Taking decisions regarding health insurance is never easy – especially when the options are very close. This is the case with Medicare Advantage and Medigap. Even though these two types of plans are similar they serve different purposes and have different costs. Hence you need to understand the nature of both of these so that you can take an informed decision.
Medicare Advantage and Medigap are both related to the Medicare program but are not directly sold by the government. For a Medicare beneficiary the easiest way to get Medicare benefits is by getting enrolled into Medicare Part A and Part B – Part A covers the hospitalization expenses and Part B covers the doctor visits, lab tests etc. Neither of these offer any coverage for prescription drugs, so in order to get that, you need to take Medicare Part D. Taking these three parts of Medicare will pretty much cover most of your medical requirements. The premiums are also very low for these plans, most people do not have to pay any premiums for Part A.
However, the biggest concern about these plans is the out-of-pocket expenses you have to pay for taking the services. You have to meet the deductibles, pay the co-payment and coinsurance amounts after paying whatever premiums are due for each part. These extra expenses add up to significant amounts.
The two most used options to mitigate these costs are to buy either Medicare Advantage or Medigap plans. You can buy either of the two not both. The choice is getting your Medicare benefits through either Original Medicare with Part D and Medigap or through Medicare Advantage.
Medicare Advantage is also called Medicare Part C. Every Medicare Advantage plan covers all the benefits that are included in Original Medicare along with additional benefits like, vision and dental care. Some Medicare Advantage plans also cover prescription drug coverage. You have to pay the applicable premium for your Medicare Advantage plan along with your Part B premium. There are a very wide range of Medicare Advantage plans available from various insurance companies. These include HMO, PPO and other types of plans with varying costs to suit every budget.
Medigap plans are also called Medicare Supplement plans as they supplement the Original Medicare plan benefits and costs. These plans are used with Part A and Part B. The various out-of-pocket expenses of Original Medicare plans are covered by Medigap. An insurance company can sell a maximum of ten standardized plans, the benefits of which have been approved by Medicare. These plans also require the payment of a premium along with the Part B premium.
Points of Comparison between Medicare Advantage and Medigap Plans
Medicare Advantage plans have lower premiums than Medigap plans.
Medigap plans cover almost all the out-of-pocket expenses of Original Medicare. Medicare Advantage cover some services not included in Original Medicare or Medigap, like, vision, dental and hearing.
Choice of Provider
With Medicare Advantage plans, you have to stay within the network of providers to get full benefit. Medigap plans offer more flexibility as they are accepted by all providers who accept Medicare.
Area of Service
Medigap plans can be used in all the states with Medicare Part A and Part B and even for medical emergency during international travel. Medicare Advantage plans are limited to the area which is served by that particular plan.
Both the types of plans have their pros and cons. You can decide which set of plans is suited best for you by working out the costs and benefits for each plan according to your situation.