Because the cost of Medigap and Medicare Advantage plans can vary so much from insurer to insurer, it’s difficult to accurately compare rates between the two options.

MedicareRights.org reported in 2013 that the average cost of a Medigap plan was $183 per month. Meanwhile, MyMedicareMatters.org reports that the average monthly cost of a Medicare Advantage plan is just $31.40 in 2017.1 But before you conclude that Medicare Advantage is the more affordable option, consider three things:

  1. MyMedicareMatters.org also reports that the cost of some plans can exceed $200 per month.

  2. Medicare Advantage plans involve more costs than just the monthly premiums. These plans may also come with deductibles, copayments and coinsurance just like any other health insurance plan. Consumer Reports estimates these costs totaling $3,400 to $6,700 per year. And remember, you can't use a Medigap plan with a Medicare Advantage plan.

  3. Medigap plans are designed to cover some of Medicare's out-of-pocket costs such as deductibles, co-payments and co-insurance. The monthly premium of a Medigap plan can offset some of the expenses that it covers such as the Part A deductible ($1,364 per benefit period in 2019) or skilled nursing facility coinsurance (up to $170.50 per day of each benefit period in 2019).

Choice of Provider

If a health care provider accepts Medicare, they automatically accept Medigap. And because it is estimated that around 96% of U.S. doctors accept Medicare, a Medigap plan is effectively part of the nation’s largest health care network.

There are no HMO or PPO network restrictions or doctor referrals needed in order to utilize Medigap’s benefits. A Medigap plan can also go with you if you change residences within the U.S. and can even be used in foreign countries in certain situations.

Medicare Advantage plans may come with restrictions regarding provider choice. Most plans are either HMO (where you can only use the insurance within a particular network) or PPO (where you can use the insurance anywhere but will pay more out-of-pocket when used outside the network). Plus, providers can leave the plan’s network at anytime throughout the year.

Continue learning about Medigap with this helpful guide. If you have questions and would prefer to talk to a licensed agent, call 1-800-995-4219 today.

 

1 https://www.mymedicarematters.org/costs/part-c/?SID=58ab5afcd9264

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