Page Reviewed / Updated – August 27, 2020

Original Medicare provides good basic healthcare coverage, but it only pays about 80% of approved costs for doctor’s office visits, hospital stays and medical procedures. In most cases, it doesn’t cover services like dental care, long-term residential care, hearing aids and routine foot care. Those who need services that Original Medicare doesn’t cover will have to pay for those services themselves unless they have Medigap or a Medicare Advantage plan.

The Difference Between Medigap and Medicare Advantage

Medigap Plans

Medigap is supplemental health insurance that is purchased from private health insurance companies licensed to sell Medigap policies. These plans aren’t connected with or endorsed by the federal Medicare program. With the exception of emergency medical benefits during foreign travel, they don’t cover additional healthcare services and instead fill the gaps in Medicare Part A coverage. Some costs that a Medigap policy might cover include deductibles, co-pays and coinsurance.Medigap plans are labeled as Plans A, B, C, D, E, F, G, K, L, M and N, each with a different standardized set of benefits. As of January 2020, new Medigap plans don’t cover the Part B deductible. Additionally, policies sold after January 2006 aren’t allowed to cover prescription drugs.

Medicare Advantage

Medicare Advantage, which is also referred to as Medicare Part C, is an alternative to Original Medicare. MA plans are offered by private companies that are approved by Medicare, and they provide coverage for services covered by Original Medicare Parts A and B. Some MA plans also cover extra services like dental, hearing, vision and prescription drugs.

Because MA plans are sold by private companies, there are several types of plans, each with their own unique coverage options and rules for how policyholders receive services, such as whether they need a referral to see a specialist or whether they have to receive healthcare from in-network providers.

Medigap policies don’t work with MA plans, meaning that they can’t be used to cover the MA plan’s co-payments, deductibles or premiums.

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Choosing Between Medigap and Medicare Advantage

When deciding between Medigap and Medicare Advantage, there are several factors to consider.

Costs

When evaluating how much a health insurance plan costs, the monthly premium is just one factor to consider. Other factors include whether the plan covers extra benefits and what cost-sharing expenses, such as co-pays and deductibles, are required.

Lifestyle

Those who frequently travel or spend part of the year living in a different area of the country may face challenges when it comes to finding Medicare Advantage in-network providers. In contrast, Original Medicare and Medigap can be used at any healthcare provider that accepts Medicare.

Health

Unlike Original Medicare, Medicare Advantage plans have maximum annual out-of-pocket limits, which can save policyholders with chronic health conditions a lot of money. On the other hand, those with Medicare Advantage plans are often more limited in where they can receive care. Another thing to consider is whether expensive drugs or equipment, such as supplies for managing diabetes, are covered by the Medicare prescription drug plan or if there’s a Medicare Advantage plan that provides the necessary coverage.

Benefits

Many Medicare Advantage plans provide coverage for services that aren’t covered by Original Medicaid and Medigap, such as long-term care, vision coverage and hearing aids. While premiums may be higher, some seniors may save more money in the long run by signing up for a more comprehensive Medicare Advantage plan.

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