Original Medicare Vs. Medigap Vs. Medicare Advantage

Every day, 10,000 adults in the US reach age 65, making them eligible to enroll in Medicare. But for many, this process only brings with it more confusion and nerves.

According to a study from the National Council on Aging, more than a quarter of respondents expecting to start Medicare said that they feel “nervous” about enrolling; another 14 percent described themselves as “overwhelmed.” What’s more, nearly half of those surveyed reported that they “never shopped around to find the best coverage.”

When it comes to Medicare, there are options out there. But slogging through paperwork, reviewing all of your choices, and navigating the timeline can be difficult.

One important place to start may be getting a handle on the difference between three different Medicare coverage options: original Medicare, Medigap, and Medicare Advantage.

How Does Medicare Work?

When Americans turn 65, they become eligible for Medicare coverage through the government. There are different parts of Medicare, and each covers different services:

  • Medicare Part A covers inpatient hospital stays and some in-home healthcare services
  • Medicare Part B is medical insurance, and it covers certain doctor’s services, outpatient care, and preventive services
  • Medicare Part D provides prescription drug coverage

With “original” Medicare, the government pays its share for covered services to the Medicare recipient’s healthcare provider. But it’s important to keep in mind that Medicare is not free.

Medicare recipients still pay a monthly premium for coverage. On top of that, Medicare beneficiaries are still responsible for covering certain costs out of their own pockets, including deductibles, copayments, and the amount of non-covered medical services. These expenses can pile up significantly over time and are why many health professionals agree that . . .

Original Medicare Leaves Gaps in Your Coverage

Even with an original Medicare policy in place, you can easily spend thousands of dollars each year for out-of-pocket medical expenses.

To start with, there are out-of-pocket costs, including deductibles, copayments, and coinsurance. Original Medicare coverage comes with a high deductible for hospital stays, as well as significant coinsurance payments for extended hospital stays and copayments for doctor’s visits and other outpatient medical services.

It’s also important to keep in mind that with traditional Medicare, there is no annual limit on your out-of-pocket expenses, meaning that your bills could just continue to pile up without stopping if you were to ever become seriously ill.

What’s more, Medicare prescription drug coverage comes with a coverage gap. Often known as the “Donut Hole,” this Part D coverage gap kicks in when a Medicare beneficiary has spent a certain amount on covered prescription drugs. After this first dollar limit is hit, you must pay your drug costs out of your own pocket until you hit the next set dollar amount (a yearly limit that is determined by your policy). At that point, your Part D coverage will kick back in.

For more information on the “Donut Hole” gap in prescription drug coverage, be sure to check out our other resources on the topic, available here.

For consumers looking to avoid these costly gaps, there are two options: Medigap plans and Medicare Advantage plans.

How Does Medigap Work?

Medigap, also called Medicare Supplement insurance, is private health insurance designed to help pay some of the healthcare costs that original Medicare doesn’t cover, including copayments, coinsurance, and deductibles. For Medicare beneficiaries, this supplemental coverage can provide a sense of security about both the predictable and unexpected costs associated with medical care.

Medigap coverage comes with an additional premium, so with a Medigap plan, you will have a total of four premiums to pay (Medigap plus the premiums for Medicare Parts A, B, and D). However, Medigap may save you significant money in the end. There are 10 major types of Medigap plans offered by insurance carriers, each with its own unique set of benefits and costs.

Regardless of the “flavor” of Medigap you choose, this coverage can help significantly ease the burden of out-of-pocket costs, while also simplifying the process.

Medigap plans are generally accepted by any doctor who accepts Medicare, meaning that you don’t need to worry about staying in-network or getting a referral to see a specialist.

Having Medigap also typically means less hassle and paperwork for you. With Medigap, your plan provider will pay its portion of the bill automatically, meaning that you won’t need to worry about paying doctors or care providers directly.

How Does Medicare Advantage Work?

Sometimes called “Medicare Part C,” Medicare Advantage plans are also offered through private insurance carriers. In most cases, Medicare Advantage covers many of the same things provided by Medicare Parts A, B and D; and some plans offer certain additional services. Some Medicare Advantage plans can also provide you with more options to control your costs that you’ll get with original Medicare.

With Medicare Advantage, most services will require a copay, and your plan might put a cap on annual out-of-pocket expenses. Many Advantage plans also include prescription drug coverage.

There are many different types of Medicare Advantage plans on the market offering significantly different coverage and payment options, rules, and restrictions between them. For example, with many Medicare Advantage plans, you may be limited to only seeing healthcare providers in a set network and require you to get referrals to see specialists.

Making the Right Choice for Your Needs

As you weigh the pros and cons of Medigap and Medicare Advantage, there are many different things to keep in mind, including factors like:

  • Pricing
  • Plan flexibility and choice
  • Your unique health needs
  • Your lifestyle

But making the right choice is not always as clear-cut as it might seem. For instance, while a Medicare Advantage plan may offer lower monthly premiums, Medigap coverage often keeps out-of-pocket payments significantly lower, which may make it the better value over time. Similarly, many Medicare Advantage plans are limited to one geographic area, whereas Medigap can help provide greater flexibility for snowbirds and world travelers.

Ultimately, figuring out the Medicare option that will best suit your needs can be a tricky proposition. But you don’t need to go it alone. The Enrollment Specialists are here to help.

How the Enrollment Specialists Can Help

Led by our founder and principal consultant Matt Peebles, the Enrollment Specialists can help demystify Medicare.

When you work with Matt, he’ll sit down with you and really get to know your unique circumstances, and then weigh in the many factors that go into choosing a Medicare plan, including costs, provider networks, and the levels of coverage your health needs require. He’ll talk you through all of it, and all at no cost to you.

From there, Matt can help you choose the option that’s right for you, making sure your costs are minimized while your coverage is always at its peak.

With the right Medicare coverage in place, you could save thousands of dollars every year, which you could put toward the important things, like:

  • Keeping your lifestyle intact
  • Enjoying your major life goals in retirement
  • Safeguarding your financial legacy for your family

And even after you’ve enrolled, for the entire life of your policy, Matt will be your go-to guy whenever you have questions. With Matt on your side, you won’t ever need to bother with the hassles of call centers, online chat rooms, or canned responses. You’ll always be able to get a hold of this health insurance superhero, right when you need him most.

Want to fill in the gaps in your coverage? Ready to say, “I Got A Guy” for all things Medicare? Don’t hesitate to get in touch today to start discussing your options.

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