The Ultimate Guide to Medicare Advantage vs Medicare Supplement (Medigap)

If you’re ready to sign up for Medicare, you have a few decisions to make. One of them is whether you should choose Medicare Advantage or Medicare Supplement (Medigap) to supplement your Original Medicare coverage. This is one of the most important decisions you can make because your decision will ultimately impact your level of coverage, the providers you can use, and the amount of out-of-pocket expenses you’ll have to pay for medical care.

This is also where it gets complicated. Every plan has advantages and disadvantages that you’ll want to consider in order to find the plan that’s right for you. Fortunately, the experts behind MoneyWizard are here to help, and this guide will give you more information on these plans, the differences between them, and the levels of coverage they provide.

What Is Medigap?

Medigap, also known as Medicare Supplement Insurance, is a type of health insurance that offers additional coverage for those enrolled in regular Medicare plans. As the name suggests, it fills the gaps in standard Medicare coverage by helping you pay for those out-of-pocket expenses that Medicare does not cover. Some of these expenses include

• Deductibles
• Copayments
• Coinsurance
• Healthcare costs when you travel internationally

Private insurance companies that are licensed by the state offer Medigap plans. They will typically offer different types of Medigap plans, each of which includes different levels of coverage.

Benefits of Medigap

One of the main benefits of Medigap is that it supplements Medicare Parts A and B. In other words, it helps fills the gaps when there are copayments, deductibles, and coinsurance amounts payable. 

Medicare Advantage and Medigap are two options when Original Medicare doesn’t provide the right coverage. Find out which is right for you!

One of the other benefits of having Original Medicare with Medigap is that this combination provides a more extensive range of providers who accept Medicare. This means that, if you’re on these plans, most doctors in the United States are available to you. This is particularly helpful if you do a great deal of travelling within the United States. Some plans even cover emergency healthcare costs outside of the US, which is helpful if you travel internationally. 

Drawbacks of Medigap 

There are, however, some drawbacks to Medigap. For one, premiums can be high because, of course, you are paying the Medigap premium on top of the premium for Medicare Part A or B.

Also, Medigap does require some waiting periods for pre-existing conditions, and there are a number of health issues and treatments that Medigap does not cover. These include:

• Long-term care
• Private nursing
• Dental care
• Hearing aids
• Vision care and glasses

Also, keep in mind that Medigap plans do not cover prescription drugs; if you want this benefit, you’ll have to purchase it separately.

What Is Medicare Advantage?

Medicare Advantage, sometimes called Plan C, is an alternative to the Original Medicare plans. Medicare Advantage plans are typically bundled with Medicare Plans A and B, which creates more complete coverage. It’s essential to keep in mind that, if you opt for Medicare Advantage, you’re still a Medicare patient.

Medicare Advantage plans are typically offered by private insurance companies that are approved by Medicare and funded by the government.

In addition to standard Medicare coverage, Medicare Advantage covers additional expenses, like:

• Vision
• Dental
• Hearing
• Wellness programs

Keep in mind, though, that the exact level of coverage depends on the specific plan you choose. Medicare Advantage plans can also be tailored to cover costs related to chronic illnesses or conditions. They may also cover additional expenses like transportation to appointments with your doctors, over-the-counter medications, and adult day care services. 

In addition, most Medicare Advantage plans will cover prescription medications. If a particular one doesn’t, it’s still possible to join a separate Medicare prescription drug plan.

Benefits of Medicare Advantage

Medicare Advantage plans offer all the benefits of Medicare Parts A and B. They also typically provide coverage for prescription drugs, and some Medicare Advantage plans also include coverage for vision, dental, and hearing benefits.

One of the most significant benefits of Medicare Advantage is the cost. Its premiums are generally lower, and the plans include a yearly cap on out-of-pocket expenses. This means that if your medical expenses exceed the cap, you won’t have to pay anything further for covered services. 

Drawbacks of Medicare Advantage

One of the drawbacks of Medicare Advantage is that it offers less flexibility in the choice of healthcare providers. So, on this plan, you’ll have to choose a provider within your plan’s network. If you don’t, the treatment will cost more. 

