Medicare and Medigap: What's the Difference?
WHEN IT COMES TO signing up for Medicare, there's plenty of confusion. Which part of the four-part program covers hospital stays? Do all parts help pay for prescription drugs? What's the difference between Original Medicare, Medicare Advantage and Medicare Supplement Insurance?
Medicare itself has four parts. Part A (hospital insurance) and Part B (health insurance) come standard in every Original Medicare Plan. Part C is called Medicare Advantage, and it's an alternative to a standard Medicare Plan that offers some additional benefits like prescription drug coverage. Stand-alone prescription drug plans, or Part D, cover prescription drugs for those who want to keep their Original Medicare plans. And then there is Medigap, or Medicare Supplemental Insurance.
Medicare Supplement Insurance plans are private health insurance plans that can help you pay for the "gaps" in your traditional Medicare policy -- such as copayments at a doctor's office, coinsurance at skilled nursing facilities and out-of-pocket hospital costs not covered by Medicare Part A. There are 10 different types of Medicare Supplement Insurance plans, each designated by a letter of the alphabet (you can find details about all 10 plans at Medicare.gov). In most states, the benefits are the same no matter what insurance company you purchase the plan from, though each plan covers different things. Premium prices for each of the 10 Medigap plans varies depending on the benefits offered, and the premiums are separate from your regular Medicare premiums.
[See: 10 Medical Services Medicare Doesn't Cover.]
To be eligible for a Medicare Supplement Insurance plan, you must already have Medicare parts A and B. The most comprehensive Medicare Supplement Insurance plan is Plan F, which covers a comprehensive array of benefits. Plan C, which covers nearly everything Plan F covers except excess charges, meaning a physician can charge up to 15% above the Medicare-approved amount and this is passed on to the patient and billed directly to them. Plan F are the most popular plans, according to Joe Baker, president emeritus of the Medicare Rights Center, a nonprofit that helps older adults understand Medicare benefits. However, these plans are not available to people new to Medicare starting on Jan. 1, 2020 because they cover the Part B deductible. Individuals who were eligible for Medicare before Jan.1, 2020, but not yet enrolled, may be able to buy one of these plans.
Medicare Supplement Insurance plans are renewable even if you develop health problems, and as long as you pay your monthly premium, your insurance carrier generally cannot terminate your policy. Prices depend on your age, where you live, the insurer and type of plan you select. In general, Medicare Supplement Insurance plans usually do not cover long-term care, vision or dental care, hearing aids, eyeglasses or private-duty nursing. A Medicare Supplement Insurance plan can also only cover one person. If your spouse wants Medicare Supplement benefits, he or she will need his or her own policy.
Since a Medicare Supplement Insurance plan supplements your regular Medicare plan, while Medicare Advantage is an alternative way of getting Medicare, you cannot purchase a Medigap plan to help you pay for your Medicare Advantage plan.
The advantage of a Medicare Supplement Insurance plan is that you may have a larger network of providers to choose from. If you have a health condition, a Medicare Supplement Insurance plan may also provide better ways to pay for medical expenses. If you can afford to spend a bit more, a Medicare Supplement Insurance plan may be a wiser choice. It may save you a lot of money in the long run if you need extensive medical services or treatments.
[Read: How to Avoid Medicare Scams.]
Regardless of whether you opt to buy a Medicare Supplement Insurance plan or Medicare Advantage plan, Baker advises not only exploring plan details, but also speaking with providers, neighbors and others who have already purchased the plan you are considering.
The best time to buy a Medigap policy is during your six-month Medigap Open Enrollment Period, which starts the month you turn 65 and are enrolled in Medicare Part B. You generally will get better prices and more choices among policies, according to Medicare.gov. You may also be able to enroll other times of the year, but keep in mind that you may have a limited number of plans to choose from at that point.
On the other hand, if you have a Medicare Advantage plan, you may opt to change your plan during the Medicare Annual Election Period, which runs from Oct. 15 to Dec. 7 or the Medicare Advantage Open Enrollment Period, which runs from January 1 to March 31.
You can sign up for a Medicare Supplement Insurance plan or Medicare Advantage plan online or by calling Medicare at 1-800-633-4227. (TTY users can call 1-877-486-2048, and the line is open 24 hours a day, seven days a week.) You can explore Medicare Plan Finder to see available plan options in your area.
Evi Heilbrunn is a Product Manager at U.S. News. You can follow her on Twitter or email her at eheilbrunn@usnews.com
