Author: Carmelo DeFranco
Date: 06/16/2022
Reading Time: 4 minutes

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So you’re gearing up to sign up for Medicare and understandably have a ton of questions. One of the most critical decisions you’ll have to make is whether to opt for Medicare Advantage or choose Medicare Supplement. 

If you’ve got only Medicare Part A and Part B, you may be responsible for several deductibles, copayments, and other coinsurance expenses. Original Medicare doesn’t cover certain benefits like prescription drug costs, overseas health-care emergencies, or such expenses as routine vision and routine dental care, you’ll be forced to pay for them out of pocket.

That’s where Medical Supplement (also known as Medigap) and Medicare Advantage (also known as Medicare Part C) come in handy. They’re designed to help fill the aforementioned coverage gaps in Original Medicare. 

For one, you can enroll in Medicare Advantage as an alternative to Original Medicare. Medigap healthcare insurance plans, on the other hand, are often used to supplement Medicare Part A and Part B. Rather than replace Original Medicare, these plans work in tandem with it. 

The two Medicare coverage options differ significantly when it comes to how they work, their benefits, coverage, and costs. Let’s find out their differences, so you can pick the right Medicare insurance plan.

Medigap vs. Medicare Advantage — Know the Difference

Roughly 40.25 million Medicare beneficiaries with a disability and retirees have Original Medicare insurance plans. At the same time, around 81 percent of these Medicare beneficiaries supplement their plans with employer-sponsored insurance, Medicaid, and Medicare Supplement. Of the 61 million Medicare beneficiaries, well over 25 million also choose Medicare Part D, as a stand-alone plan for prescription medication.

Medicare Supplement is designed to work alongside Original Medicare. In this way, these insurance plans cover the coverage holes in Medicare Part A and Part B, but they don’t provide stand-alone coverage. That means you’ll need Original Medicare for medical and hospital coverage, while Medigap takes care of some costs not covered by Part A and Part B. Once more, you’ll need to sign up for a stand-alone Part D plan for prescription drug coverage.

In essence, Medicare Supplement doesn’t replace Original Medicare; you’ll still be enrolled in it when you purchase a Medigap insurance plan. They work in tandem — Medicare Part A and Part B takes care of medical and hospital expenses, whereas the Medicare Supplement plan pays for deductibles, copayments, and other cost-sharing bills.

That isn’t all; the Medicare Supplement plan can also cover some costs that Original doesn’t, including overseas healthcare emergency coverage and excess charges on Medicare Part B. It’s also worth noting that when you’re enrolled in a Medigap plan, you can only use it to cover Original Medicare (Part A and Part B) expenses. You can’t use it to pay for Medicare Advantage costs.

On the other hand, Medicare Advantage can be used as a stand-alone Medicare insurance plan, which then replaces the Original Medicare. The big difference is that you’ll receive your benefits through Medicare Advantage, rather than through the government-sponsored Medicare program. 

To sign up for a Medicare Part C insurance plan, you must be enrolled in Original Medicare Part A & B and a resident in the service area of the Medicare Advantage plan you’re interested in. While the coverage for both Medicare Original and Medicare Advantage are practically the same, the latter may provide extra benefits like routine dental care, vision, prescription medication, acupuncture, and wellness programs.

Medicare Advantage Plan Benefits

Medicare Advantage plans often vary greatly from plan to plan because private healthcare insurers have more leeway when it comes to designing their additional benefits programs included within.  For a Medicare insurance seeker, that means you should take more time to carefully compare your choices, so you don’t end up missing out on benefits you are entitled too.

Again, Medicare Part C insurance plans are flexible, often allowing you to get coverage for more expenses that are not covered by Original Medicare. You can get coverage for routine ear care, dental care, and vision, plus health wellness. These are expenses that you’d typically pay for out-of-pocket under Original Medicare. Medicare Part D is also part of most Medicare Advantage plans, offering coverage for prescription drugs.

Medigap Benefits

As noted earlier, Original Medicare has two parts: Part A, which covers hospital bills, and Part B, which is in effect medical insurance. You can supplement this coverage with a Medicare Supplement insurance plan. These plans are available through brokers or from insurance companies, so they are basically private insurance plans. Medigap plans are not federally administered, too.

There are 10 Medicare Supplement insurance plans you can sign up for in most states, and each plan has a letter designation — i.e., Plans A, B, C, D, F, G, K, L, M, and N, with each Medicare Part C. Each lettered plan has a set of standardized benefits, with some plans covering overseas medical emergencies.

 All plans in the same letter group, such as Plan E, offer the same set of coverage, no matter the provider, but the monthly premium often varies from one insurance company to the next. Premium costs may also vary across states. For instance, Wisconsin, Minnesota, and Massachusetts have set up their Medigap insurance plans in a different way from other states.

If you’re looking for an insurance plan that’ll pay for out-of-pocket expenses that Original Medicare, Part A & Part B, doesn’t cover, look no further than Medigap. It covers deductibles, coinsurance, and copayments. Some even pay for the first 3 pints of blood. Unlike Medicare Advantage plans, Medicare Supplement plans don’t offer coverage for prescription drugs. You may have to purchase a stand-alone Medicare Part D for that. 

Choosing Medicare Providers

Medicare Advantage plans have more limited networks than Medigap plans which are widely accepted by nearly all healthcare providers that already accept Original Medicare. For instance, some Medicare Part C insurance plans, such as PPOs and HMOs, are restricted to the provider network. That means you can only visit a healthcare facility or see a doctor that’s part of your provider network and contracted with your Medicare Part C plan. In some plans, you may consult both out-of-network (in which case you might pay increased copayments and deductibles) and in-network medical providers.

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