Medigap vs. Medicare Advantage: What is the Difference?

Medigap vs. Medicare Advantage: What is the Difference?

Jan 13 2022

Medicare plan options can be confusing. Medigap and Medicare Advantage are not the same. Know the differences before you choose.

Medicare Advantage and Medigap are both supplemental options to your Original Medicare plan. They are similar in some respects and quite different in others. This can make it challenging to decide which is the best option for you.

Many people find that Original Medicare doesn’t cover enough of their health care costs based on the care they require. For example, Part A generally covers 100% of your hospital costs after you pay your deductible, which is $1,556 in 2022. And Part B only covers 80% of the cost for medically necessary services, making you responsible for the remaining 20%. If a service isn’t considered medically necessary, you’ll pay the entire cost. Original Medicare also doesn’t include prescription drugs and long-term care.

Medigap and Medicare Advantage are both good options to supplement your coverage and make your costs more manageable.

What’s the difference between Medigap and Medicare Advantage?

Medicare Advantage, also known as Medicare Part C, gives you the same coverage you get with Original Medicare, plus a lot more. The plan operates similar to that of an individual or employer HMO or PPO plan, which may feel most familiar to you. The plan helps lower your out-of-pocket costs with predictable copayments, smaller deductibles and out-of-pocket maximums. In many cases, it may also include extras like prescription drug coverage, dental or a gym membership. You’ll save money by seeing doctors within the plan’s network.

Medigap plans, on the other hand, work with your Original Medicare to help pay for most or all of your out-of-pocket costs such as copayments, coinsurance and deductibles that Original Medicare doesn’t cover. A Medigap plan gives you more flexibility when it comes to doctor choice as well because you can go to anyone who accepts Medicare.

Keep in mind that these two plan types do not work together. If you have a Medicare Advantage policy, you cannot enroll in a Medigap plan, and vice-versa.

How much does each plan cost?

Medicare Advantage plans typically have lower monthly premiums, but you may pay more out-of-pocket at the time you receive care.

With a Medigap plan, you’ll pay less—or nothing—when you get medical care, but you’ll pay a higher monthly premium than you would with a Medicare Advantage plan.

For many people, the choice between these two plans comes down to price. Do you need the stability of a higher monthly cost with little-to-no money spent out of pocket? Can you afford to pay some costs out of pocket, perhaps somewhat unexpectedly, as long as they are less costly and more predictable than with Medicare Part B alone?

What about prescription drug coverage?

Many Medicare Advantage plans include prescription drug coverage (Part D), appropriately named Medicare Advantage Prescription Drug (MAPD) plans MAPD plans are usually the lowest cost way to bundle Original Medicare (Parts A, B) and prescription coverage (Part D).

Medigap plans don’t include prescription drug coverage, so you’ll need to purchase a separate Part D prescription drug plan.

How and when should I enroll?

If you’re looking to enroll in a Medicare Advantage plan, you should do so during your initial enrollment period, the period of time that starts three months before your birthday month and ends three months after. Each year after that, you have the option to change your plan during the Anuual Enrollment Period (AEP), which runs from Oct. 15 to Dec. 7.

The best time to buy a Medigap policy is during your 6-month Medigap open enrollment period, which automatically starts the month that you turn 65 and are enrolled in Medicare Part B. After this enrollment period, you could be turned down or charged extra for a pre-existing condition.

If you are still working and have credible health care coverage through your employer, you can delay enrolling in Medicare Part B. When your coverage ends, you will have the opportunity to enroll in Medicare Part B. Your Medigap open enrollment period will begin then.

Medigap and Medicare Advantage plans can help make your health insurance coverage more manageable as you age and may have to use more medical services.

Still have questions about your Medicare options? Download our free Smart Choice Medicare e-guide to cover all the basics so you can feel confident in your Medicare choice.

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