You can't sign up for both types of coverage, so you'll want to understand how each works. The biggest difference between Medigap and Medicare Advantage is that with a Medigap plan, you have the freedom to see any doctor that accepts Medicare, whereas with Medicare Advantage, you must get care within the plan's network of doctors and hospitals. Show
Here's what you should know. Medigap vs. Medicare Advantage: OverviewYou may not be alone if you're unsure how Medigap and Medicare Advantage differ. Only about a third of people "strongly agree" that they can make effective Medicare selection decisions, according to a July 2022 report from health care consulting firm Sage Growth Partners. Here's the breakdown: MedigapMedigap, or Medicare Supplement Insurance, is insurance sold by private companies that fills the "gaps" in Original Medicare by covering certain out-of-pocket expenses, such as deductibles and copays. Medicare beneficiaries pay a monthly premium for a Medigap plan, which can vary widely based on age and geographic location. (You'll also pay a monthly Part B premium and any Part D prescription drug premium you may have.) Medigap plans are standardized, meaning that a Medigap Plan G policy from one insurance company offers the same benefits as a Medigap Plan G policy from another company. The differences to consider are price and company reputation. How it worksOriginal Medicare comes with deductibles and coinsurances you'll owe for your care. Some of your costs in Original Medicare that may be covered by a Medigap plan (depending on the type of plan you choose) include:
If you have a Medigap plan that covers these costs, you won't pay anything out of pocket other than your Medigap premium. "It'll keep the out of pocket to a very reasonable amount of money," says Jeffrey Golden, a certified financial planner in New York City. When to buy itMedigap can be purchased during the six-month period that starts the month you're 65 or older and obtain Medicare Part B. During this time, called the Medigap open enrollment period, companies must offer you a Medigap plan at the same price as everyone else. After this period, you may have to go through medical underwriting to get a policy, which could result in a higher price or denial of coverage if you're in poor health. (This is true unless you live in Connecticut, Massachusetts, Maine or New York, which offer guaranteed issue protections.) You should carefully consider whether a Medigap plan is right for you when you're first eligible since it may be expensive or impossible to get a plan later. Medicare AdvantageMedicare Advantage is a bundled alternative to Original Medicare that includes the coverage of Medicare Part A and Part B, usually Part D (prescription drugs), and often extra benefits such as some dental and vision coverage. Medicare Advantage is sold by private insurance companies that have contracted with the federal government to offer plans. How it worksThese plans operate much like the health insurance people may have had through an employer. Plans operate within networks of doctors and hospitals. To receive the lowest-priced care, you must use in-network providers and facilities. You may need a referral to see a specialist, and if you can access out-of-network care, it may be more expensive. When to buy itMedicare-eligible people can buy Medicare Advantage during their initial enrollment period, typically their 65th birthday month, plus the three months before and after. After that, you can change plans during Medicare open enrollment, which happens from Oct. 15 to Dec. 7 each year, or during Medicare Advantage open enrollment, which occurs from Jan. 1 to March 31 each year. You may also be able to switch plans if you qualify for a special enrollment period, such as when you've moved out of your plan's service area or moved into a skilled nursing facility. Medicare beneficiaries must still pay their Part B premium, which is $170.10 per month in 2022 ($164.90 in 2023), along with the monthly premium for their Medicare Advantage plan. That said, many Medicare Advantage plans offer a $0 premium. Medigap vs. Medicare Advantage: Coverage features
How to choose between Medigap and Medicare AdvantageWhen choosing between Medicare Advantage and Medigap, you'll need to think about how you prefer to receive medical care and how often you think you'll need it. Here are some considerations. Consider Original Medicare with a Medigap plan if you:
Consider Medicare Advantage if you:
Medicare decisions are complicated, and your decisions when you first enroll can affect your care later. If you're confused, a Medicare specialist or consultant can help. In addition, your financial professional may be able to point you toward the right resource. "The people that I deal with are very accomplished in their own professions," Golden says. "They come to this [Medicare] and they tell me this is really difficult without getting some guidance." What is the biggest disadvantage of Medicare Advantage?The biggest disadvantage of Medicare Advantage plans is the closed provider networks, limiting your choice of which doctor or medical facility to use. Medicare Advantage costs are also largely based on how much medical care you need, making it more difficult to budget for health care costs.
Is a Medigap plan better than an Advantage plan?Is Medicare Advantage or Medigap Coverage Your Best Choice? If you are in good health with few medical expenses, Medicare Advantage can be a suitable and money-saving choice. But if you have serious medical conditions with expensive treatment and care costs, Medigap is generally better.
What are the disadvantages of Medigap plans?Some disadvantages of Medigap plans include: Higher monthly premiums. Having to navigate the different types of plans. No prescription coverage (which you can purchase through Plan D)
Do more people have Medigap or Medicare Advantage?In 2022, nearly half of (48%) eligible Medicare beneficiaries – 28.4 million people out of 58.6 million Medicare beneficiaries overall – are enrolled in Medicare Advantage plans. Medicare Advantage enrollment as a share of the eligible Medicare population has more than doubled from 2007 to 2022 (19% to 48%).
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