Medigap vs. Medicare Advantage: What’s the Difference?

When the Original Medicare plan doesn't offer the coverage that you need, you will want to seek out a supplemental health insurance plan.
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If you have the Original Medicare Plan, you might find gaps in your coverage that you want to address. Luckily, there are options to help supplement your Medicare: Medigap and Medicare Advantage. However, Medigap and Medicare Advantage can’t be used together. You have to decide which plan works for you. Discover what the difference between the two plans are and which option will best serve you.

What Is Medigap?

Medigap, also known as Medicare Supplement Insurance, is a type of health insurance that offers additional coverage for normal Medicare plans. It helps fill in the “gaps” in normal Medicare coverage by helping you pay for out-of-pocket costs that Medicare won’t cover. Some of these expenses include:

  • Deductibles
  • Copayments
  • Coinsurance
  • Health care costs when you travel internationally

Medigap plans are offered by private insurance companies that are licensed by the state to provide the plan. There are typically different types of Medigap plans, each providing different degrees of coverage. Though the number of plans varies from state to state, the majority of the U.S. can offer 10 different types of Medigap coverage. Many people decide to select Medigap Plan F, which has the broadest coverage out of all the different types of Medigap available.

What Is Medicare Advantage?

Medicare Advantage, sometimes called “Plan C,” offers an alternative to the original Medicare plans. These plans are bundled with the typical Medicare Plan A and B plans, creating more complete coverage for the insured person. If you opt for Medicare Advantage, you are still a Medicare patient. Medicare Advantage plans are typically provided by private insurance companies that are approved by Medicare, but they are funded by the government. In addition to normal Medicare coverage, the Medicare Advantage plan covers expenses for:

  • Vision
  • Dental
  • Hearing
  • Wellness Programs

While the exact details vary depending on the specific plan, Medicare Advantage plans can also be tailored to cover costs related to chronic illnesses or conditions that you may have. The Medicare Advantage plans may also cover additional expenses, such as:

  • Transportation to doctor’s visits
  • Over-the-counter medications
  • Adult daycare services

Most Medicare Advantage Plans will also include Medicare Part D, also known as prescription drug coverage. However, if the plan doesn’t include this, you can always join a separate Medicare prescription drug plan.

Medigap vs. Medicare Advantage - Key Differences

While the Medigap and Medicare Advantage plans can each be beneficial, there are key differences between the two. Being well acquainted with these differences can help you choose the type of plan that works best for you.

Price

The primary difference between the Medigap and Medicare Advantage plans come at a different cost. Generally speaking, Medigap plans have higher premiums than Medicare Advantage plans. However, Medicare Advantage plans often cover less expenses than Medigap — potentially resulting in more out-of-pocket expenses. You can save money by choosing the plan that makes sense for your specific conditions and lifestyle.

Choice of Physicians

One key difference that might influence your decision to select Medigap or Medicare Advantage plan is the choice of physicians they offer. Be mindful of the limitations of both plans if you have a chronic condition that requires you to see specific specialists. Medicare Advantage offers a limited selection of physicians and facilities within their network. Certain Medicare Advantage plans don’t cover out-of-network physicians at all. Some Medigap plans offer more flexibility. Both Medigap and Medicare Advantage will cover any physician or facility that accepts Medicare.

Location

One major determinant of which plan you choose is where you are located and your lifestyle. If you live in one state and rarely travel, then Medicare Advantage might be best suited to you. If you live in more than one state throughout the year or travel frequently, then Medigap may be a better choice. Medicare Advantage plans usually offer coverage in one region exclusively. They also don’t typically offer coverage when traveling internationally. In contrast, many Medigap plans provide coverage in all 50 states and when traveling outside of the U.S.

Benefits of Medigap

Medigap bolsters Medicare plans A and B by filling in the “gaps” in coverage and providing more comprehensive options for the insured person. It covers almost all of the out-of-pocket costs in the Original Medicare plan.

Aside from having more comprehensive coverage in general, one of the top benefits of Medigap is the cost. While the premiums can be higher than Medicare Advantage, these premiums result in few to no out-of-pocket costs.

It also offers a great deal of flexibility in terms of the physician network. Generally, any physician or facility that accepts Medicare is covered by Medigap. This stands in stark contrast to the more limited network offered by Medicare Advantage.

Another great advantage of Medigap is the lack of effort involved in filing a claim. There is virtually no paperwork to deal with. Checks are automatically made to providers and facilities after Medicare pays its portion of the bill.

Benefits of Medicare Advantage

Medicare Advantage is an extension of Medicare plans A and B, offering more coverage than Original Medicare. This option is very popular because it replaces the Original Medicare Plan while still remaining affordable. It often has much lower premiums than Medigap, making it an attractive option if you don’t anticipate using it frequently. For many plans, if you hit the maximum out-of-pocket costs, the plan will cover you for the rest of the year.

Another benefit of the Medicare Advantage plan is that enrollment is simple. You qualify for the Medicare Advantage plan once you qualify for the Original Medicare plan, and enrollment occurs annually.

Most Medicare Advantage plans also include prescription drug coverage, otherwise known as Plan D. In contrast, Medigap does not offer prescription drug coverage. This means that the person being insured must purchase a prescription plan separately.