Figuring out the difference between Medicare Advantage and Medigap plans can be mind-boggling. However, at Boomer Benefits we have helped Medicare beneficiaries decide which kind of plan is right for them many times. Let’s walk through the basics of how each plan works. It will help you determine which one – Medigap vs Medicare Advantage – might be right for you.
Medicare supplements are also called Medigap plans. These plans have been around since the 1960’s. Even when Medicare was brand new, it still had gaps in the plans, such as deductibles and coinsurance. People needed insurance coverage that would help them pay for this.
That’s exactly what a Medigap plan does. It fills in some of those gaps. If you enroll in a Medicare supplement, here are some things you can expect:
- You stay enrolled in Original Medicare A & B. You’ll present both your Medicare card and your Medigap card to your doctor or treatment provider
- Your provider bills Medicare. Medicare pays its share of the bill, and then sends the rest on to your supplement company to pay
- Since you are still enrolled in Medicare, you can see ANY treatment provider or hospital that accepts Medicare. (Regardless of which Medicare supplement company you choose!)
- Monthly premiums for your Medigap coverage are in addition to what you pay for Medicare Part B
- Medigap plans plans do not include retail prescription drug coverage because Part D was not created until 2006. This is a simple fix – you just add a standalone pharmacy card that you will present at the pharmacy. This Part D drug plan card tells the pharmacist what copay to charge you for your medications
We find that about 70% of our clients enroll in Medigap plans. One difference between Medicare Advantage and Medigap that our clients most often mention that they like is the convenience of choosing their own doctor. They don’t want to worry about getting a referral from their primary care doctor. Full coverage medicare supplements will also often leave you with no out of pocket expenses at the doctor’s office.
Click here to see a list of Medigap plans and what they cover.
Medicare Advantage Plans
Medicare Advantage plans are private Medicare health plans that you can choose to enroll into instead of Medicare. You never lose your Medicare. However during the time that you are enrolled in a Medicare Advantage plan, your providers must bill your plan. If they bill Medicare, the bill will be rejected. Medicare will show that you have opted for a Medicare Advantage plan instead.
Medicare Advantage plans have only been around for the last 20 years or so, and sometimes they are referred to as Medicare Part C. . These plans function similar to group insurance you have had in the past, where you will pay a copay for various services. For example, if you enroll in the ABC Medicare HMO plan, then that plan will have a summary of benefits which shows what copay you will pay for doctor’s visits, lab-work, surgery, ER visits, hospital stays, etc.
Most of the time, the plan is structured as an HMO or PPO, so you will need to use the plan’s network of doctors and hospitals to get the lowest out of pocket costs. It’s very important to check with your favorite doctors to make sure they are in the plan’s network before you enroll into a Medicare Advantage plan. Learn more about Medicare HMO plans here.
These plans also often include the Medicare Part D drug plan rolled right in. So you will have just one card that you present at the pharmacy and at the doctor’s office, and you can stash your original Medicare card away in a safe place because you won’t be using it. If you enroll in a Medicare Advantage plan, here are some things you an anticipate:
- You must still pay for your Medicare Part B unless you qualify for Medicaid or another Medicare Savings program
- Medicare Advantage plans are often less expensive than supplements. Some even have premiums as low as $0/month. This is because you have agreed to share in some of your costs, such as doctor co-pays and hospital stay co-pays
- Each Medicare Advantage plan has an out-of-pocket limit on your annual spending. So if you have some expensive imaging testing done, and your plan calls for you to pay 20%, then that amount that you spend is counted towards your out-of-pocket maximum. If you hit the maximum in any given calendar year, the plan pays 100% of the cost of your Medicare-approved medical services for the rest of the year
- Your Part D drug plan costs do not count toward the plan’s out of pocket maximum. Instead, the Part D costs follow the same standard limits that any standalone Medicare Part D drug plan has.
- You might be eligible for some extra services, such as a built in routine eye exam or hearing exam for a copay. Some plans include memberships at certain local gyms.
- The benefits and premium on these plans can and often do change from year to year. So, if you enroll in one, always be on the lookout for your annual notice of change letter in September which will tell you what is changing on the plan
The disadvantage of Medicare Advantage plans for some people is the network restrictions and requirement to get prior authorizations for some procedures. Some individuals truly find this a hassle while others will happily follow the plan’s rules in order to achieve such low premiums.
Which is better – Medicare supplement or Medicare Advantage?
Well, the answer to that is that it truly does depend on your personal needs and budget. If you travel a lot in the United States for instance, a Medicare supplement might work well for you. You can use your coverage at any Medicare provider in the nation.
If your favorite hospital and doctor both participate in a Medicare Advantage plan, then perhaps that plan would suit you well.
Is a Medicare Advantage plan the same as a Medicare supplement?
Definitely not. They work very differently and you should research them carefully before deciding which style of coverage would work best for you.
Are Medicare Advantage plans good?
Part C Medicare Advantage plans are a good fit for some individuals while for others they might not work well. It’s a personal choice.
Difference Between Medicare Advantage and Medigap: What’s Right for You?
If you are unsure as to which plan makes sense for you, just give us a call. One of our team of licensed agent professionals can help you think through the different options so that you make an educated decision. We’ll walk you through the pros and cons of Medicare Advantage and Medigap plans so you can make an educated choice.
We are here to help!