Medicare Advantage vs. Medigap: Is One Better Than The Other?

• Medicare Advantage and Medigap plans are considered supplemental insurance to Original Medicare, otherwise known as ​“Medicare supplement plans.” These plans ​“fill in the gaps” of Original Medicare to provide more comprehensive coverage.

• While a Medigap policy can be used with Original Medicare, it cannot be used in conjunction with a Medicare Advantage plan.

Navigating Medicare is not necessarily the easiest task (nor is understanding most health care for that matter). From figuring out one’s medical needs to what those needs will cost, there is a lot to balance.

While Original Medicare provides quite comprehensive medical coverage, it doesn’t cover everything which is why many beneficiaries opt into a separate Medicare supplement plan in addition to their main coverage. As such, Medicare enrollees may opt to join a Medicare Advantage plan, add on a Medigap policy, or enroll in the Medicare-Medicaid Dual Eligibles program if they are eligible.

Not all beneficiaries will be eligible for the Dual Eligibles program. If an individual is interested in more comprehensive coverage than what Original Medicare provides, they’d need to choose between a Medicare Advantage plan or a Medigap policy. That said, one isn’t necessarily better than the other. It will all come down to the Medicare enrollee’s specific health and financial needs.

If you’re searching for a Medicare supplement, Medigap or Medicare Advantage may be your best route. This article will help beneficiaries understand everything they need to know about Medicare Advantage and Medigap plans, including how to choose between these two types of supplemental insurance plans and a number of other helpful resources to help make navigating Medicare plans easier.

The Federal Medicare Program was designed to provide health care for Americans age 65 and older, as well as younger Americans with certain disabilities or end-stage renal disease (ESRD).

There are two ways to get Medicare coverage: 

• Original Medicare

• Medicare Advantage

Those who enroll in Original Medicare also have the option to add on a Medigap policy to help with out-of-pocket costs that usually come with health insurance, too. 

Original Medicare is comprised of two different parts: Medicare Part A and Medicare Part B. Each one pays for different types of health services. These Medicare Parts do not include prescription drug coverage. In order for someone with Original Medicare to get coverage for prescription drugs, they’d need to enroll in Medicare Part D (drug coverage). Original Medicare also does not pay for dental care, vision care, or hearing care.

What is Medicare Part A? 

Medicare Part A is hospital insurance. This consists of coverage for inpatient services someone would receive at the hospital such as: 

• Inpatient hospital care

• Skilled nursing facility care

• Nursing home care (non-custodial or long-term care)

• Hospice care

• Home health care

What is Medicare Part B? 

Medicare Part B is medical insurance. This consists of coverage for outpatient services such as: 

• Medically necessary services

• Preventive services (i.e. vaccinations, medical screenings, etc.)

What is Medicare Part D? 

Medicare Part D is prescription drug coverage. Medicare prescription drug plans must cover a wide variety of prescription medications that many people with Medicare take. This includes most drugs in protected classes, such as those needed to treat cancer or HIV/AIDS.

Medicare beneficiaries can confirm drug coverage on the plan’s drug list, known as a formulary. Most plans break prescription drugs down by tier, with the highest tier being the most expensive and the lowest being the least expensive. Most plans have five tiers.

Medicare supplement insurance plans are Medicare plans that are designed to ​“fill in the gaps” of Original Medicare coverage. There are three types of supplemental Medicare insurance plans: 

• Medicare Advantage (also known as Medicare Part C) 

• Medigap (also known as MedSupp)

• Medicaid-Medicare (Dual Eligibles)

A Medicare Advantage plan is a type of Medicare supplement insurance plan. Medicare Advantage plans are also known as Medicare Part C or MA plans. Medicare Advantage plans are provided through private insurers companies that are Medicare-approved. 

