Medigap versus Medicare Advantage – One of the first decisions you’ll need to make when you enroll in Medicare is if you’d like to have a Medigap plan or a Medicare Advantage plan. Either one will provide you additional coverage to Original Medicare, but the two kinds of plans work very differently. This first decision is critical to your future healthcare costs.
We won’t say one is better than the other, but it is true that Medigap plans (also called Medicare supplement plans) will offer more predictable coverage and less out-of-pocket costs. There are six reasons you might choose Medigap versus Medicare Advantage.
1. Medigap Plans Are Accepted Everywhere
Since Medigap plans do not require the member to stay within a specified network area, the member will enjoy plan coverage anywhere in the United States as long as the provider accepts Medicare assignment. (Over 96% of providers in the U.S. accept Medicare.) It does not matter which private insurance company you have your Medigap plan through or which specific supplement you have. If your provider accepts Medicare, they’ll accept any Medigap policy.
When traveling, a Medicare Advantage member will likely not have coverage. This is because Medicare Advantage plans are tied to a certain provider and facility network. For example, if you have an HMO plan with Company X, you need to see providers who participate in that specific plan.
No one plans to see a doctor during times of travel, so usually, these experiences are unexpected and come at a great financial cost. There are limited coverage amounts in emergency situations, but you’ll still pay more than you would have if you had a Medigap plan.
2. Some Medicare Supplements Do Not Have Copays
Most Medicare supplements do not require copays when visiting your doctor. This benefit is included in two of the most popular Medicare supplements – Plans F and G.
Medicare Advantage plans, however, almost always require copays for office visits. While the copay amount might be relatively low (many copays are $20), these can add up quickly if you are someone who needs more frequent medical attention.
3. Medigap Insurance Is Predictable
The majority of Medicare beneficiaries are on a fixed income. You probably know exactly how much money is coming in and going out each month and have a set budget. One nice feature of Medigap plans is that they are so predictable when it comes to your out-of-pocket costs.
For example, if you enroll in Plan G, your only expense (outside of the premiums) is going to be the $233 Part B deductible. Original Medicare and Plan G will take care of all other covered services. This is really helpful for those who need to plan their budgets for the year and would be greatly burdened with unexpected medical expenses.
4. Medicare Supplements Don’t Require Referrals
Medigap policies do not require referrals to specialty providers. The opposite is true for Part C (Medicare Advantage) plans, which can cause a delay in treatment and an inconvenience to the individual. In addition, if you have an Advantage plan that requires a referral, you’ll need to pay a copay for your primary care physician visit and then an additional copay to the specialist.
Outside of requiring referrals, there are other rules involved in Part C plans. You may need to try other (cheaper) forms of treatment or medications before the plan considers paying for more expensive alternatives. While the intention of this is to control costs for both you and the insurance company, it can also be a hindrance to your medical care.
5. Medigap Policies Never Change
A Medigap plan will never change. These plans remain the same year after year. There are occasional changes to the eligibility requirements, as we saw with Plan F in 2020. Prior to 2020, Plan F was available to all Medicare beneficiaries. Now, it is only an option for those who turned 65 before 2020. That being said, anyone who was already enrolled or met the eligibility requirement is allowed to continue with Plan F with the same benefits.
As the policyholder ages, the plans do increase in premiums, which is the only change you’ll find with your Medigap policy.
On the other hand, Medicare Advantage plans can (and usually do) change every year. There can be changes in premiums, deductibles, and overall coverage. The plan can decide to no longer cover certain services and can even be discontinued completely. You’ll need to have your Part C plan reviewed every fall during the Annual Enrollment Period (AEP) to find out if you can stay in your current plan or if you need to change to a new one.
6. Medicare Supplement Insurance Is Easy to Understand
Medigap plans are standardized by the federal government. What that means is that their coverage and benefits remain the same from one insurance carrier to the next and one state to the next.
Plan N is Plan N, no matter who you purchase it through or where you live. The only thing the insurance company gets to choose is the monthly premium.
Medicare Advantage plans, however, vary greatly from carrier to carrier. They’ll offer completely different out-of-pocket costs, benefits, and networks. This makes them harder to compare to other plans and keep track of their coverage.
As we said in the beginning, Medicare Advantage plans still have great value and can be the better choice in some instances. It’s just important that you know how these two Medicare plans differ so you can get the most from whichever one you choose.