Medigap vs. Medicare Advantage

By Kendra Knouff
eMedicareSupplements Senior Writer

When open enrollment time comes around every November, many seniors must decide between enrolling in a traditional Medicare plan and choosing a Medicare Advantage Plan. Those who enroll in a traditional Medicare plan often choose to enroll in a Medicare Supplemental Plan as well, called a Medigap plan, to cover any “gaps” in their Original Medicare plan. Others choose to enroll in Medicare Advantage Plans. These plans cover everything in Medicare parts A, B and D, and they also offer many extra benefits.

Medigap plans are offered through many insurance companies around the nation. These plans cover any gaps left by the Original Medicare plan. Medigap plans will pay on healthcare claims after Medicare pays on the claims. Just like any other health insurance plan, Medigap has pros and cons.

Pros:

• Any healthcare provider that accepts Medicare will accept all Medigap Plans. (i.e. there are no networks, Medicare Supplements are not HMOs or PPOs) You do not ever need a referral to see a doctor or specialist.
• Generally, there are no co-pays when services are rendered.
• Medigap plans are standardized (A-N). This means you can compare prices from one company to another and always know you are comparing the exact same coverage.
• Generally, premiums are the only out-of-pocket costs throughout the year.
• Medigap Policies are “Guaranteed Renewable”. This means that as long as you continue to pay your premium, you can never lose the coverage.
• If you move to another city or state, you can take your Medigap policy with you.

Cons:

Medicare Advantage Plans, also known as Medicare Health Plans, MA or MAPD plans, provide coverage for everything included in Medicare parts A, B and D, along with many added benefits. They are often offered through companies that provide individual and group plans. There are many different types of MA plans, including HMOs, PPOs and PFFSs. Just like Medigap plans, these also have their pros and cons.

Pros:

• These plans offer low monthly premiums. The average is $50.
• They can be offered with “No Monthly Premium” to you because Medicare takes your $96.40 monthly Medicare Part B premium and gives it to the Medicare Advantage Provider. Medicare also pays Medicare Advantage companies additional funds to help cover your Medicare expenses (the money that was deducted from your pay check throughout your working career).
• Because the monthly premiums are generally much lower, if you don’t go to the doctor much, a Medicare Advantage plan could save you more money over the course of a year.
• Some Medicare Advantage plans include prescription drug coverage. These are called MAPD plans.
• Some additional benefits such as coverage for dental (routine cleanings), vision (routine checkup), and health club memberships are available through these plans.

Cons:

• They are not standardized. There are many different varieties of MA plans. Consumers must carefully review each plan to make sure they know what they are getting.
• MA plans are not “Guaranteed Renewable.” The company can discontinue the plan at the end of any year. You would then need to get another plan for the following year. Doctors can choose not to accept any or all of the MA plans. Even if they accept Medicare, they do not have to accept MA plans.
• Your primary care physician may accept the plan but a referred specialist may not.
• Most MA plans have co-pays for almost every visit.
• There is generally more paperwork for the consumer. Many co-pays are a percentage of the Medicare approved amount, which is not known until after the bill has been submitted to the Medicare Advantage provider, so you will be billed for your co-pay at a later date, sometime several months later.
• If you move to another area, your plan may not be available in that area. You will need to get another one.
• Your out-of-pocket costs could reach your “Out of Pocket Maximum” if you have a particularly unhealthy year.

It is very important to investigate all of the available options before choosing a plan. Research may take some extra time, but it will help you choose the insurance plan that will fit your lifestyle and your wallet.