MA plans bundle both Medicare Part A and Medicare Part B into one health insurance plan. This means that MA plans provide the same basic benefits as seen within Original Medicare coverage. However, most Medicare Advantage plans also often provide extra benefits such as: 

• Hearing coverage

• Dental coverage

• Vision coverage

• Prescription drug coverage

Every MA plan will be different, however, which is why it’s always best to always confirm additional benefits with a provider before enrolling in a plan. As well, while MA plans can provide a more compressive healthcare plan due to their additional benefits, there are still both pros and cons to consider.

Types of Medicare Advantage Plans 

There are various types of Medicare Advantage plans. These include: 

• Health Maintenance Organizations (HMO) Plans

• Preferred Provider Organization (PPO) Plans

• Private Fee-for-Service (PFFS) Plans

• Special Needs Plans (SNPs)

Note: Learn more about Medicare Advantage plans at this resource.

Medigap insurance plans are Medicare supplement policies sold by private insurance companies. Also known as MedSupp, Medigap plans help to lower out-of-pocket expenses of Original Medicare. In turn, this can lower medical costs all around. 

Medigap does require paying a monthly premium in addition to the monthly premium for Medicare Part B. Medigap premiums costs will vary.

Note: Medigap coverage can only be used alongside Original Medicare. It cannot be combined with Medicare Advantage. This is because Medicare Advantage is also considered to be a supplemental insurance plan. In fact, it is actually illegal for anyone to sell a Medicare enrollee both a MA plan and a Medigap plan, unless they’re switching back to Original Medicare. If this occurs, they need to contact their State Insurance Department.

A Medigap plan and Medicare Advantage plan benefits cannot be combined. A Medigap plan will also not pay for MA plans’ copayments, deductibles, and monthly premiums. 

Similarities

Some key similarities include: 

• Both Medicare Advantage and Medigap plans are considered to be Medicare supplement insurance plans to traditional Medicare.

• Both MA plans and Medigap plans can help provide more complete health coverage.

• Both plans are provided by private health insurance companies the operate separately from the Federal Medicare Program.

Differences

Some key differences include: 

• A Medigap policy will not cover prescription drugs while many Medicare Advantage plans do include prescription drug coverage.

• Medicare Advantage plans are a way to get Medicare benefits (i.e. Medicare Part A and B). A Medigap policy is a supplement to Original Medicare benefits.

When it comes down to which is best, it will all depend on individual circumstances. That said, if there is ever uncertainty regarding whether to choose Medicare Advantage versus an Original Medicare plan with Medigap supplement insurance, there are some strategies someone can take to help make the most informed decision for their health care needs and financial situation:

Medicare’s MA Plan Comparison Tool

This helps beneficiaries compare MA plans prior to enrolling. Compare plans here.

Speak With a Licensed Insurance Agent

They are educated on everything their plans have to offer, helping beneficiaries make the most informed decisions.

Contact the Insurance Company

Contacting the insurance provider directly can help get answers straight from the source. 

Contact Medicare

Contacting Medicare can help beneficiaries understand all their Medicare options. Get Medicare contact information at this resource.

Talk With Loved Ones

They know your situation well and can help you make a well-informed decision, financially and health-wise.

Consider Your Current Healthcare Providers

Some MA plans require choosing a primary care doctor. If an enrollee’s current PCP is not included in the plan’s network, and they have a good rapport with that physician, that is important to keep in mind.

Think Through Current Medical Expenses

Look at what medications are covered (or aren’t) by potential Medicare plans.

If a beneficiary is ever unsatisfied with their Medicare plan, they have the option to switch policies. They will need to make the decision to change or drop coverage by certain dates, however. Learn more at this resource.

Why would people choose Medigap over Medicare Advantage?

One of the biggest reasons beneficiaries opt for Medigap over MA plans is for added flexibility regarding their network. With Medigap, a beneficiary can visit any provider or practice that accepts Medicare. However, with MA plans, beneficiaries must stay within their provided network in order to avoid added out-of-pocket costs.

Can I cancel my Medigap or MA plan and revert back to Original Medicare whenever I want?

Medigap policies can be cancelled at any time. However, Medicare Advantage plans can only be dropped or switch during certain times of the year such as during annual open enrollment season from October 15th to December 7th.