There are many options to choose from in the Medicare system. While everyone is familiar with original Medicare, you may be less familiar with Medicare Advantage, also known as Part C, or Medigap plans, also known as Medicare supplemental insurance.
Both Medicare Advantage and Medigap, also known as Medicare Supplement Insurance, can help cover costs that are not part of original Medicare. It’s important to understand the variety of options to find coverage that best meets your health care needs.
[Read: When Can I Buy Medigap?]
Choosing Between Medigap (Medicare Supplement) and Medicare Advantage
Depending on where you live and your current health needs, there are several options available for you to consider. Navigating through the system can be daunting, especially if your medical needs are complex. The Medicare Plan Finder, which shows all the available plans, is the best place to begin your search. You can compare plans in your area to see differences in medication copayments, plan premiums and benefit coverage.
“If you have questions, every state has a federally designated State Health Insurance Assistance Program (SHIP), which provides objective, unbiased Medicare counseling and can assist with plan selection and enrollment,” says Kelli Jo Greiner, a healthcare policy analyst with the Minnesota Board on Aging in St. Paul, Minnesota.
[READ: Changing Medicare Supplement Plans]
Medicare Options
There are two main ways to receive Medicare benefits:
Original Medicare
Original Medicare, sometimes called traditional Medicare, consists of several parts. The two main parts are:
— Medicare Part A (hospital insurance): Part A covers benefits such as inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care services.
— Medicare Part B (medical insurance): This part covers outpatient care, doctor visits, preventive services, durable medical equipment such as wheelchairs or walkers and some home health care. You may visit any doctor that participates in Medicare within the 50 states. For example, if you live in North Carolina but the specialist you need is at the Mayo Clinic in Minnesota, you are covered.
Together, Part A and Part B form the core of Original Medicare, providing coverage for a wide range of essential medical services. Original Medicare does not cover prescription medications. You will need to sign up for Medicare’s drug benefit program, Part D, if this is coverage you are looking for.
Medicare Advantage
Medicare Advantage plans, also known as Part C, look more like the employer-based health insurance plans that many are familiar with. While Advantage plans are through private insurers, the federal government mandates that they cover everything that Medicare Part A and Part B cover. One benefit that many people find appealing is that, depending on the Medicare Advantage plan, they can also cover prescription drugs, routine dental services, vision exams and certain other benefits.
Unlike original Medicare, Advantage plans typically limit care to those medical providers who are in-network and within a certain geographical area. Double check to make sure your preferred doctors and medical centers are covered. If the plan you are considering has prescription drug coverage, confirm that your medications are on the formulary before signing up.
In most Advantage plans for non-emergency care, you need to use the providers that are in your plan’s network.
“In most situations, if the beneficiary travels outside of the plan’s service area, they will only have coverage for emergency services,” Greiner explains.
Advantage plans can be purchased during Medicare’s open enrollment period from October 15 through December 7 or when you first enroll in Medicare. You will still need to enroll in Medicare Parts A and B, including paying the premiums.
If you do not qualify for assistance through a Medicare Savings Program, the premium per month in 2024 for Part B is $174.70. Usually there is no monthly premium for Part A if you worked more than 10 years and paid Medicare taxes. You may have to pay an additional monthly premium to your Advantage plan, which averaged $18 a month in 2023.
“Medicare Advantage plans can also change their benefits and networks every year, so if a plan suits you this year it is no guarantee that the same plan will suit you next year,” says David Lipschutz, an associate director at the Center for Medicare Advocacy in Washington, D.C. “Annual research into plan benefits is really recommended.”
Original Medicare + Medigap (Medicare Supplement)
While original Medicare provides substantial coverage, it does not cover all health care expenses.
Under the plan, people usually pay 20% of the Medicare-approved amount once the deductible is met for Part B-covered services. To help fill the gaps in coverage, some individuals choose to purchase additional insurance through Medigap, which covers certain out-of-pocket expenses, such as copays, coinsurance and deductibles.
Medigap plans, which are labeled Plans A through N, are sold by private insurers but are regulated by both federal and state laws to provide standardized protections for beneficiaries. For example, all Medigap Plan As must offer the same benefits, but are administered by different companies and may have different out-of-pocket expenses.
Medigap is not standalone coverage and must be used in tandem with original Medicare.
These plans will not cover 100% of all medical expenses that Medicare Part A and B do not cover, but can significantly cut down on out-of-pocket expenses. For example, if you find yourself with a large medical expense such as a hospital stay, most Medigap plans cover the Part A hospital deductible, which in 2023 was $1,600. They do not, however, help cover some expenses, such as prescription drugs, which are administered under Medicare Part D.
Medigap policies tend to have higher premiums than Medicare Advantage plans. However, depending on how much medical care you need, it can save you over time, especially if you have an unexpected medical emergency visit that comes with hefty bills.
