When you become eligible for Medicare, the myriad of plan options to supplement can seem overwhelming. To streamline the process we have briefly outlined your options of deciding between Medigap vs. Medicare Advantage plans. Our goal is to quickly match you with the plan that best meets your needs, protects your family’s assets and gets you the best value for your dollar.

Medigap vs. Medicare Advantage both offer coverage beyond the basics of Original Medicare.

Medicare is divided into many letters that all cover the costs of different aspects of medical care. Medicare Parts A and B are considered the basics, covering the cost of services like skilled nursing facilities, hospital stays, lab work, doctor visits, ambulance services, testing, etc. However, these costs are not fully covered, and With Medicare Parts A and B alone the patient will still have out-of-pocket expenses in the form of deductibles, copays and monthly premiums. 

Medigap plans are optional supplemental plans that can cut costs further. Medigap plans are purchased as add-ons to Medicare Parts A and B to cut some of these costs. Depending on the Medigap plan purchased, it can cover different things, but it is not allowed to cover the cost of prescription drugs. However, Medicare Part D can be purchased alongside Medigap to cover this cost.

Medicare Advantage—aka Medicare Part C—is a private insurer’s plan that is offered as an alternative to Medicare. It is required to cover everything in Parts A and B at least, but may also include components of Part D—prescription drug costs—and other types of care such as dental, vision or hearing. 

Medicare Part D covers the cost of prescription drugs. Purchasing just Medicare Parts A and B, or just Medicare Parts, A, B and D for prescription drugs is one option, but this leaves open the possibility for very high out-of-pocket expenses should one need to access care. Medicare Part G, for example, is a Medigap plan that offers additional coverage of out-of-pocket costs for things like hospital stays.

Which is right for me – Medicare Supplement or Medicare Advantage?

Whether a Medigap or Medicare Advantage plan is best can vary by individual and by the policy involved, but in general Medigap plans have higher monthly premiums and more extensive care than a Medicare Advantage plan. 

Medigap essentially covers more of the total care of the cost for Original Medicare. Medigap Plan G is one popular example. However, when purchasing a Medigap plan it’s a good idea to shop around for the best deal, since what is covered and how much it costs monthly and at the point of service can vary greatly. Medigap plans have the advantage of being accepted by any doctor that accepts Medicare, which can offer flexibility and security.

Medicare Advantage is a kind of replacement plan where a private insurance company is required to provide everything in Medicare Parts A and B as part of the policy. Medicare Advantage typically covers similar prescription drug costs to Medicare Part D as well. Medigap plans do not cover prescription drugs, so usually, someone purchasing Medigap will also purchase Medicare Part D. Medicare Advantage plans are often able to offer cheaper deals than buying Medigap plus Medicare Part D, especially for coverage of prescription drugs, but not always.

Medicare Advantage plans often have rules and regulations regarding in-network,out-of-network doctors and specialist referrals. If doctor selection is a vitally important consideration then a Medigap plan may be better suited than Medicare Advantage. Medigap plans can be used anywhere Original Medicare is accepted. Both types of plans can sometimes be used for international travel.

What is included and covered on Medigap plans?

Medigap plans are an extension of Original Medicare, so having Medicare Parts A and B is a requirement of their use. Medigap will, therefore, cover everything under Medicare Parts A and B—skilled nursing facilities, hospital stays, lab work, doctor visits, ambulance services, testing, etc.—while expanding to also cover some copays, deductibles and coinsurance costs that Original Medicare won’t cover.

Medigap plans are nationally standardized but may vary in some specifics. Typically they cut the costs that are put to the Medicare patient after insurance has paid its part. A long hospital stay, for example, could result in tens of thousands of dollars of out-of-pocket expenses without supplemental coverage. 

Medicare Part D covers prescription drug costs. Other Medigap plans do not. Spouses need separate policies, as Medigap plans only cover one individual. Some Medigap plans will cover the cost of international travel.

In summary, Medigap plans will cover a greater proportion of the overall medical cost and decrease out-of-pocket payments following care, compared to Original Medicare. 

What is included and covered on Medicare Advantage?

Medicare Advantage plans are private plans that are required to cover everything that would be covered by Original Medicare Parts A and B at minimum. Medicare Parts A and B cover care such as skilled nursing facilities, hospital stays, lab work, doctor visits, ambulance services, testing, etc.

The cheapest Medicare Advantage plans will be private insurance offers of these services, but most Medicare Advantage plans will be more extensive. They are often expanded to include care like vision, dental and hearing aids. 

Most Medicare Advantage plans cover portions of Medicare Part D, which is prescription drug costs. Many Medicare Advantage plans add up to a cheaper yearly cost than using Medigap plus Medicare Part D for people who take prescription drugs regularly. 

Medicare Advantage plans tend to be more limited in terms of providers but can be convenient for people who want to access all care from one administrator. This can be convenient for someone who wants to coordinate several points of care—such as primary care, vision and dental.

When is the best time to purchase Medigap?

The best time to purchase Medigap for most people is during the 6-month open enrollment period that begins at age 65 after one enrolls in Medicare Part B. For people who don’t enroll in Medicare Part B until after they are 65, there may still be an open enrollment window, but it often comes with a late enrollment fee. Individuals can also purchase a Medigap plan outside of that open enrollment period, but may have to undergo some additional underwriting requirements not required during the open enrollment period.

During open enrollment, the law states that any policy sold within one’s state is available for purchase at the same price as it would be for a healthy person. This makes open enrollment the easiest time to apply for people with pre-existing conditions.

Companies may choose to decline coverage to some people outside of open enrollment, and are legally allowed to consider age and health status in their decision.

When is the best time to purchase Medicare Advantage?

Medicare Advantage first becomes available as part of the open enrollment period that lasts 6 months after one turns 65 and enrolls in Medicare Part B. 

Each following enrollment period one is free to choose Medicare Advantage if they would like to switch over from Original Medicare. Which plans are available, as well as how easy it is to switch between Medigap or Medicare Advantage plans vary by state, so be sure to look up what is available locally. What plan is covered under the plan and out-of-pocket costs can vary depending on the Medicare Advantage Plan offered.

Do these plans have to be purchased during open enrollment?

These plans do not have to be purchased during the open enrollment period, but it is usually the best time. Medicare Advantage is continually offered, but the cost can vary by individual plan and by the health status of the applicant. Applying during open enrollment also prevents gaps in coverage.

Medigap plans are required to be offered at the same rate for everyone regardless of health status during the 6-month enrollment period after one turns 65 and enrolls in Medicare Part B, but after this open enrollment, Medigap plans will be priced according to an individual’s health status and/or age. Companies may also reject an application based on health status or age after open enrollment.

The best plan for an individual varies on their health and financial needs, state availability and timing. Personal considerations may vary by age and enrollment status in Original Medicare. The government does list star ratings for Medicare Advantage plans and some Medigap plans, assigned based on what coverage one gets for the cost. This can help with shopping around for the best deal on needed coverage. Have more questions? You can contact specialists to get some guidance and explore available options or compare rates while making a decision.