Your Medicare Choices: Understand Medicare Advantage Versus Medigap Insurance

Because Medicare is the federal program in America for those 65 years of age or older, for younger persons with certain disabilities, and for persons with end-stage kidney failure, the great majority of Americans at some time in their lives are covered by Medicare.

And yet, given the complexity of the program, including initial choices, options for changing those choices, and the features of the choices themselves, Medicare is not simple to understand.

Look briefly at the basic choices you have when enrolling in Medicare; your options for changing those choices every year (during the "open enrollment period"), and the differences between two options in particular: Medigap insurance and Medicare Advantage Plans.

Four parts of Medicare

When you initially are enrolled in Medicare (often it is automatic), either at age 65 or under special circumstances mentioned above, you are in fact enrolling in a four-part program:

Medicare Part A

Medicare Part A covers the costs of your inpatient hospital care. People who paid Medicare taxes while working are eligible to receive these benefits.

Medicare Part B

Medicare Part B is medical insurance for outpatient care. If you want this coverage, you will pay a monthly premium deducted from your Social Security payment. Co-payments and deductibles may apply to services you receive.

Together, Parts A and B are also called "Original Medicare," which is a government-run program of payments for your care. Most people when they first enroll in Medicare choose Original Medicare.

Medicare Part C

Medicare Part C is now called "Medicare Advantage Plans," which are offered by private companies but under contract to the Medicare program. An Advantage plan covers the same services as do Parts A and B, so you choose either Medicare Parts A and B or an Advantage Plan. With an Advantage Plan, however, you are offered prescription drug coverage (Medicare Part D).

When you sign up for a private healthcare provider's insurance plan, a Medicare Advantage Plan is actually just one of three options. The other two private company options:

● A Medicare Supplement Insurance Plan (Coverage for Part A and B costs that must be paid by you out-of-pocket).

● A Prescription Drug Plan (Coverage for Part D costs.)

These plans might be viewed as "Medicare-Plus": The same coverage as Parts A and B, but with additional options for members of the plan.

Understanding your options

You begin to see, perhaps, some complexities of the Medicare program. My Eligibility Resource can help you understand your choices on initial enrollment in Medicare and also your options for changing those choices each year during the Medicare Open Enrollment Period. Our program professionals understand all the choices that you face and how important they are to your healthcare. Now, focus specifically on Medicare Advantage versus Medigap.

What is Medicare Advantage?

Look now at one important distinction you should understand: Medicare Advantage and Medigap insurance. Summarizing what we have said about Medicare Advantage:

● It is a Medicare-approved plan of a private company that offers an alternative to Original Medicare for your healthcare and drug coverage. These "bundled" plans include Part A, Part B, and usually Part D.

● Some plans may have lower out-of-pocket costs than Original Medicare.

● Plans may offer some extra benefits that Original Medicare doesn't cover—like vision, hearing, and dental services.

What Is Medigap?

It you choose Original Medicare, it will cover a large portion of the costs of your health care services and supplies—but not 100 percent. Some remaining expenses such as co-payments (Medicare pays a certain amount for a service and you pay the rest) and deductibles (each year you pay up to a certain amount and then Medicare kicks in) can be covered by Medicare Supplement Insurance, otherwise known as Medigap coverage.

If you have Original Medicare and you buy a Medigap policy:

● Medicare will pay its share of the Medicare-approved amount for covered health care costs.

● Then, your Medigap insurance plan will pay its share, covering the remaining amount.

As the name implies, Medigap helps fill "gaps" in Original Medicare reimbursement and is sold by private insurance companies. Naturally, the private companies that sell Medigap insurance have many different, competing plans, designated Plan A through Plan N. Some of these plans have high deductibles (explaied below), some offer additional services such as emergency medical care when you are travelling outside the United States.

Terms you need to know

Now that that's clear, there are a few terms you'll need to familiarize yourself with so as to get a deeper understanding of how the Medigap Plans work.

● Deductible – the amount you are responsible for paying before your insurance provider steps in. for instance, if your deductible is set at $1000, you'll need to pay $1000 on your own before your insurance can kick in

● Coinsurance – a percentage of expenses you pay even after meeting your deductible

● Copayment – a certain fixed rate you have to pay for hospital stays, doctor visits, and prescriptions

● Out-of-pocket expenses – medical expenses you have to pay for. Usually, the supplement plan kicks in once you've already reached your out-of-pocket limit and covers 100% of the remaining health care expenses.

Types of Medigap Plans

Now, there are 10 main Medigap Plans that you can choose. The type of plan you select will determine how much of the expense your insurer will pay. So, it is crucial to understand their benefits.

Also, remember that the 'Medigap Plans' below are not the same as the 'Medicare Parts' A, B and D we saw above.

Let's dive right in!

Medigap Plan A

Plan A is the most basic Medigap Plan we have out there. It also has the lowest premiums. For this reason, all Medicare insurance providers are required to offer this plan.

