Is there really a difference between Medigap and Medicare Advantage Plans? Yes, but to understand the differences requires understanding exactly what each one does.
Medigap is the term used for Medicare Supplement (MS) Plans used to pay for all or some of what Medicare Part A and Part B do not cover. This may include Medicare deductibles, coinsurance for items partially covered by Medicare and coverage for items not covered by
There are twelve Medicare approved plans with varying coverages. Most plans pay up to 100% of the Medicare approved amount. Two plans do have cost sharing programs with out-of-pocket cost limits, an attribute shared with Medicare Advantage plans.
A Medicare Advantage Plan (MA) stands in place of Medicare as the primary provider of health coverage. The MA plan provider must provide coverage at least comparable to Medicare Part A and Part B. They may supplement these coverages with additional coverage such as prescription drug or dental insurance.
All MA plans have cost sharing programs where the senior must pay a certain amount of a given charge before the insurance pays anything. The out-of-pocket cost limits for the senior can vary from $3,000 to over $7,000 per year.
Medigap plans will typically have a monthly premium based on the senior’s attained age and will be adjusted annually. Enrolling outside of the open enrollment period can require underwriting approval.
Medicare Advantage plans will have low to no premiums depending on the amount of cost sharing required by the plan. In addition these plans receive government subsidies which normally include the Part B premium paid by the senior.