Folks on Medicare find out quickly that, as nice as it is to have Medicare, the program simply does not pay for everything. Most everyone faces a choice of selecting a private plan to make up some of the difference. The most common choices are either a Medicare Advantage Plan that includes Drugs, or a Medigap Plan combined with a separate Drug Plan. I often get the question, “Which is best?” As with so many such questions, the correct answer is that “It depends.”
The Medigap plans are more accurately called Medicare Supplement Plans and they come in several different options standardized by the federal government into “lettered” plans (Plan C, Plan F, etc). These plans have been around a long time and although each plan varies, they can pay some or all of your Part A (Inpatient) Deductible, Part B (Outpatient) Deductible, the other 20% of the Medicare approved amount for certain services, the balance left over when doctors charge in excess of the allowed amount, some coverage for out of the country needs and so forth. What is common about them is that they can be used with any doctor that accepts Medicare. So, no networks, no referrals, no having to choose a Primary Care Provider. Medigap Plans do not cover drugs so it is necessary to purchase a separate Part D Drug Plan (PDP) to cover that aspect of your health care.
Medicare Advantage Plans have been around in one form or another since the 1970’s. Rather than filling in the “gap” in what Medicare doesn’t pay, they actually replace Medicare for your coverage. They typically don’t have deductibles for inpatient or outpatient care but it is common for them to have co-pays for doctor visits, a certain number of days in the hospital and so on. Many are HMOs and some are PPOs, but what they generally have in common is a preferred network of doctors and providers. If you go out of network you either pay more or, in some cases, have no coverage at all. The exception is that emergency and urgent care is almost always covered at in-network pricing regardless of where you are when the incident happens. Medicare Advantage Plans generally have the option of including Drug coverage in the plan. Medicare Advantage Plans, by and large, cost less than a Medigap Plan combined with a separate Drug Plan.
People who travel a lot, perhaps spend months in Arizona or elsewhere, may find Medigap or Supplement Plans to be a better fit, despite the higher cost, because there are no network restrictions. For people who get their primary care near their home and might only need emergency care when occasionally traveling, may find a Medicare Advantage Plan more to their liking, but it is important to examine the network and make sure it works for you.
Finally, since Medigap plans tend to leave you with less to pay out of pocket for doctor visits and hospital stays, I also usually recommend that you carefully consider your own health history before purchasing either type of plan. If you visit the doctor often or have just a couple of hospital stays, the savings of the Medicare Advantage lower premiums can quickly disappear in multiple copays.
As with all such decisions, I recommend that you sit down with an insurance agent that specializes in this sort of coverage, or do some very careful research on your own. To set up an appointment with me, just phone or return the Contact Form. To research on your own, the best place to start is the official government website, Medicare.gov.