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Medicare Advantage vs. Medigap

Many people find that Original Medicare (Part A hospitalization and Part B medical services) won’t cover all of your health care cost and that you may need to supplement your coverage.

The next step is to decide whether a Medicare Advantage or a Medigap plan is right for you.

Medicare Advantage with prescription drug (MAPD) plans include all of the coverage that you get with Original Medicare plus so much more.  MAPD plans can help lower your out-of-pocket maximums. MAPD plans also cover prescription drugs and can include extras, like dental or gym membership. You’ll make the most of your plan when you see doctors in the plan’s network. This type of plan may be right for you if:

  • You want predictable copayments, deductibles and an out-of-pocket maximum.
  • Paying lower monthly payments is important to you.
  • You want to have your Part D prescription coverage bundled with your Parts A and B coverage
  • Want additional coverage even though you have a pre-existing condition
  • You want to see doctors in the plan’s network, which will save you money

Medigap plans work side-by-side with Original Medicare to help cover cost like copayments, coinsurance and deductibles that Original Medicare doesn’t cover. They don’t include prescription drug coverage, but they do give you the flexibility to see any doctor who accepts Medicare. This type of plan may be right for you if:

  • You don’t mind paying a higher monthly premium but paying less-or-nothing- when you get medical care.
  • You live outside of you resident state for more than a month each year and want to see routine health services when you’re away
  • You don’t want to worry about staying in-network for your services to be covered because Medigap plans don’t use networks
  • You don’t care about having a stand-alone Part D prescription drug plan.

What’s the difference between Original Medicare, Medicare Advantage, and Medigap?

Original Medicare is the Part A (hospitalization) and Part B (medical services) coverage you get through the federal government. Part A covers most hospital cost after you pay the first $1,340.00 (your 2017 Part A deductible). Most people don’t pay a monthly Part A premium because they have paid for it through their payroll deductions while working. Part B covers 80% of the cost of doctors visits and everyday medical services after you pay the first $183 (your 2018 Part B deductible). You’ll pay a Part B monthly premium and usually 20% of the Medicare-approved cost for out-patient care. There is no prescription drug coverage included with Original Medicare.

Medicare Advantage plans give you the same coverage you get with Original Medicare, plus they cover a lot more. These plans, offered through private insurers, Priority Health, BCBS, Humana , HAP, are required by the federal government to include all of the benefits you get with Original Medicare, so you won’t lose any coverage, you’ll only get more. Some Medicare Advantage plans include $0 premium, but if it doesn’t , you’ll pay a monthly premium in addition to any Part A and Part B premiums you may have. When you choose one of these plans, you can put away your red-white-and blue Medicare card, you’ll use the card you get from your private insurer.

There are several different standard Medigap (Medicare supplement) plans. Each one has different benefits that help cover costs like copayments, coinsurance, and deductibles that Original Medicare doesn’t cover. The benefits are set by the government so no matter which insurance carrier you choose, the coverage will be the same. The differences you see will be in monthly premiums and customer service performance. Medigap plans do not include prescription drug coverage. These plans also don’t normally include things like dental, hearing or a gym membership. You’ll pay a monthly premium in addition to any Part A and Part B premiums you may have. You can’t enroll in a Medigap plan if you have a Medicare Advantage plan.

How do insurance companies set prices for Medigap policies?

Each insurance company decides how it’ll set the price, or premium, for its Medigap policies. It’s important to ask how an insurance company prices its policies. The way they set the price affects how much you pay now and in the future. Medigap policies can be priced or “rated” in 3 ways:

Community- rated (also called “no-age rated”)
Issue Age-rated (also called “entry -age-rated”)
Attained-age-rated
Community-rated : Generally the same premium is charged to everyone who has the Medigap policy, regardless of age or gender. Your premium isn’t based on your age. Premiums may go up because of inflation and other factors but not because of your age.

Issue-Age-rated: The premium is based on the age you are when you buy (are issued) the Medigap policy. Premium are lower for people who buy at a younger age and won’t change as you get older. Premiums may go up because of inflation and other factors but not because of your age.

Attained- Age- rated: The premium is based on your current age (the age you’ve “attained”) , so your premium goes up as you get older. Premiums are low for younger buyers but go up as you get older. They may be the least expensive at first, but they can eventually become the most expensive. Premiums may also go up because of inflation and other factors.

In the long run you will save the most money with Community-rated or Issue-Age-rated plans. Be sure to ask your agent or the carrier how they price their plans. An informed consumer leads to smart decisions especially when purchasing a Medigap policy.

The best time to buy a Medigap policy

When’s the best time to buy a Medigap policy? This period lasts for 6 months and begins on the first day of the month in which you’re both 65 or older and enrolled in Medicare Part B. Some states have additional Open Enrollment Periods including those for people under 65. During this period an insurance company can’t use medical underwriting. This means the insurance company can’t do any of these because of your health problems:

Refuse to sell you a plan.

Charge you more for a Medigap policy than they charge someone with no health problems.

Make you wait for coverage to start.

While the insurance company can’t make you wait for coverage to start, it may be able to make you wait for coverage related to a pre-existing condition. A pre-existing condition is a health problem you have before the date a new insurance policy starts. In some cases , the Medigap insurance company can refuse to cover your out-of-pocket costs for these pre-existing health problems for up to 6 months. This is called a “pre-existing condition waiting period”. After 6 months, the Medigap policy will cover the pre-existing condition. During the waiting period Original Medicare will cover the pre-existing conditions.

Medigap Insurance

What’s a Medigap policy? A Medigap policy is private health insurance that helps supplement Original Medicare. This means it helps pay some of the health care costs that Original Medicare doesn’t cover (like copayments, coinsurance, and deductibles) These are “gaps” in Medicare coverage.

Medicare Basics

The different parts of Medicare: Medicare Part A (Hospital Insurance) helps cover Inpatient care in hospitals, Skilled nursing facility, hospice, and home health care.

Medicare Part B (Medical Insurance) helps cover-Services from doctors and other health care providers, hospital outpatient, durable medical equipment, and home health care. Preventive services to help maintain your health and to keep certain illnesses from getting worse.

Medicare Part C (Medicare Advantage) Includes all benefits and services covered under Part A & Part B, Run by Medicare approved private insurance companies, Usually includes Medicare prescription drug coverage (Part D) as part of the plan, May include extra benefits and services for an extra cost.

Medicare Part D (Medicare Prescription Drug Coverage), Helps cover the cost of outpatient prescription drugs, Run by Medicare-approved private insurance companies, May help lower your prescription drug costs and help protect against higher cost in the future