Another drawback is that Medicare Advantage premiums are determined by personal health factors, meaning these premiums are likely to increase as you age.

Prior authorizations for hospital stays, medical equipment, and medical procedures are commonly required with Medicare Advantage. This is simply a cost-control measure put in place because the insurance companies that provide Medicare Advantage can’t deny coverage to anyone who’s eligible for Medicare.

How Much Does Each Plan Cost?

Medicare Advantage plans typically have lower monthly premiums than Medigap, but you’ll also have to pay more out-of-pocket expenses.

In contrast, with Medigap, you’ll pay a higher monthly premium, but you’ll pay less (or nothing) when you get medical care.

Medicare Advantage vs. Medigap

In light of the above, let’s compare Medicare Advantage and Medigap. What they have in common is that both are provided by private insurers, and their coverage basics are regulated by the government. 

Another thing these plans have in common is that both limit the amount of out-of-pocket expenses you’ll incur. The exact amount of the limit will depend on which plan you choose.

The main difference between the two is that Medicare Advantage is paid for by the government. Simply put, it’s an enhanced version of Original Medicare with more coverage than Medicare Plans A and B.

Another difference is that Medicare Advantage cannot refuse you on the basis of pre-existing health conditions or medical underwriting requirements (with the exception of end-stage renal disease).

In contrast, Medigap is a health insurance policy that you purchase to boost your basic Medicare coverage. Outside of an open enrollment period, it also uses medical underwriting, which means that you could be denied coverage due to pre-existing conditions.

How Do You Decide Which Is Better?

So, which one is better? The answer really depends on the level of coverage you want. Consider the following factors(and perhaps others specific to your particular situation) when choosing which is best for you:

• Prescription drug coverage. Medigap does not provide coverage for prescription medications, while Medicare Advantage does.
• Coverage for the 20% out-of-pocket medical costs with Original Medicare. Depending on which plan you choose, Medigap will pay some or all of the out-of-pocket expenses. The 20% out-of-pocket expenses do not apply with Medicare Advantage plans, which offer different options for deductibles, copayments, and coinsurance.
• Choice of doctors. With Medigap, you’re able to see any doctor who accepts Medicare. With Medicare Advantage, you’re limited to its network of doctors and other healthcare providers.
• Dental or vision care. With Medigap, there’s no coverage for dental or vision care, while Medicare Advantage does offer some plans that have these benefits.
• Out-of-state coverage. Medigap allows you to see any doctor who accepts Medicare. With Medicare Advantage, out-of-state coverage may be limited or excluded, depending on the plan.
• Out-of-country coverage. Medigap offers coverage for out-of-country medical expenses, while Medicare Advantage does not.
• Extra medical benefits. Medicare Advantage does offer extra medical benefits while Medigap does not.

It’s crucial to consider each of the above factors when deciding on the right coverage for your needs.

Is It Better To Have Medicare Advantage or Medigap?

Although it is possible to have a Medigap plan along with Original Medicare, you cannot have both Medicare Advantage and Medigap. So, while you could use Medigap to help pay Original Medicare’s copayment, deductibles, and coinsurance costs, you’re not able to use Medigap to pay Medicare Advantage’s out-of-pocket expenses.

In fact, it’s against the law for insurers to sell someone a Medigap plan if they already have a Medicare Advantage plan, unless they’re switching to Original Medicare.

Frequently Asked Questions

We hope this guide provides a good illustration of the features of both Medicare and Medicare Advantage, their similarities, and where they differ. It’s a big decision, and people usually have a lot of questions. Below, we’ve answered more of those frequently asked questions.

Can You Switch Between Medicare Advantage and Medigap? 

Yes, you can switch between Medicare Advantage and Medigap. However, you’ll only have three opportunities to make the switch. The first is during the initial enrollment period (IEP), which is a six-month period beginning the month before you turn 65. 

The second is during the Medicare Advantage IEP. This period runs from January 1 through March 31 every year. Between these dates, you can switch from Medicare Advantage to Original Medicare or Medigap.

The third opportunity is shortly after enrolling in Medicare Advantage. Once enrolled, you’ll have three months during which you are permitted to switch back to Original Medicare and enroll in Medigap.