Overview of Medicare
Medicare is a health insurance program administered by the Federal government that helps cover the cost of medical care for individuals who are 65 and older, and also qualified individuals with disabilities. Medicare is divided into two broad categories: Original Medicare and Medicare Advantage. Original Medicare is composed of Parts A and B and provides hospital and doctor coverage, and Medicare Advantage provides an ‘all-in-one’ health plan.
Let’s take a look at the differences between Medicare, Medigap, and Medicare Advantage:
What is Medicare?
Medicare is a national health insurance program financed by the federal government and administered through the Social Security Administration. It provides health care coverage to people over 65, certain disabled individuals, and those diagnosed with specific conditions.
Generally speaking, Medicare consists of four parts:
- Part A (Hospital Insurance)
- Part B (Medical Insurance)
- Part C (Medicare Advantage Plans)
- Part D which covers prescription drugs.
Part A covers hospital costs such as room and board, nursing services, laboratory tests, surgery, home health care, and other services related to your in-patient stay. Part B is designed to cover medical costs such as physicians’ fees, outpatient hospital costs, preventive services like annual checkups or vaccinations, durable medical equipment (DME), home health care services and certain treatments not covered under Part A.
Part C Medicare Advantage plans offer coverage beyond that provided by Parts A and B. These plans provide additional benefits such as vision care, hearing aids and dental benefits as well as prescription drug coverage either through an external provider or an included PDP (Prescription Drug Plan). Enrollment in a Medicare Advantage plan means that you are still enrolled in Original Medicare but all costs for Parts A & B will be paid by the plan rather than from your own pocket. Private insurers work with the Centers for Medicare & Medicaid Services (CMS) to offer these plans in different parts of the country.
Part D – Prescription Drug Plans are offered by private insurance companies approved by CMS to provide coverage of prescription drugs outside of those already included in Parts A&B or a Medicare Advantage Plan’s formulary list. You can combine Parts C & D if you choose a program that has both components or you can purchase a stand alone Prescription Drug Plan at additional cost.
Medicare Parts A, B, C & D
For individuals who are eligible for Medicare, understanding the different parts and how to derive maximum benefit from them can be overwhelming. Medicare is divided into four distinct parts, each providing coverage for different types of services: Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage) and Part D (prescription drug coverage).
- Part A: Also known as hospital insurance, Part A covers inpatient hospital stays, rehabilitation facility services, hospice care and home health services. Most people automatically receive Part A at no additional cost if they or their spouse have contributed to Social Security taxes for at least 10 years; however, some individuals may be required to pay a premium.
- Part B: Also known as medical insurance, part B helps cover medically necessary services such as doctor visits and laboratory tests. Individuals are typically responsible for paying a monthly premium depending on individual income level; however, the standard monthly premium amount will remain the same in 2021 as it was in 2020.
- Part C: Medicare Advantage plans are administered by private health insurance companies that provide all of your Parts A and B benefits. These plans may also offer extra benefits such as coverage for vision or hearing care; usually at an additional cost to the enrollee. Beneficiaries must also pay premiums and out-of-pocket costs associated with their plan choice including copayment/coinsurance expenses meeting deductibles etc which may differ based on plan selection/coverage tier availability.
- Part D: Prescription drug coverage is available through private health insurance companies approved by Medicare. Coverage under a stand-alone prescription drug plan or through a Medicare Advantage plan will require paying related premiums in addition to copayments or coinsurance expenses incurred when filling prescriptions covered under the policy terms/plan documents and general eligibility requirements.
Medigap
Medigap is a supplemental health insurance policy designed to cover the gaps in original Medicare. It helps cover some of the costs that original Medicare does not cover such as copayments, coinsurance, and deductibles. It is a great way to get additional coverage if you do not want to get a more comprehensive plan such as a Medicare Advantage Plan.
In this article, we will discuss the pros and cons of medigap:
What is Medigap?
Medigap is a form of supplemental health insurance policy that helps fill “gaps” in Original Medicare coverage. These gaps are costs that are not paid by Original Medicare, such as copayments, coinsurance, and deductibles. Medigap policies can help consumers reduce the out-of pocket expenses they otherwise would have to pay.
Medigap policies are standardized by the Centers for Medicare & Medicaid Services (CMS) and they all provide similar benefits. There are different Medigap plans available each of which offer different benefits but adhere to the same guidelines set up by CMS. Consumers typically select a plan based on their individual needs and budget.
All Medigap plans include basic benefits for hospital and medical services such as:
- Part A coinsurance
- Part B coinsurance or copayment
- Skilled nursing facility care coinsurance
- Hospital costs up to 365 days after Medicare benefits have been used up.
Additional benefits vary depending on the plan chosen by the consumer.
