Learning Center > Medicare Advantage vs. Medigap: What's the Difference?

Medicare Advantage vs. Medigap: What's the Difference?

“Medicare for All” has been a popular phrase as Obamacare and rules surrounding the health insurance landscape continue to shift. But why is it such a popular topic?

For starters, Medicare has the highest rate of satisfaction among its users. In fact, enrolled ranked both Original Medicare and Medicare Advantage highly according to a 2019 survey.

Still, it can be a difficult task to pick the best Medicare plan. Let's simplify the process by looking at Original Medicare, then discussing how Medicare Part C (Medicare Advantage) plans and Medicare Supplement (Medigap plans) work.

What is Medicare?

Medicare is health insurance for:

  • People who are 65 and over.
  • People under 65 years old who are disabled and have been receiving Social Security Disability benefits for at least 24 months.
  • People suffering from End Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis, also known as ALS or Lou Gehrig’s disease.

Medicare Part A costs

Original Medicare is broken up into two parts: Part A (for hospitalization) and Part B (for medical services). In most cases, there is no cost for Part A.

But you would have to pay a $458 monthly premium for Medicare Part A if you only paid Medicare taxes for 29 quarters or less (about 7.25 years). And if you paid Medicare taxes between 30-39 quarters (7.5 years to 9.75 years), the standard Part A premium is $252.

Medicare Part B costs

Part B premiums are determined by your modified adjusted gross income. If your income for 2019 was less than or equal to $87,000 for a single or $174,000 for a married couple filing jointly, you will pay the standard Medicare Part B rate, which is $144.60 a month in 2020.

Part B premiums rise to a maximum of $491.60 a month if your income exceeds $500,000 for an individual or $750,000 for a couple filing jointly.

Many people are automatically enrolled in Medicare Part A and Part B when they turn 65 and begin to receive Social Security retirement benefits. But you might be in a situation where you have other health insurance besides Medicare, like a plan through your employer, so you can delay your enrollment in Part B without being penalized and save paying the monthly premium as long as you’re on that plan.

Enrolling in Medicare

If you don’t receive Social Security benefits at age 65, you need to sign up on your own. There are three ways to enroll:

  • Go online to www.SocialSecurity.gov.
  • Call Social Security at 1-800-772-1213 (TTY 1-800-325-0778).
  • Visit your local Social Security office in person.

The seven-month Initial Enrollment Period (IEP) for Medicare begins three months before you turn 65, continues during your birthday month, and runs for three months after you turn 65. If you don’t enroll in Medicare during this timeframe, you could face penalties for not complying with Medicare rules.

There’s also a Medicare annual enrollment period each year after your initial enrollment, which allows you to make changes to your coverage for the following year.

What are the different types of Medicare plans?

  • Part A is hospital insurance. It helps cover inpatient care, skilled nursing facility care, hospice care, and home healthcare. In most cases, there is no cost for care, but there is a deductible of $1,408 in 2020.

  • Part B is medical insurance. This plan helps cover doctor visits, outpatient care, home healthcare, durable medical equipment, and many preventive care services. Monthly premiums vary based on your income, and there is a deductible of $198 in 2020.

  • Part C is Medicare Advantage. Medicare Advantage combines Medicare Part A and Part B into a health plan and many of these include Part D and additional health benefits. (More on this below).

  • Part D is prescription drug coverage. Part D helps cover the cost of prescription drugs. The standard maximum deductible is $435 in 2020.

  • Plans A-N is Medicare supplemental coverage. Also known as Medigap, there are a host of differences between the plans, which help cover benefits that Medicare Part A and Part B may not cover. Medigap prices vary by plan benefits, not income. Note that Plans C, E, F, H, I, and J are no longer sold to new enrollees.

So, the big question is: Should you consider Medicare Advantage, or enroll in Original Medicare and get a supplemental plan instead? And the short answer is: It depends.

You have to evaluate your healthcare needs and how much you can afford to pay out-of-pocket for health insurance.

What is Medicare Advantage (Medicare Part C)?

Medicare Advantage provides all of your Part A (hospital) and Part B (medical) coverage. A majority of Medicare Advantage plans offer extra coverage, such as vision (78%), hearing, dental care (67%) or wellness programs (72%). Most include Part D prescriptions drug coverage (90%). Those with Private Fee For Service (PFFS) plans that do pay a drug premium pay $65 a month on average.

As a Medicare beneficiary, you have a choice between selecting Original Medicare or choosing a Medicare Advantage plan (also known as Part C), which is provided by private health insurance companies.

How much does Medicare Part C (Medicare Advantage) cost?

Medicare Part C premiums vary by the plan (many plans have $0 premiums). And each Medicare Advantage plan can charge different out-of-pocket costs and have different rules for how you get medical services. For example, most insurance companies require Medicare Advantage plan participants to get pre-approved before they can have a procedure done, but another insurance company might not have that requirement.

Do Medicare Advantage plans cover pre-existing conditions?

