When individuals go on to Medicare they will often make a choice between a Medicare Advantage Plan and Medigap plan to supplement their Medicare policy. Medicare Advantage and Medigap plans are both offered through private insurance companies, but they are very different. Medigap is supplement and helps to fill gaps by paying out-of-pocket costs. Medicare Advantage plans replace Original Medicare and generally provide additional coverage. You can choose to buy one or the other, but you cannot have both a Medigap policy and a Medicare Advantage plan at the same time.
What is the different between a Medicare Advantage Plan and a Medigap Policy?
The biggest difference between Medicare Advantage Plan and Medicare supplemental insurance is the way they operate with Medicare.
Medigap policies cover some of the gaps that Original Medicare doesn’t pay for; such as coinsurance, deductibles and coinsurance. Original Medicare only pays 80 percent for Medicare-covered services such as doctors’ services and outpatient medical services and supplies.
Medicare Advantage Health Plans are similar to private health insurance. Most services, such as office visits, lab work, surgery, and many others, are covered after a small co-pay. Plans might offer an HMO or PPO network and all plans place a yearly limit on total out-of-pocket expenses. Each plan has different benefits and rules. Most provide prescription drug coverage. Some require a referral to see a specialist while others do not. Some may pay a portion of out-of-network care, while others will cover only doctors and facilities that are in the HMO or PPO network.
Selecting a plan with a low or no annual premium can be important. But it's also essential to check on copay and coinsurance costs, especially for expensive hospital stays and procedures, to estimate your possible annual expenses. Since care is often limited to in-network physicians and hospitals, the quality and size of a particular plan’s network should be an important factor in your choice.