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The Difference Between Medicare, Medigap and Medicare Advantage

Taking care of an aging family member is a job that can take a toll on your finances. This is why some 63 million Americans rely on Medicare to afford senior healthcare.

However, there is a lot of confusion associated with signing up for Medicare. What part of Medicare covers outpatient medical care? Should you use Medigap to supplement your Medicare plan, or should you just choose Medicare Advantage instead?

Understanding the answers to these questions and the advantages and disadvantages of each of these options can help you figure out how to handle the expenses that come with caregiving.

What Is Medicare?

Medicare is a basic health insurance plan provided by the federal government to adults aged 65 and older. The original Medicare plan comes with two standard parts: Part A is the hospital insurance that covers in-patient hospital care, whereas Part B is health insurance and covers outpatient medical care.

Original Medicare is far from comprehensive in its coverage and only pays for about 80% of approved costs for hospitals, doctors and medical procedures. This is why many older adults also opt for supplement coverage like Medigap.

What is Medigap?

Medigap plans help pay for healthcare services that are not covered in your traditional Medicare policy, including copays, coinsurance and out-of-pocket hospital costs not included in Medicare Part A. These plans are usually provided by private insurance companies and must follow state and federal laws.

Pros and Cons of Medigap

Nationwide Coverage: You can use any hospital or doctor in the United States who accepts Medicare. There are even Medigap options that cover emergency care outside the U.S.

Coverage Limit for Out-of-Pocket Costs: Each Medigap plan offers specific benefits with clearly specified out-of-pocket costs.

Renewable: Even if your loved one’s health needs to change, their insurance provider cannot cancel their policy as long as they pay their premium.

Drug Coverage: Medigap only covers related to Part A and Part B. For prescription drug coverage, you will have to pay a separate premium for a Medicare drug plan (Part D).

Pre-Existing Health Conditions: Not only do retirees with pre-existing conditions have to wait six months for coverage, but their insurance provider can also refuse to reimburse any out-of-pocket expenses associated with treatments during the waiting period.

High Monthly Premiums: Retirees with Medigap plans have to pay an additional premium on top of their Medicare Part B premium. The average premium can range from $67 to $481 per month, which can be quite steep for some seniors.

What Is Medicare Advantage?

Medicare Advantage is an alternative option to Medicare and its supplemental healthcare plans. In contrast to the original Medicare, Medicare Advantage plans offer various benefits, premiums and copays..

Pros and Cons of Medicare Advantage

Coverage: All Medicare Advantage plans must cover all the medically necessary services included in the original Medicare. They can also cover extra benefits not included in Medicare. Most plans also cover prescription drugs.

Choice of Doctors and Hospitals: For non-emergency care, you can only use healthcare providers who are in the plan’s network or you will have to pay out of pocket. Though there are plans that offer non-emergency coverage out-of-network, they are usually more expensive. You also need a referral to see a specialist, which you don’t for Medigap.

Costs: You have to pay a separate premium for Medicare Advantage in addition to the premium for Medicare Plan B. Medicare Advantage premiums can come up to an average of $21.

Out-of-Pocket Costs Coverage: Plan must generally cap annual out-of-pocket costs at $7,550 for in-network services. This can go up to $11,300 for in-and-out-of-network providers combined.

Signing up for Medigap and Medicare Advantage plans can be intimidating on your own. If you have any questions about senior healthcare insurance options, contact Oasis Senior Advisors at 475.619.4123 or 914.356.1901, or fill out this online form and let us help you with the process.

Oasis Senior Advisors


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Paul and Susan Doyle

Certified Senior Advisor®

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