What Is the Difference Between Medigap vs Medicare Advantage Plans?

If you’re eligible for Original Medicare, it’s important to compare your options for coverage. Original Medicare refers to Medicare Part A and Medicare Part B, and together they cover most of the costs of your healthcare. Unfortunately, you’re still responsible for your prescription medications, as well as copays, deductibles, and 20% of your medical costs. Medicare Advantage plans and Medicare Supplement plans both work in different ways to help make your healthcare affordable.

What Is a Medicare Advantage Plan?

We know that having several Medicare options can get confusing. If you know you want an alternative to Original Medicare, you may be wondering: what is a Medicare Advantage plan? A Medicare Advantage plan offers the same amount of coverage as Original Medicare, but through a private company approved by Medicare. The federal government requires Medicare Advantage plans to offer the same amount of coverage as Original Medicare, so you’ll feel comfort in knowing your basics will be covered. This means that your Medicare Advantage plan will provide coverage for hospital inpatient services and medical outpatient services.

 A Medicare Advantage plan is an insurance plan that’s offered by a private company, and it replaces Original Medicare. While the benefits of Medicare Advantage plans vary by carrier, they must offer coverage that is considered at least equal to that of Original Medicare.

So, how do Medicare Advantage plans work? Medicare Advantage plans vary based on where you live, but you’ll most likely have an option between HMO or PPO plans. Many Medicare Advantage plans also include a prescription drug plan, and some offer dental benefits as well.

Signing up for a Medicare Advantage plan is easy, as you don’t have to answer any medical questions. However, Medicare Advantage plans aren’t guaranteed renewable, and your coverage could be discontinued at the end of the year. Your benefits may also change from year to year as well.

How Much Do Medicare Advantage Plans Cost?

If you select a Medicare Advantage plan, you’ll still need to pay your Medicare Part B premium. For most people in 2020, the Medicare Part B premium is $144.60 Your Medicare Advantage plan may have a premium as well, but it will most likely be lower than your Part B premium.

When you compare Medicare Advantage plans, you should be sure to review the deductible and copayments for medical services and prescription medications. These out-of-pocket costs are typically much higher than with a Medicare Supplement and may come as a shock if you aren’t expecting them. In addition, your Medicare Advantage plan carrier can choose to deny your claim, leaving you on the hook for the entire bill.

What Is a Medicare Supplement Plan?

Medigap plans, also known as Medicare Supplement plans, work with Original Medicare and are available in a range of coverage options. While these plans are also offered from various carriers, they are standardized based on the plan letter. So, for instance, Medicare Supplement Plan G with Cigna will offer the same benefits and coverage as Medicare Supplement Plan G with Humana.

Because each plan letter works with Original Medicare, you can seek coverage anywhere in the country that accepts Medicare without having to worry about out-of-network costs. An important exception to note is that if you choose a Select plan, such as Medicare Supplement Plan F Select, your hospital network will be limited.   

Medicare Supplement plans are guaranteed renewable, so you don’t have to worry about your coverage ending at the end of the year. Signing up for a Medicare Supplement plan is easy for many people; however, depending on your situation or the state you live in, you may need to answer medical questions.

Medicare Supplement plans don’t offer prescription drug coverage. Instead, you can choose from a variety of Medicare Part D Prescription Drug Plans. You can save money by selecting the plan that offers the best rates on your specific prescriptions at your preferred pharmacy.

How Much Do Medicare Supplement Plans Cost?

Premiums for Medicare Supplement plans vary based on factors such as your age, gender, and where you live. While the rates for Medicare Supplement plans tend to be higher than Advantage plans, they significantly lower your out-of-pocket costs. Because Medicare Supplement plans work with Original Medicare, as long you receive a Medicare-approved service from a doctor who accepts Medicare, you don’t need to worry about your claim being denied.

Is it Better to Have Medicare Advantage or Medigap Insurance?

 Although Medicare Supplement plans tend to have higher premiums, many people favor them because of the peace of mind they offer.  If you’re looking for the following features in your insurance, a Medicare Supplement plan may be the best choice:

  • Broad doctor and hospital network
  • Low and predictable out-of-pocket costs
  • Claims paid that are paid on time and in full, without hassle or risk of denial

Ultimately, it’s up to you to determine which type of insurance you prefer. You can use the Medigap vs Medicare Advantage comparison chart below to help you weigh your options.

Medicare Advantage Medicare Supplement
  • Replaces your Original Medicare
  • Original Medicare is the primary insurance
  • Typically lower premiums
  • Premiums usually higher
  • Risk of high out-of-pocket costs
  • Lower, predictable out-of-pocket costs
  • Claims may be denied
  • Clear guidelines for a no-hassle claims-paying process
  • May include prescription drug coverage
  • Doesn’t include prescription drug coverage
  • Doctor network varies by carrier
  • Nation-wide doctor network
  • Plans vary by carrier and location
  • Plans are standardized
  • Nothing on this website should ever be used as a substitute for professional medical advice. You should always consult with your medical provider regarding diagnosis or treatment for a health condition, including decisions about the correct medication for your condition, as well as prior to undertaking any specific exercise or dietary routine.

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