However, some states have exceptions, whereby companies don't have to provide it to individuals below 65 who are on Medicare disability. Always ensure that you confirm this with your State Insurance Department.

Once again, Kee[ in mind that the Medigap Plan A is not the same as the Medicare Part A (which is part of Original Medicare).

Medigap Plan B

With this plan, you get everything covered in plan A. Only on top of that, it also covers the Medicare Part A deductible (meaning you won't have to pay your deductible for in-patient treatment and care).

As with plan A above, plan B is not the same as Medicare Part B. Part B is in the Original Medicare covering outpatient services and treatment.

Medigap Plan C

The Medigap Plan C is yet another popular plan. It covers basically all the benefits apart from any excess charges in the Medicare Part B. However, as of 1ST January 2020, this Plan C (as well as plan F) became unavailable to newly eligible Medigap applicants.

Medigap Plan D

Medigap Plan D covers a lot of the common benefits. However, it doesn't cover any excess charges or the part B deductible. Remember, Plan D is not the same as Medicare Part D, which covers prescription drugs.

Medigap Plan F

Plan F is also extremely popular because it covers not only all benefits but also any out-of-pocket expenses. With this, you won't have to make any copayments when you see a doctor, visit the emergency room, or are admitted to a hospital.

The downside is that, like Plan C, Plan F is currently not offered to newly eligible Medigap applicants.

Medigap Plan G

Medigap Plan G covers nearly everything covered by plan F, apart from Part B deductible. And this makes it the next best option for people who are not eligible for plan F.

In some states, you can get a high-deductible Plan for Plans G and F, meaning you'll pay lower monthly premiums. However, this also translates to more out-of-pocket expenses.

Usually, with these types of plans, you'll be required to pay a certain deductible fee before the policy can step in.

Medigap Plans K and L

Unlike the other plans we've seen above, Plans K and L only offer a partial coverage of some benefits. They also have certain set yearly out-of-pocket limits. As of 2022, the out-of-pocket limits are $6620 for Plan K and 3310 for Plan L. This means that once you pay the Part B deductible and reach your out-of-pocket limit amount, your Medigap Plan will pay 100% of the costs covered by your Medicare for the remaining part of the year.

Medigap Plans M and N

With these two plans, you get all the benefits of Plan D. The difference here is that Plan M covers 50% of the Part A deductible.

Plan N, on the other hand, will cover the part B coinsurance. While it has lower premiums, you will need to cover copayments yourself. Therefore, you must pay up to a certain set amount during doctor and emergency room visits.

Side-by-side Comparison of the Medigap Plans

Here is a table comparing the different medigap plans side-by-side. It shows the percentage of each benefit that each plan covers. If there is no percentage, it means the policy doesn't cover that benefit.

Compare Medigap Plans

Medigap Benefits

Plan A

Plan B

Plan C

Plan D

Plan F

Plan G

Plan K

Plan L

Plan M

Plan N

Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used up

100%

Part B coinsurance or copayment

100%

50%

75%

100%

Blood (first 3 pints)

100%

50%

75%

100%

Part A hospice care coinsurance or copayment

100%

50%

75%

100%

Skilled nursing facility care coinsurance

100%

50%

75%

100%

Part A deductible

100%

50%

75%

50%

100%

Part B deductible

100%

Part B excess charge

100%

Foreign Travel Emergency (up to plan limits)

80%

Out-of-pocket limit (for year 2022)

N/A

$6,620

$3,310

N/A

If you want to learn more about these 12 different Medicare Supplement (Medigap) Plans available to most Medicare beneficiaries in 2022, just fill out our My Eligibility Resources initial inquiry form and we will put you in touch with the right professional staff members for your need.

Summarizing this comparison of Medicare Advantage and Medigap

● Both are provided by private companies, not directly by the federal Medicare program. Private companies offering Medicare Advantage plans must be approved by Medicare.

● You choose between Original Medicare and Medicare Advantage when you enroll in the Medicare program and can change this choice during every open enrollment period.

● In choosing either option, you will have certain Medicare-paid healthcare costs and certain costs not paid by Medicare.

● If you choose Original Medicare, your unpaid healthcare expenses can be paid "out of pocket" or by a Medigap supplemental insurance plan you choose.

● Medigap insurance plans offered by private insurance companies offer many options—more than a dozen—addressing all sorts of financial situations and healthcare needs.

You don't need to work through these choices on your own. Just let us know how we can help you. Getting things going is as easy as letting us know your need or your questions on our contact form.

When we discuss with you some factors that affect your choice between Medicare Advantage and Medigap, we will look at personal circumstances like these:

● Your budget.

● How much choice you seek in your plan.

● Your future plans such as travel abroad.

● Your existing health conditions.

No one needs to be an expert in everything. We are the experts in programs that meet your needs. Fill out the form to let us know how we can help you.

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