Almost every person turning 65 hits the same fork in the road. You can pick Medicare Advantage. Or you can pick a Medigap plan with Original Medicare. Both are real options. Both have real trade offs. The right answer depends on you, not on a TV ad. Here is how to think about it in simple terms.
What is Medicare Advantage?
Medicare Advantage is a private insurance plan. It takes the place of Original Medicare. You still pay your Part B premium. Then you pick one company to handle all your care. UnitedHealthcare, Humana, and Aetna are common choices.
Most plans add things like dental, vision, hearing, and a small grocery card. Many cost zero dollars a month beyond your Part B premium.
What is Medigap?
Medigap goes with Original Medicare. It does not replace it. You keep your red, white, and blue Medicare card. You also get a Medigap card from a private company.
The Medigap plan pays the parts of the bill Medicare does not pay. There is no network. You can see any doctor in the country who takes Medicare.
How they pay for your care
Medicare Advantage uses copays. You go to the doctor, you pay a small fee. You go to the ER, you pay a fee. Hospital stays might be a few hundred dollars a day. There is a yearly cap. Once you hit it, the plan pays everything for the rest of the year.
Medigap works differently. There are very few copays. The plan covers most or all of what Medicare does not. You pay a higher monthly bill, but you almost never pay at the doctor's office.
Doctor networks
This is the biggest difference between the two plans.
Medicare Advantage has a network. You must use doctors and hospitals in that network. If your doctor is not in, you pay more, or you may not be covered at all.
Medigap has no network. Any doctor in the country who accepts Medicare will take your plan. This matters if you travel a lot, have homes in two states, or want to keep specific doctors.
The cost picture
On the surface, Medicare Advantage looks cheaper. Many plans cost zero dollars a month. Medigap can cost a hundred dollars or more a month.
But when you get sick, the picture flips. With Medigap, your costs at the doctor stay near zero. With Medicare Advantage, every visit and every test costs you something. A bad year of health can cost you thousands of dollars on Medicare Advantage before the yearly cap kicks in.
When Medicare Advantage makes sense
Pick Medicare Advantage if you:
- Are in good health and rarely see a doctor
- Have doctors who are in the plan network
- Like extras like free gym memberships, dental, or grocery cards
- Want the lowest monthly bill
- Stay close to home most of the year
When Medigap makes sense
Pick Medigap if you:
- Want to see any doctor in the country
- Travel often or split time between states
- Have ongoing health issues and use care regularly
- Want costs you can plan for, even in a bad year
- Want to keep your specialists no matter what
The one thing many people miss
Going from Medigap to Medicare Advantage is easy. You can switch during the fall enrollment window each year.
Going from Medicare Advantage to Medigap is harder. In most states, the Medigap company can ask health questions. If you have new health issues, they can charge you more or turn you down. So pick carefully the first time.
The bottom line
Both plans can work. Both can be a mistake if you do not match the plan to your life. The choice between Medicare Advantage vs Medigap comes down to how much you value low monthly bills versus low costs when you actually use care. A short call can help you sort through it for your specific situation.