Advantages of Medigap
Medigap (Medicare supplement insurance) plans are private health insurance plans that are designed to supplement the coverage you receive through Original Medicare. Medigap policies help cover some of the costs that Original Medicare does not cover, such as: Medicare deductibles, coinsurance and co-payments.
Medigap policies are offered by private insurance companies and usually help pay only for services associated with Original Medicare.
The advantages of a Medigap policy include:
- Gaps in coverage: Medigap policies can help to fill in the gaps when it comes to original Medicare coverage. This helps reduce out-of-pocket costs associated with medical care and helps protect you from unexpected medical bills.
- Protection against rising healthcare costs: With Medicare Supplement Insurance, you know what your premium rate and benefits will be year after year regardless of your changing health needs or increasing healthcare costs.
- More quality providers to choose from: Medigap plans allow you to choose any doctor or hospital that is approved by Medicare and accept patients with original medicare for payment without referral from any primary care physician (PCP), no networks or HMO restrictions apply in most states.
- Coverage away from home: When you travel out of state or even across the country, your doctors accept original medicare for payment just like they do in your hometown. Out-of-state medical bills may also be covered by a medigap plan, depending on where your plan was purchased – allthough this should always be checked ahead of time with individual insurers.
Disadvantages of Medigap
Medigap is an insurance policy intended to supplement Medicare coverage by covering some of the out-of-pocket costs not covered by Medicare, such as co-insurance, deductibles and co-payments. While Medigap policies can be beneficial for those who need the additional coverage, they are associated with certain drawbacks.
One disadvantage is that Medigap plans can be expensive. Most plans cost anywhere from $100 per month to over $500 per month depending on the type of coverage purchased and the age of the individual. In addition, health care costs have been rising over time, so these costs could increase significantly over time.
Another downside of purchasing a Medigap plan is that you may not be able to choose your own doctors or hospitals as they may not accept Medigap plans due to pre-existing contracts with other insurers or health plans. This could make it difficult to get specialist care that you need.
Due to these drawbacks, many people opt instead for a Medicare Advantage plan, which provides benefits similar to those that would be offered under a traditional Medicare supplemental plan but at lower premiums and allowing individuals more choice in selecting their providers. However, it is important for individuals considering either option to carefully compare their options before making a decision.
Medicare Advantage
Medicare Advantage is a type of Medicare health plan offered by a private company that contracts with Medicare. Unlike traditional Medicare, it provides not only Part A and Part B coverage, but also typically includes additional benefits such as prescription drug coverage, dental and vision coverage, and even gym memberships. Medicare Advantage plans can vary in their coverage and cost-sharing requirements, so the best plan for you will depend on your individual needs.
Let’s look at the pros and cons of Medicare Advantage:
What is Medicare Advantage?
Medicare Advantage, also known as Medicare Part C or MA plans, is a health plan offered by private insurance companies that are contracted with Medicare to provide benefits covered under Original Medicare Parts A and B. These benefits are combined into one plan for members to help pay for medical costs. Medicare Advantage plans may include prescription drug coverage and other extras such as vision, hearing, dental and/or health and wellness programs.
The amount you pay for your plan depends on the specific benefits of the plan you choose. Most Medicare Advantage plans charge a monthly premium in addition to any copayments or coinsurance they require when services are received. Some plans offer additional coverage such as vision, hearing or dental at no additional cost while others do not include these services in their coverage. It’s important to compare all of your options carefully before choosing a plan so that you can make an informed decision about which is best for your needs.
You will generally remain enrolled in Original Medicare Parts A and B when you switch to a Medicare Advantage plan, however there may be exceptions depending on the type of policy purchased or state where the policy was issued. Be sure to check with your insurance provider if you have any questions about how the transition will affect your current coverage.
Advantages of Medicare Advantage
Medicare Advantage (MA) plans are an option available to Medicare-eligible individuals that allow them to receive their Medicare benefits from a private insurance company instead of from the government. MA plans often offer more coverage than Original Medicare, and are typically bundled with additional services such as dental, vision, and prescription drug coverage.
The advantages offered by MA plans vary depending on the specific plan chosen, but common advantages can include:
- Lower monthly premiums than Original Medicare
- Incentives such as fitness reimbursements or gym memberships
- Coverage for routine health care expenses that Original Medicare doesn’t cover including dental, vision, and hearing
- Prescription drug coverage through the same policy
- Flexibility to choose health care providers within a network
- Access to personalized health advice through 24/7 nurse hotlines
MA plans may have additional advantages depending on the specific plan chosen. It is important to research all of your options carefully before choosing a plan.
