Medicare Advantage (Part C) vs. Medicare Supplement (Medigap): Which Is Cheaper?

When navigating the landscape of Medicare, beneficiaries often find themselves comparing Medicare Advantage (Part C) plans to Medicare Supplement (Medigap) policies. One of the biggest questions on their minds is cost. Which is cheaper – Medicare Advantage or Medigap? The answer isn’t straightforward, as it depends on individual health needs, preferences, and regional variations. Here’s a closer look at both to help you decide.

1. Overview:

Medicare Advantage (Part C) Plans: Medicare Advantage plans are offered by private insurance companies and bundle together Part A (Hospital Insurance) and Part B (Medical Insurance), and often Part D (Prescription Drug) coverage. These plans might also offer additional benefits like vision, hearing, and dental.

Medicare Supplement (Medigap) Policies: Medigap policies are also offered by private companies and act as a supplement to Original Medicare. They help cover some out-of-pocket costs that Part A and Part B don’t cover, such as deductibles, coinsurance, and copayments.

2. Premiums:

Medicare Advantage:

• Some Medicare Advantage plans may have $0 premiums, but this doesn’t mean they don’t have other costs.
• Beneficiaries are still responsible for paying their Part B premium.
• Plans with lower premiums might have higher out-of-pocket costs.

Medigap:

• Medigap policies often have higher monthly premiums compared to many Medicare Advantage plans.
• Beneficiaries are still responsible for their Part B premium.
• After paying the premium, many Medigap policies offer a lot of certainty concerning out-of-pocket expenses.

3. Out-of-pocket Costs:

Medicare Advantage:

• These plans come with an annual out-of-pocket maximum, capping how much you pay in a given year.
• Copays, coinsurance, and deductibles can vary widely from plan to plan.

Medigap:

• These policies can minimize out-of-pocket costs. For instance, a Plan F or Plan G Medigap policy covers virtually all out-of-pocket costs associated with Parts A and B.

4. Extras:

Medicare Advantage:

• Might offer extra benefits like vision, hearing, dental, and even wellness programs.
• Many plans come with Part D coverage.

Medigap:

• Primarily covers gaps in Original Medicare and does not offer added benefits like vision or dental.
• Does not include Part D coverage. If you want prescription drug coverage, you’d need a separate Part D plan.

5. Network Restrictions:

Medicare Advantage:

• Often have network restrictions like HMOs or PPOs. You might pay more if you see providers outside the plan’s network.

Medigap:

• No network restrictions as long as the provider accepts Medicare.

Conclusion:

On the surface, Medicare Advantage might seem cheaper due to lower (or even $0) premiums. And, in fact, they often are. However, you also need to understand how your healthcare needs and utilization can affect your out-of-pocket costs, which can be significant depending on the plan. Medigap policies, with their higher premiums, offer good predictability in costs, which can be especially beneficial for those who frequently need medical services. However, they also typically have higher per-month costs (due to their higher premiums) and may also have higher total out-of-pocket costs, depending on the plan that you select.