Medigap and Medicare Advantage Plans - How They Differ

The Medicare Open Enrollment period is rapidly coming to a close. In less than two weeks -- Tuesday, December 7, 2021 -- the enrollment period will end and if you have not made a decision, now is the time to do so. If you are still trying to figure out if a Medicare Part C plan (Medicare Advantage) or a Medigap plan (Medicare Supplemental Insurance) is right for you, we are doing this final blog to help you understand the differences and hopefully make the choice that fits your needs.

Researching plans is important

"We have discussions about Medicare with our older clients who are doing Estate Plans to make sure that they are in the right Medicare plan for them and their healthcare needs," said certified elder law attorney Attorney RJ Connelly III. "The right Medicare plan is just as important as other parts of their estate planning requirements. For instance, are they paying too much for their plans given the health conditions present? Maybe the plan they are thinking of choosing could cost them more in the long run given rehabilitation or prescription needs and the high deductibles. These are all questions that arise and need to be discussed - and not just once - but every time the enrollment period rolls around. With age, needs and circumstances often change, sometimes dramatically."

"The right Medicare plan is just as important as other parts of estate planning requirements...questions that arise need to be discussed -- and not just once, but every time the enrollment period rolls around. With age, needs and circumstances often change, sometimes dramatically." ---- Attorney RJ Connelly III

During this enrollment period, those who are unhappy with the Medicare Advantage Plan they bought last year can explore other plans and for those who want to opt-out altogether from these plans and just return to their original Medicare, they can do that as well, but make sure it is an informed choice.

One area of confusion that usually arises with the enrollment season is an understanding of the difference between Medicare Advantage Plans and Medigap Plans (Medicare Supplemental Insurance). Let's take a look at these.

Medigap Plans (Medicare Supplemental Insurance)

This has been confused by many seniors with Medicare Advantage Plans that are being heavily advertised on television. Medigap, usually known as Supplemental Medicare Insurance, can be purchased usually when the person begins Medicare coverage and covers the "gaps" that Original Medicare does not cover. These plans consist of A, B, C, D, F, HD-F, G, HD-G, K, L, M, and N plans. If a Medigap plan is not purchased at that time (and for some they may not be eligible at that time anyway), trying to buy it after you have been on an Advantage Plan may be next to impossible.

Medigap covers some or all out-of-pocket costs that are associated with original Medicare. This may include deductibles, co-payments, and even coinsurance. This minimizes seniors' financial liabilities and under original Medicare, there is no limit to the out-of-pocket costs as compared to Medicare Advantage Plans which limit these costs to an annual amount. Private insurers are required to offer Medigap policies only when people first enroll in Medicare (there are a few special situations that allow this to happen at other times). If this is not done at that point, insurers can refuse to write such a policy for those with pre-existing conditions like heart disease and diabetes.

"For 2022, there are twelve types of Medigap plans (Medicare Supplemental Insurance), each with standard benefits to the senior and most covering coinsurance and copayments for Part A, Part B and hospice care." --- Attorney RJ Connelly III

"For 2022, there are twelve types of Medigap plans, each with standard benefits to the senior and most covering coinsurance and copayments for Part A, Part B, and hospice care," stated Attorney Connelly. "Some plans pick up coinsurance costs for skilled nursing homes while some do not." Drug costs, however, are not included in these plans. Premiums for Medigap depends on the senior's age, gender, where they live (yes, some areas of the country are riskier than others), and smoking history. Costs for these policies run from around $100 a month to as high as $250 or more.

If you originally just had Part A of Medicare and now want to enroll in Part B, insurers are required to offer you a Medigap policy, no matter what your health status is, for the next six months. However, insurers can exclude you from coverage or even charge higher premiums if you have been recommended for a surgical procedure or have pre-existing conditions like asthma, chronic bronchitis, or rheumatoid arthritis.

What to Remember About Medigap (Supplemental Insurance)

As a quick review, here are some things to remember about Medigap (Supplemental Medicare Plans):

  • In order to qualify for a Medigap plan, you must have original Medicare Parts A and B.

  • Medigap Plans have a separate charge over and above the cost of your original Medicare premiums.

  • Medigap plans cover only the plan holder. Spouses must sign on for their own plan, if eligible.

  • Dropping your Medigap policy could be a mistake as you may not be able to get it back.

  • If you qualify for a Medicare Advantage Plan (Medicare Part C), it is illegal for anyone to sell you a Medigap Plan unless you switch back to Original Medicare.

Medicare Advantage Programs

The ads you are currently seeing on television, for the most part, are for Medicare Part C (although there are a limited few about Medigap enrollment). These programs, known as Medicare Advantage Plans, can provide you with more help at a lower cost than the traditional Medicare with Medigap (Medicare Supplemental Insurance) plans.

Instead of paying for Parts A, B, and D, you enroll through a private insurance company that may cover everything that is provided by Parts A, B, and D as well as some additional services. In most cases, you pay your Medicare Part B (the standard monthly premium for Medicare Part B will be $170.10 for 2022, an increase of $21.60 from $148.50 in 2021) along with your Medicaid Advantage premium.

Medicare Advantage commercials are dominating the airwaves.

These programs work like private health insurance plans with services such as office visits, lab work, surgery, and other medical procedures covered after a small co-pay. These programs range in cost from area to area and could offer HMO or PPO network plans that place a limit on your total out-of-pocket costs.

Just like private plans, each has its own rules and benefits and most provide prescription coverage. Some plans may require a referral from your PCP to see a specialist while others have no such provision. However, most Medicare Advantage plans limit you to doctors within the HMO or PPO and have limitations on out-of-network providers. Also, like private plans, each has different benefits and rules.

"Medicare Advantage ads are pervasive during the enrollment period because Medicare pays the insurance companies for each client they enroll. Although they are not scams, they do paint rosy pictures of coverage and highlight giveaways to encourage enrollment. High out of pocket costs to providers under Medicare Advantage plans could add up to more than the cost of a Medigap plan." --- Attorney RJ Connelly III

As stated earlier, each Medicaid Advantage plan may have rules and benefits. Some may require a referral to see a specialist while others won’t. Some may pay a portion of out-of-network care, while others will only cover you for doctors and facilities that are in the HMO or PPO network. Traditional Medicare and Medigap policies cover you if you go to any doctor or facility that accepts Medicare.

Know the pro's and con's of Medicare Advantage

The other drawback to most Medicare Advantage plans is that they only operate within a certain region. So if you are a resident of Rhode Island with a house in Florida, you may not be covered. In cases like that Medigap is a better option, however, there are some Medicare Advantage plans that do cover seniors almost anywhere, even when traveling out of the country.

Medigap programs usually cost more than Medicare Advantage plans but on the plus side, they may have lower out-of-pocket costs. Medicare Advantage plans can cost less while covering more services however may have higher co-pays or deductibles. The bottom line is that doing your homework is the best bet. When you are on a limited income, every dollar saved is important. So doing your research on what works best given your situation is important.

Scams During Open Enrollment

As the end of the open enrollment period approaches, there will be a rush for eligible individuals to sign up. Here at Connelly Law, we have received a number of calls from seniors who are beginning to become concerned about enrollment because that deadline is coming. "We know that when the enrollment period begins to wind down, scam artists are more likely to be successful in duping seniors who have waited until the last minute and do not have the time to research the available options," said Attorney Connelly. "Not only do they attempt to sell fraudulent policies, but they also gather unsuspecting seniors' sensitive personal, health, and financial information."