If you are new to Medicare, you may just be learning the differences between Medicare supplements (Medigap) and Medicare Advantage plans. Both offer benefits beyond Original Medicare Parts A and B. Medicare supplements are meant to fill in the gaps left by Original Medicare, while Medicare Advantage plans actually take the place of Original Medicare and offer additional benefits.
In this article, we’ll quickly review the key differences between the two types of plans and then compare one of the more popular Medigap plans, Plan G, with the most common coverage seen in Medicare Advantage plans.
The Basics of Medigap Plans
There are only ten Medigap plans on the market today. These ten plans are standardized by the federal government and sold by private insurance companies. What this means is that no matter where you purchase a Medigap plan, the coverage is the same. Since we’re discussing Medigap Plan G in this article, we’ll use that as an example.
Purchasing Plan G from Company X offers the same coverage as purchasing Plan G from Company Y. The only difference you will see is in the price of the monthly premium.
Medigap plans are designed to fill in the “gaps” of Original Medicare. Medigap plans only cover the services that Original Medicare also covers. However, Original Medicare will only pay up to 80% of the cost of services. Medigap plans are there to take care of the remaining 20%. (Each Medigap plan is different, but this is the basic thought behind the Medigap plans.)
The Basics of Medicare Advantage Plans
Medicare Advantage plans are also referred to as Medicare Part C. These plans are also sold by private insurance companies, and while they are not standardized, they must be approved by the Medicare program.
Because Part C plans are not standardized, there are a wide variety of plans. Premiums, deductibles, and coverage will vary by the plan. All plans will offer the same or better coverage than Original Medicare (Parts A and B).
In addition to the coverage seen in Medicare Parts A and B, Medicare Advantage plans often offer additional benefits like those for dental, vision, and hearing services. Many Part C plans also include prescription drug coverage.
Medigap and Medicare Advantage: 5 Key Differences
We’ve touched on some of the differences you’ll see between these two types of plans, but let’s lay out the key differences between the two.
First, Medigap plans will usually have a higher premium than Medicare Advantage plans, but they will not usually have a co-pay as the Advantage plans will.
Second, Medigap plans give their members the freedom to choose any provider. Medicare Advantage plans usually limit members to receive care from a specific network of providers.
Third, you will not need a referral to see a specialist if you are enrolled in a Medigap plan. You will need a referral in most Medicare Advantage plans.
Fourth, Medicare Advantage plans offer coverage for routine dental, vision, and hearing services. Medigap plans do not offer these additional benefits.
Finally, Medigap members have coverage across the entire United States, as long as the provider accepts Medicare assignment. Medicare Advantage members may only receive care for emergency services if they are outside of their network (and don’t want to pay out-of-pocket).
Plan G versus Medicare Advantage
Now that you understand how Medigap and Medicare Advantage plans work, you already have a good idea of how Plan G will differ from Part C plans. Let’s get a little more specific.
Plan G will cover:
- Part A coinsurance and up to an additional 365 days of hospital costs after Medicare benefits are exhausted
- Part B coinsurance/copayment
- Blood (3 pints)
- Part A hospice coinsurance/copayment
- Skilled nursing facility care coinsurance
- Part A deductible
- Part B excess charge
- 80% of foreign travel exchange
- No out-of-pocket limit
Plan G is the most comprehensive Medigap plan on the market today. (Plan F actually offers slightly more coverage, but it is not available to anyone who turned (or turns) 65 on or after January 1, 2020. There is also a high-deductible version of Plan G. The high-deductible version is a great choice for those who would like a lower monthly premium and can afford to pay the $2370 deductible.
As we mentioned earlier, it’s difficult to compare Plan G to a Medicare Advantage plan. Since the Part C plans vary widely, you may find one that offers the same, better or worse coverage than Plan G.
However, it is important to note that if you do enroll in Plan G, you will need to enroll in at least one other policy – Part D. Medicare Part D is your prescription drug coverage. This is part of many Medicare Advantage plans but is never part of a Medigap plan. (Medicare Advantage plans with prescription drug coverage are commonly referred to as MAPDs.)
Medigap members also often choose to enroll in a Dental, Vision, and Hearing (DVH) plan. There is no need for the additional DVH plan if you are already enrolled in a Medicare Advantage plan that covers these services.
When trying to choose between Medigap Plan G and Medicare Advantage, first, you’ll need to consider their key differences. What kind of providers are in your area? If your provider is not in the Medicare Advantage network, are you willing to switch? How often do you travel?
Next, consider your budget. Many Medicare Advantage plans have a $0 monthly premium. Considering they also offer benefits that Medigap plans do not, this is often the most appealing part of a Medicare Advantage plan. That being said, Plan G offers a great value for a lower premium than some other Medigap plans.
You don’t have to make this decision alone! These are the exact dilemmas we help our clients with every day. We can help you compare coverage and even assist you in locating providers in your area that are any of the plan’s networks.
Give The Medicare Gurus a call today, and let us help guide you through this process.