Is It Better to Have Medicare Advantage or Medigap?

Original Medicare provides hospital and medical insurance, but it doesn’t cover some out-of-pocket expenses. Medicare members have two options to help fill coverage gaps.

  1. Medicare Advantage is an alternative to Original Medicare that can be more cost-effective and bundles hospital, medical and sometimes includes prescriptions, dental and more.
  2. Medigap is a supplemental plan that works alongside Original Medicare to pay for costs not covered by Medicare including coinsurance, copayments and deductibles.

Get an overview of each and contact one of our Medicare advisors to find the option that’s right for you!

Medicare is the federal health insurance program that offers four parts: Original Medicare (Parts A and B — traditional Medicare), Medicare Advantage (Part C) and prescription drug coverage (Part D). Traditional Medicare can cover members’ basic needs, but it only pays on average 80% of hospital, doctor’s visits and medical costs. You’re responsible for the remaining 20%.1 This is where Medicare Advantage and Medigap come in.

What is Medicare Advantage?

Provided by private Medicare-approved insurance companies, Medicare Advantage is an alternative plan to Original Medicare. This bundle covers hospitalization and medical and typically includes prescription drug coverage. Medicare Advantage plans are an advantageous option because they often offer additional coverage like vision, hearing and dental. The policy also includes cost benefits such as zero or lower premiums and an annual cap on out-of-pocket costs. Once expenses meet the cap, you don’t have to pay for additional covered services.2

Medicare Advantage Cons: Since Medicare Advantage works like a health maintenance organization (HMO) or preferred provider organization (PPO), there are some potential limitations. Members may:1

  • Be restricted to coverage in the plan’s network
  • Pay more for out-of-network plans
  • Need authorization and a referral from a primary care physician for specialty services
  • Not be covered outside the network’s region

What is Medigap?

Medigap is a supplemental insurance plan for Original Medicare (which is required unless you have Medicare Advantage) that helps with expenses not covered by Parts A and B. These healthcare expenses include copayments, deductibles and coinsurances. By supplementing your Original Medicare with a Medigap plan, you’re eligible to visit any Medicare-registered doctor or hospital throughout the United States. The majority of doctors and hospitals accept Medicare. Unlike Medicare Advantage, Medigap does not require pre-authorization or a referral. If you want prescription drug coverage, that plan needs to be purchased on its own. A Medigap policy requires a monthly premium, in addition to the Part B premium.1

Medicare Advantage and Medigap Do NOT Work Together

If you need additional coverage, you must choose between Medicare Advantage OR Medigap. Medigap cannot be used to cover out-of-pocket costs under a Medicare Advantage plan. Visit Medicare.gov to get more information on enrolling and disenrolling in either of these plans.

Annual Open Enrollment Period

Medicare’s Annual Open Enrollment period is a window (Oct. 15th – Dec. 7th) when you can switch to or purchase a new policy. This period is available for making changes to Medicare Advantage and prescription drug coverage. You cannot make changes to Medigap insurance during the annual open enrollment period.

Here’s what you can do:

  • Switch from Original Medicare to Medicare Advantage or vice versa.
  • Purchase a new Medicare Advantage plan or switch to another Part C plan.
  • Enroll, disenroll or change a Medicare prescription drug plan.

You may want to check in with your Medicare Advisor to learn about your options and any penalties.

Is It Better to Have Medicare Advantage or Medigap?

You have two choices: You can either (1) supplement Original Medicare with a Medigap plan OR (2) enroll in Medicare Advantage, which wraps up Original Medicare, prescription drug coverage in most cases and additional Medicare Advantage benefits into one policy. Is one better than the other? In short, no. Each offers pros and cons, and it all depends on what fits with your needs. The Medicare Resource Center rounds up some benefits of each:3

Medicare Advantage Pros:

  • A Medicare Advantage Special Needs Plan benefits people with certain medical conditions, as well as people who are institutionalized or who are eligible for Medicare-Medicaid.
  • Those who are on Medicare due to a disability and under age 65 may have difficulty obtaining Medigap. Medicare Advantage is available for those with a disability, as long as they’re eligible.
  • Medicare Advantage plans expand benefits to dental and vision coverage, hearing aids and gym memberships.
  • Medicare Advantage plans often include prescription coverage; whereas with Medigap, you’ll have to purchase a prescription drug plan in addition to Medigap.
  • Zero-premium Medicare Advantage plans are available — just know that you still have to pay for a Part B premium.

Medigap Pros:

  • Although Medigap plans tend to be more expensive, they cover copayments, coinsurance and deductibles, as well as all or some Medicare out-of-pocket costs.
  • A majority of Medigap plans cover foreign travel.
  • Medigap offers greater flexibility and a more sizeable network of hospitals and doctors across the United States.

Keep in mind, choosing between Medicare Advantage and Medigap plans in Arizona depends on your own health and financial needs. Because your healthcare needs evolve and policies are always changing, it's a good idea to look over your Medicare plans regularly. You’ll want to work with an advisor you trust to review your evolving needs and the coverage that might work best for you.

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1https://www.investopedia.com/articles/personal-finance/071014/medigap-vs-medicare-advantage-which-better.asp
2https://www.medicalnewstoday.com/articles/medigap-vs-medicare-advantage
3https://www.medicareresources.org/medicare-benefits/how-to-choose-between-medicare-advantage-medigap-and-part-d/

The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.