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Medigap vs. Medicare Advantage - How to Choose? Thumbnail

Medigap vs. Medicare Advantage - How to Choose?

"...in fact, you can even find Medicare Advantage plans with $0 premiums..."

Hi, I’m Mike Frontera and welcome to another edition of Retirement Insights.


Hey! It’s Medicare’s Open Enrollment Period! It’s that short, but important window that runs from October 15th to December 7th in which Medicare beneficiaries can make major changes to their plans. And what better time to talk about one of the big debates in the Medicare world? That is, do I want a Medicare Advantage plan or a Medigap plan?


First, let’s get a quick definition of original Medicare. Original Medicare is our government-run health insurance that most people get when they turn age 65.

And it comes in three parts, Part A, that covers major medical (hospital stays, skilled nursing care, etc.) Part B, which covers things like doctor’s visits, mental health


medical equipment like wheelchairs, walkers, etc. and Part D, which is prescription drugs.

While this coverage is pretty robust there are major shortfalls in what Medicare covers. For example, with Part B, you typically have to pick up 20% of your expenses, with no maximum out of pocket spending. This can quickly get out of hand if you’re faced with a serious illness or a major procedure. 


So to limit the risk of high out of pocket costs, Medicare recipients will often shop for a Medigap or Medicare Advantage plan. So what are they and how do they differ?


A Medigap plan is easy to remember because it’s designed to cover the “gaps” in Medicare coverage. Gaps like that 20% coinsurance that I mentioned earlier.


And putting a maximum on your annual out-of-pocket expenses. Medigap plans are offered by insurance companies and are relatively easy to compare to one another because they just come in 10 standard plans. That means you can compare and confidently shop among insurance carriers to find the best deal. Medigap plans can be used for any doctor who takes Medicare and you won’t need a referral to see a specialist. Overall, these Medigap, or Medicare supplement plans as they’re sometimes called, provide freedom of care and help rein in out of pocket costs. But the premiums can be steep for those retirees on a budget.

Now on the other side we have Medicare Advantage plans. Like Medigap plans, these plans are provided by private insurance companies. They’re different though because they are designed to


replace the coverage offered by Medicare rather than just supplement the benefits. The policies work like typical health insurance that you’re probably used to. They come in HMO, PPO and high deductible plans, and the like. There are no standard set of plans with these either. Each company is creating their own plan with their own premiums, set of deductibles, etc. Since Advantage plans tend to have network doctors, you’ll also often need to stay in network to keep your costs contained, and a lot of plans do require that you get a referral to see specialists. Overall, you tend to have much more restrictions under a Medicare Advantage plan than you might under a Medigap plan, and coverage tends to not be as complete either.


So why do people get them?



Mostly due to cost. When you look at a Medigap plan premium, those often run well over $100, 200 or 300 per month, while most Medicare Advantage plans are usually under $100 per month. In fact, you can even find Medicare Advantage plans with $0 premiums.


So which to choose? Well your best bet is to consult a professional who’s experienced with both kinds of plans and can lay out the options clearly for you. But a good rule of thumb is, if you’ve had medical issues and especially if you take prescription medications, lean toward a Medigap policy. If you are in very good health and expect to stay in good health, you may be able to save some premium dollars by going with a Medicare Advantage policy.

Do you have questions for me? Let me know! Give me a call me at (518) 612-1060



or send me an email at mfrontera@npafinancial.com. Do you follow me on Facebook? I think that you should! You’ll see videos like this, blog and article shares on everything retirement planning. Once again, thank you for joining me. See you next time.

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