Yes, your acceptance is guaranteed except for people who suffer from End State Renal Disease (ESRD) until that changes in 2021. Other than that, Medicare Advantage plans have zero coverage restrictions, and you’re not required to complete any medical history forms.

What is a Medicare Supplement (Medigap) plan?

Medicare supplement plans (Medigap) plans provide extra coverage to help pay for some of the healthcare costs and services that Medicare doesn’t pay. These plans can offer protection from large out-of-pocket medical costs that result from numerous doctor or hospital visits.

It’s important to note that you can’t have more than one Medicare supplement plan. And though Medicare supplement plans may have higher monthly premiums than Medicare Advantage plans, you may want to consider buying a Medicare supplement insurance plan if:

  • You’re likely to have numerous hospital stays during a year.
  • You have regular doctor visits and/or medical services.
  • You live in different places during the year and cannot be confined to a local network.
  • You frequently travel outside the U.S. and want insurance coverage for emergency medical care overseas, which Medicare Part A and Medicare Part B may not provide. Note: Some Medicare supplement plans provide international travel coverage.

A Medicare supplement plan may also be a good fit if you want to visit a specific top-tier medical facility like the Mayo Clinic. You wouldn’t qualify for an in-network check-up with a Medicare Advantage plan, but you’d have the ability to see a Mayo Clinic doctor with a Medicare supplement plan, with coverage for a large chunk of your services.

How much do Medigap plans cost?

Pricing for Medicare supplements are based on the plan you select (high/low benefits), your age at time of enrollment, your state of residence, and the health insurance company you select. That’s why it is important to compare when you shop from plan to plan or even between the same company’s plan differences before choosing a Medicare supplement plan.

Medicare Advantage vs. Medicare Supplement: What’s the difference?

Medicare Advantage offers more choice and covers more medical services than Medicare, while still following all of Medicare’s rules. Meanwhile, Medicare Supplement insurance was created to help Original Medicare recipients cover more of their out-of-pocket expenses.

Remember, Medicare Advantage acts as an alternative to original Medicare, while Medicare Supplement plans are additions to Original Medicare coverage.

  Medicare Advantage Medicare Supplement
Coverage In most cases, copayments (a fixed amount of money you pay) are required. In most cases, it can cover deductibles, copayments, and coinsurance that isn’t covered by Part A and Part B.
Cost Many times $0 or a low monthly cost. Higher monthly cost based on state, gender, and age.
Travel Many plans may cover emergency care when you’re out of the country, but there’s typically a maximum amount the plan will pay. Many plans may cover emergency care when you’re out of the country, but there’s typically a maximum amount the plan will pay.
Prescription Drugs Typically included with coverage. Not covered. You must enroll in a Part D plan for drug coverage.
Routine dental, vision, hearing coverage May be covered depending on the plan selected. Not covered.
Copayments and coinsurance Usually have copayments and/or coinsurance. Typically pays for copayments and coinsurance.
Network Medicare Advantage plans have different networks: HMO, PFFS, and PPO. It’s important to understand the rules about going out of network for your healthcare. No network. See almost any doctor or medical facility that accepts Medicare.

Medicare Advantage and Medigap plans may provide benefits for the following services (but check your plan details for specific benefits):

  • Hospitalization: Medicare limits the number of days you can spend in the hospital. If you pass the maximum number of days, supplemental insurance pays the copayment that Medicare does not cover.
  • Skilled Nursing Facility: Depending on the plan you select, Medicare supplement covers skilled nursing services that Medicare does not cover.
  • Blood: If you need blood, Medigap coverage could pick up the tab on a few pints.
  • Hospice care: Medicare pays for everything but copayment and coinsurance. Medicare supplement could pay the copayment and coinsurance.
  • Inpatient or outpatient hospital medical expenses: Medicare generally pays 80% of all expenses, and a Medigap plan generally pays the remaining 20%.

Other services may be covered based on the supplemental plan you pick.

Shopping tips

Choosing between a Medicare Advantage plan or a Medicare supplement plan on to your Original Medicare coverage depends on your situation. Ask yourself these types of questions:

  • Do I travel outside of the United States regularly?
  • Do I live in a different state for a portion of the year?
  • Do I want to see any doctor and not be limited to a network?
  • Is my budget more important than my health benefits?
  • Are extra benefits like dental and vision coverage important to me?

But you don’t have to go it alone: We can answer your questions about Medicare and help you find the best Medicare plan for your needs. Get Medicare quotes, compare plans, or contact us today.

Note: Medicare supplement plan benefits are subject to state rules and regulations. Benefits described here encompass common Medigap plans available in the marketplace. Please check your insurance policy documents or talk to a customer service representative for more information.

Get a Free Quote

Get a Free Quote

Healthinsurance.com LLC is a commercial site designed for the solicitation of insurance from selected health insurance carriers. It is not an insurer, an insurance agency, or a medical provider. You may obtain a complete list of available Medicare plans by contacting 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.