Disadvantages of Medicare Advantage
While Medicare Advantage plans have some advantages, there are a few downsides to signing up for one. These include:
- Limitations on Choice of Providers: Medicare Advantage plans usually require you to choose from a limited network of healthcare providers and facilities. Many times, you may not be able to receive care from the doctor of your choice—or find specialists in your area under the plan.
- Higher Premiums: Many Medicare Advantage plans come with higher premiums than traditional Medicare, though this isn’t always the case—it depends on your specific plan.
- Cost Sharing for Some Services: While many services may be covered at no cost or with a co-payment, there are some services that require patients to pay part of the cost through co-insurance (paying a percentage of medical bills). These costs can add up quickly if you have frequent doctor visits or ongoing care needs.
- Potential Penalties: If you decide to event switch back to original Medicare within 12 months of signing up for a Medicare Advantage plan, it could result in penalties if you don’t qualify for certain exceptions.
- Limited Coverage Outside Your Service Area: If you live in an area where traveling frequently is necessary, it’s important to make sure that your Medicare Advantage plan will cover any medical expenses while traveling abroad or out of state. Many plans only offer coverage within their service area and do not offer coverage outside that area.
Comparing Medigap and Medicare Advantage
When it comes to choosing between Medigap and Medicare Advantage, it can be a difficult decision to make. Medigap is a supplemental insurance policy that covers gaps in Medicare coverage, while Medicare Advantage is a private insurance plan that replaces traditional Medicare. Both plans offer different coverage options and come with their own pros and cons.
Let’s take a look at the differences between Medigap and Medicare Advantage in order to help you make an informed decision:
Coverage
When choosing between Medigap and Medicare Advantage, it is important to understand the differences in coverage they provide. Medigap policies supplement original Medicare by providing additional coverage for things like hospital stays and doctor visits. Premiums are determined by the type of policy selected, as well as factors like age, tobacco use, and where you live.
Medicare Advantage plans are offered by private insurance companies that are approved by Medicare. These plans provide Part A (hospital) and Part B (medical) coverage and sometimes will include additional benefits such as vision, dental or hearing care. Premiums vary based on plan type and insurance provider.
For both options, you must also continue to pay your Part B premium as long as you have Medicare A & B coverage. It’s important to do some research to find out which option best suits your specific needs before making a decision.
Cost
When it comes to cost, Medigap and Medicare Advantage plans differ significantly. Medigap plans are generally more expensive than Medicare Advantage plans, but you get what you pay for. A Medigap policy typically covers much more of your out-of-pocket expenses than a Medicare Advantage plan would. It’s important to compare different types of medigap plans and do research before making your decision.
Medigap coverage has premiums that can vary in price depending on the policy’s features and the specific insurer you choose. Premiums for the same plan may range from only a few dollars per month from some companies to a few hundred dollars per month from others.
Medicare Advantage plans are different in that they don’t have premiums – instead, these premiums are rolled into an overall health plan premium (which includes medical, pharmacy, etc.). Medicare Advantage premiums vary widely by health plan, region and demographic factors like age, so it’s important to shop around for rates before making a decision. Keep in mind that some Medicare Advantage plans also come with copayments or coinsurance fees.
Flexibility
When choosing between Medigap and Medicare Advantage plans there is a great deal of flexibility when you take into account the varying coverage offered. Both policies include certain core benefits like coverage for hospitalization, doctor visits, and prescription drugs, but their approach to cost sharing and flexibility can differ significantly.
Medigap plans offer greater flexibility than Medicare Advantage in most cases. These plans typically provide supplemental coverage that bridges “gaps” in original Medicare coverage. Medigap plans typically allow beneficiaries to choose any doctor or hospital within the United States who accepts Medicare. However, these plans do not usually cover extra benefits like vision or hearing care, or prescription drug coverage.
Medicare Advantage plans on the other hand are restricted health plan options that are run through private companies such as insurance companies and health maintenance organizations (HMOs). These plans may have a wider range of benefits than what traditional Medicare offers including vision, hearing care or prescription drug coverage (depending on the plan), but at a potentially higher cost-sharing rate than Medigap policies offer. In addition, beneficiaries must select either an HMO or Preferred Provider Organization (PPO) – where provider choice is limited by network size – in order to get the maximum value out of these types of health insurance policies.
Conclusion
Ultimately, there is no single answer to what is the better option for you between Medigap and Medicare Advantage. Both have their advantages and disadvantages depending on your individual circumstances.
Before deciding on a plan, you should carefully consider factors such as your current and future healthcare needs, budget, coverage options and any additional costs or terms associated with each choice. It’s also important to look at the quality of care you would receive under each option. Since Medicare doesn’t cover everything, it’s important to choose a plan that meets all of your healthcare needs.
After considering these factors, you can decide which is the best choice for you – Medigap or Medicare Advantage.
