When you first enroll in Medicare, one of the biggest choices you’ll have to make is whether you want to enroll in Medigap or a Medicare Advantage plan. Unfortunately, there’s a lot of confusion surrounding these two options, and mistakes could have long-lasting consequences. Learn about the differences between Medigap and Medicare Advantage plans so you can make a decision you won’t regret.
What’s the Difference Between Medigap and Medicare Advantage?
Medigap and Medicare Advantage are two different types of private insurance plans that Medicare enrollees can purchase. However, despite these similarities, there are some huge differences.
Medigap is also called a Medicare Supplement Insurance.
- It works with Original Medicare to help with out-of-pocket costs, such as copays. This is important because Original Medicare does not have an out-of-pocket maximum.
- Some plans also provide foreign travel emergency care. However, Medigap plans do not provide additional benefits like vision, dental or prescription coverage. (Some plans used to cover prescription drugs, but they are no longer sold to new beneficiaries.)
- In most states, there are 10 different plans that you can buy with varying costs and levels of coverage. They are standardized and go by different letters: plans A, B, C, D, F, G, K, L, M, and N.
- To enroll in a Medigap plan, you need to pay a premium. You will still need to pay your Medicare Part B premium, and if you don’t qualify for premium-free Medicare Part A, you’ll need to pay for that, too. If you need prescription drug coverage, you’ll also need to pay a premium for Medicare Part D.
- When you buy a Medigap plan, you’re still enrolled in Original Medicare, so you can typically see any provider who accepts Medicare.
- The best time to enroll in Medigap is during your Medigap Open Enrollment Period, which lasts for six months and begins the first day of the month you’re 65 and enrolled in Medicare Part B. If you try to buy a plan after this period, you could be charged more or denied coverage based on your health.
Medicare Advantage is also called Medicare Part C.
- It provides an alternative to Original Medicare.
- Most plans provide prescription drug coverage, and many plans provide additional benefits, such as vision and dental care. However, plans vary widely, so compare policies carefully.
- To enroll in Medicare Advantage, you need to pay a premium, but it can be as low as $0. You still need to pay your Medicare Part B premium, and if you don’t qualify for premium-free Medicare Part A, you’ll need to pay for that, too. Since most plans include prescription coverage, you don’t need to pay a separate premium for prescription coverage.
- Most plans use a network of providers. If you see a provider outside of the network, you may not have coverage, or you may have to pay more. You may also need prior authorization.
- When you use your plan, you will be responsible for your deductibles and copays. These vary from plan to plan. However, all Medicare Advantage plans have an out-of-pocket maximum.
- You can enroll in Medicare Advantage when you become eligible for Medicare. Each year, you’ll be given an opportunity to switch from Original Medicare to Medicare Advantage, from Medicare Advantage to Original Medicare, or from one Medicare Advantage plan to another during the annual enrollment period, which runs from October 15 to December 7.
Do You Need to Buy a Medigap or Medicare Advantage Plan?
Medicare enrollees are not required to buy a Medigap or Medicare Advantage plan. You can just stick to Original Medicare if that’s what you want. However, many retirees find that Original Medicare alone does not provide sufficient coverage.
First of all, Original Medicare doesn’t provide prescription drug coverage. If you don’t have creditable prescription coverage from another source, you should buy a Medicare Advantage Prescription Drug Plan or a Medicare Part D plan. Note that even if you don’t take any prescriptions now, you might later – and there’s a late penalty if you delay enrollment in Medicare prescription drug coverage.
Second, Original Medicare doesn’t have an out-of-pocket maximum. If you have any serious health issues, you could end up paying thousands of dollars out of pocket. Many seniors enroll in Medigap or Medicare Advantage to control their costs.
Should You Enroll in Medigap or Medicare Advantage?
Whether to enroll in Medigap or Medicare Advantage is a personal choice. There’s no universal answer – it comes down to your situation and preferences. Consider the pros and cons of both options.
Medigap
- Pro: You don’t usually have to deal with networks.
- Pro: Your costs are predictable.
- Con: The premiums can be expensive.
- Con: You don’t get other benefits like prescriptions, hearing and dental.
Medicare Advantage
- Pro: Many plans are affordable, with premiums as low as $0.
- Pro: Most plans provide prescription drug coverage, and many plans provide other benefits not covered by Original Medicare.
- Con: You usually have to stick to providers in your plan’s network to avoid paying more.
- Con: You may need prior authorization for some types of care, such as specialist care or non-emergency hospital care.
Do you need help deciding between Medicare Advantage and Medigap? A Medicare insurance agent can help you. Find an agent.