| Medicare vs Medigap Plans

Get the latest updates and news straight to your inbox.

senior insurance | supplemental health insurance | medicare | medigap | Medicare Supplement

WHAT YOU NEED TO KNOW ABOUT MEDICARE VS MEDIGAP PLANS

When it comes to choosing Medicare and Medigap plans, it’s essential to consider your options carefully. Medigap isn’t an alternative to Medicare. Instead, it’s a buffer that helps control your healthcare costs.


In fact, you have to be enrolled in Medicare Parts A and B to get a Medigap plan. Your supplemental insurance that you get through standardized Medigap plans will help you pay the out-of-pocket costs for certain services.

With that said, not everyone decides to get Medigap. Others stick with just Original MedicareParts A and B) or Medicare Advantage (Part C), while some may supplement their Medicare insurance with a Prescription Drug Plan (Part D).

It’s important to remember, though, that you cannot purchase Medigap plans if you have Medicare Advantage.

To help you determine if Medigap insurance is right for you, let’s look at seven critical differences between Medicare and Medigap so you can make an informed decision about the latter for you or a loved one.

First, though, we’ll define Medigap so we’re all on the same page.

WHAT IS MEDIGAP?

Medigap plans, or Medicare Supplement insurance plans, are a type of supplemental health insurance that seniors buy to reduce their out-of-pocket healthcare expenses. It reduces copayments, deductibles, and coinsurance payouts in specific areas, such as hospital stays, skilled nursing facility services, and sometimes even foreign travel emergencies.

After you enroll in one of the 10 Medigap plans, you’ll use both your Original Medicare and Medigap plans to cover your healthcare expenses. Instead of paying a $20 copay to visit your general practitioner, for instance, you might be able to visit the doctor for free.

Doctor and patient discussing Medicare

1. YOU CAN CHOOSE YOUR MEDIGAP INSURER

Unlike Medicare which is provided by the government, Medigap plans are administered by private insurance carriers. If you decide to go this route, you can choose any insurance company in your state that offers the plan you desire.

Additionally, Medigap plans generally let you see any doctor who accepts Medicare. For this reason, many people choose to supplement their Original Medicare with Medigap rather than choosing Medicare Advantage, which usually requires you to use a provider within the plan's network.

The freedom of choice is one main reason people choose to take out Medicare supplemental insurance. Instead of feeling boxed in with providers and insurance carriers, you gain more control over two of the things that matter most in life: healthcare and financial security.

2. THERE ARE 10 MEDIGAP PLANS AVAILABLE

You might already know that there are four types of Medicare coverage:

  1. Part A (Original Medicare, which covers hospital insurance)
  2. Part B (Original Medicare, which provides medical insurance)
  3. Part C (Medicare Advantage, which offers both hospital and medical insurance)
  4. Part D (Prescription Drug Coverage)

Medigap, by contrast, supplements Original Medicare Parts A and B and has 10 distinct plans: A, B, C, D, F, G, K, L, M, and N. That is, unless you live in Massachusetts, Minnesota or Wisconsin where policies differ. 

Each plan offers a unique set of coverage benefits so you can find a plan based on your healthcare needs. If you never travel internationally, for instance, you may not need one of the plans that offers foreign emergency coverage.

Since the plans are standardized, every insurance company that offers a Medigap plan must provide the minimum coverage levels described by Medicare. This makes comparison shopping much easier because you can simply compare prices and service.

3. MEDIGAP INSURANCE CAN LOWER DEDUCTIBLES & COPAYMENTS

Each Medigap insurance plan reduces deductibles, copayments, or coinsurance expenses by a different amount. You’ll pay more out-of-pocket if the plan only covers 50 percent of Medicare Part B copayments than if you choose a plan that covers 100 percent.

It’s important to note that Medicare only covers about half of the average consumer’s total health costs. According to a recent Newsweek piece, seniors’ out-of-pocket health expenses can soar to as much as $350,000 from retirement on.

When you pay less out-of-pocket for medical treatment, you gain more financial freedom.You can also accurately predict future costs based on your insurance premiums and any required deductibles or copayments.

4. THERE ARE TWO SEPARATE PREMIUMS

As mentioned above, Medigap plans don’t replace Medicare. They supplement Medicare Parts A and B.

You’ll pay your Medicare premium as well as your Medigap premium. They’re both typically divided into 12 monthly payments, which makes them easier to handle from a budgetary standpoint.

This means there are also two sets of coverages. You’ll be covered by Medicare as well as Medigap.

Medigap premiums generally differ depending on the plan’s coverage benefits. The more comprehensive the benefits, the more expensive the monthly premium.

In most cases, the amount you’ll pay monthly for Medigap is much lower than the out-of-pocket costs not covered by Original Medicare.

5. MEDIGAP PLANS COST MORE UP FRONT

Many consumers decline to get Medigap insurance because they don’t want to pay the additional premiums. It’s true that Medigap adds an additional upfront expense.

However, you can save significant cash in the long run, especially if you suffer a serious accident or injury. Furthermore, the added expenses are spread out over the life of the policy, so you can budget for them in advance.

It’s kind of like buying car insurance. Maybe your vehicle will never get stolen, but if it does, you want the coverage.

6. PART C MIGHT RESTRICT YOU TO DOCTORS IN NETWORK

Medicare Part C plans, or Medicare Advantage health plans, usually come with network restrictions, meaning you don’t have the freedom to see any provider who accepts Medicare. If you enjoy seeing your current general practitioner, for instance, you might not want to bind yourself to a plan that doesn’t include him or her in network.

With Medicare Advantage, you can choose between HMOs and PPOs. If you go with an HMO, you’re restricted completely to doctors in network. On a PPO, you can see an out-of-network provider, but you’ll pay more for the privilege.

Medigap plans, by contrast, allow you to see any physician or provider who accepts Medicare. This freedom can allow you access to a greater number of general practitioners, specialists, and hospitals.

If you live in a small town or rural area, such freedom can have an even stronger impact on your healthcare. You already have more limited access to providers, so you’ll want as many choices as possible given your geographic location.

7. MEDICARE ADVANTAGE HEALTH PLANS AREN'T ALWAYS COMPREHENSIVE

There is another alternative to Original Medicare and Medigap plans. Medicare Part C — also called an Advantage plan — provides additional coverages through private insurance carriers.

The problem is that those plans aren’t always as comprehensive as you need them to be.

With Medicare Advantage, you’ll likely have to pay copays and deal with paperwork in your provider’s office. Medigap plans usually involve the insurer paying the provider directly, so you have less hassle when you need treatment.

Deductibles can also be higher with Medicare Advantage plans, while Medigap tends to cover most or all deductibles and coinsurance or copayment expenses, depending on the plan you choose.

Before deciding on Part C, research the coverage levels. Lots of comparison shopping will help protect your health and financial future.

CONCLUSION

Knowing the differences between Medicare and Medigap plans can help you make informed decisions. It’s easy to confuse the two types of insurance, especially if you’ve never researched your retirement health-care options before.

Now that you’re more familiar with the available plans, start shopping for Medicare supplemental insurance today.

New call-to-action

Get the latest tips, news, and resources

New call-to-action

Get the latest tips, news, and resources