Be aware that Medigap policies only cover one person, so if you and a loved one are both looking for this coverage you will each have to buy your own policy. To purchase a Medigap policy, you must be enrolled in original Medicare. The most advantageous time to enroll is during the Medigap open enrollment period, which is the 6-month period that starts the first day of the month you’re 65 or older and signed up for Part B. During this time insurers must offer you all available policies in your area and at the best rates for your age.
“Outside of certain periods during which Medigap issuers must sell people plans, such companies can decline people policies, or charge more, based on pre-existing conditions,” Lipschutz says.
Currently, only four states — Connecticut, Maine, Massachusetts and New York — provide the right to purchase one annually.
[READ: Medicare vs. Medicaid: What Is the Difference?]
Can You Have Both Medigap and Medicare Advantage?
No, a Medigap policy cannot be used with a Medicare Advantage plan.
If you decide at some point to switch to Medicare Advantage, be sure to cancel your Medigap policy so you are not stuck paying the premium for something you cannot use. If you join an Advantage plan and are not satisfied, once you switch back to original Medicare, you have a one-year period to return to your Medigap plan as long as it is offered by the same insurance company.
Medigap vs. Medicare Advantage: Key Differences
While there are many similarities between plans, there are also some key differences to keep in mind when you are choosing what works best for you.
| Original Medicare | Medicare Advantage | Original Medicare with Medigap | |
| Copays, coinsurance | 20% after deductible for Part B | Plan dependent | Can pay up to 100% after deductible depending on plan and service |
| Network | See any doctor who participates in Medicare | Limited to in-network doctors | See any doctor who participates in Medicare |
| Deductible | Part B $240 | Yes, but varies | Part B $240 |
| Drug coverage | Must enroll in Part D | Plan dependent | Must enroll in Part D |
| “Extra” benefits | No | Routine vision, dental, hearing and other benefits | No |
| Out-of-pocket limits | No | Depending on plan can be as high as $8,850 for in-network | Covers many out-of-pocket expenses for both Part A & B |
| Premiums | Part A and Part B | Part B and possible additional premium | Original Medicare plus Medigap premium |
| Referrals needed | No | Needed for most plans | No |
What Are the Cost Differences Between Medigap and Medicare Advantage?
The premiums for original Medicare are standardized, but cost differences may apply. They may vary on a number of factors, such as:
— How long you or your spouse has paid taxes into the Medicare system while working.
— If you qualify for a Medicare Savings program.
— Plans available in your geographical area.
— What plan you join if signing up for Medicare Advantage, Medigap or Medicare Part D.
— Your income.
Medigap
For Medigap plans, you must pay your Part A and B premiums, plus the premium charged by the insurer you purchase your Medigap plan from. For many, Part A is $0 because of the number of working years paid into the Medicare system (generally 10 or more), while working and Part B is $174.70.
You will still need to pay any out-of-pocket expenses that your plan has, although the point of adding a Medigap plan to original Medicare is to help reduce your out-of-pocket costs. Specialists at your local SHIP office can help guide you through what you qualify for, and the costs associated with it.
Medicare Advantage
For Medicare Advantage plans, you still need to pay your Part B premiums, which in 2024 is $174.70, as well as any premium necessary for the Advantage plan you select.
Who Is Eligible for Medigap and Medicare Advantage?
Medicare is for people 65 or older.
However, if you are not turning 65, you may be eligible for Medicare if you have any of the following conditions:
— Disability.
— End-stage renal disease.
— ALS, also known as Lou Gehrig’s disease.
Choosing the Right Medicare Plan for You
There are many factors that go into choosing a health care plan, including the associated costs and benefits of each plan and how healthy you are. Without a crystal ball it can be hard to determine exactly what your needs will be in the coming years, but talking to your doctor may be one way to help narrow down what benefits you should include.
Don’t forget to factor in prescription medication costs and if you think you will need routine dental or vision care in the upcoming year. Some Advantage plans offer those benefits. If you want the reassurance that you are covered from any major medical bills as well as day-to-day out-of-pocket expenses, then a Medigap policy is the way to go.
Bottom Line
Medicare Advantage and Medigap supplemental plans both have some important benefits and limitations that should not be overlooked when weighing decisions for health care coverage.
The additional benefits — such as dental, vision and prescription drug coverage — bundled in Advantage plans might be precisely what one needs. On the other hand, Medigap plans offer peace of mind by covering out-of-pocket expenses, especially in situations involving costly medical services, like hospital stays. While Medigap plans may come with higher premiums than Advantage plans, they can be a big money saver overall, depending on your health care usage.
Talk to your doctor or licensed health insurance advisor to find out which plan is right for you.
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Medigap vs. Medicare Advantage: Which Should You Buy? originally appeared on usnews.com
