By: Kevin Nystrom
For many seniors considering health care, the pivotal question is in deciding between Medigap vs Medicare Advantage. Finding the best option depends on a variety of factors, but it also depends on how much effort you’re willing to expend in order to find the plan that’s best for you.
What is Medigap and Medicare Advantage?
Both are offered by private insurance companies, and both help to cover the gaps of regular Medicare. Medigap refers to a group of supplemental insurance plans that work in conjunction with your regular medicare benefits. In contrast, Medicare Advantage plans are separate from Medicare. In fact, if you purchase a Medicare Advantage plan, you are de-enrolled from Medicare. Following are some more key differences:
The benefits of Medigap plans are standardized by the federal government, meaning that plans sold by different insurance companies all offer the same benefits. Medicare Advantage plans must provide at least the same coverage as Medicare A and B, but vary widely beyond this minimum set of benefits.
Medigap plans offer services from a large network of doctors and caregivers, while the services offered by Medicare Advantage plans are usually in a restricted network.
Medigap plans always require an additional monthly premium. The premiums for Medicare Advantage plans are almost always less than those for Medigap plans, and in many cases there are no monthly premiums for Medicare Advantage plans.
As you’ve probably realized from reading that last bullet point, Medicare Advantage plans are usually cheaper than Medigap plans. So, if you’re willing to deal with the restricted network, i.e., you don’t plan on being a perpetual globetrotter, the Medicare Advantage plan may be the best choice for you. But, of course, there are other factors you should be aware of.
Making the choice of Medigap vs Medicare Advantage
Medicare Advantage can be cheaper, but not necessarily so. For instance, the premiums for those Advantage plans that require them will rise over time, while policy holders of Medigap plans can select options in which the premiums are locked. In addition, out-of-pocket costs for many services such as hospital stays are more expensive with Advantage plans than they are with Medigap plans.
The key is doing the research. Seniors considering a Medicare Advantage plan should read the fine print of the policy benefits to determine that the coverage satisfies their needs. They should also contact their physicians to ensure that the plan they desire is accepted. As well, seniors need to check that all of their prescription drugs are covered.
This can be a lot of work, and for many seniors, the daunting task of verifying all of this information drives them to considering a Medigap plan. As mentioned before, the benefits of Medigap plans are standardized, so there is less variation to consider, and with the wider network of doctors, more assuredness that the plan will be accepted. Nonetheless, for those willing to do the work, Medicare Advantage plans can offer adequate coverage at a lower cost.
So when comparing Medigap vs Medicare Advantage, figure out how comfortable you are evaluating the important details, and don’t rush into a decision!
By: Kevin Nystrom
The senior health plan landscape can be split into two main categories: Medicare and Medigap. All seniors age 65 and older are eligible for Medicare, but because Medicare doesn’t cover all of the services that many seniors need, Medigap (also called Medicare Supplemental Insurance) exists to fill in the gaps. Following are the main points to consider when researching senior health plans.
Keys to the four parts of Medicare
Part A: After turning 65, seniors are eligible for premium-free Medicare part A as long as they paid enough taxes into Medicare while working; a good gauge is if you’re eligible to get Social Security, then you’re likely eligible for premium-free Medicare part A. But part A only covers hospital services such as inpatient care in hospitals and skilled nursing facilities.
Part B: More general medical services such as doctor’s visits and outpatient care are covered by Part B, but it comes with a standard premium of $96.40 per month. This premium is more for seniors with above average incomes.
Part C: Also called The Medicare Advantage Program, Part C offers seniors more robust insurance plans that are sold by private insurers. The benefits include those from Parts A and B, as well as other benefits such as dental and vision. It also often includes Part D coverage (more below). Some Part C plans require policy holders to pay a separate premium in addition to the premium for Part B.
Part D: The final part of Medicare helps offset the cost of prescription drugs. To enroll, seniors with Medicare choose a separate Medicare-approved plan offered by a private insurer, or select a Part C plan that includes Part D coverage.
Keys to Medigap Senior Health Plans
Similar to Part C of Medicare, Medigap plans are offered by private insurers, and they provide more robust coverage than parts A and B of Medicare. While the premiums for Medigap plans are usually more than those for Part C Medicare Advantage plans, the copayments and deductibles are usually less.
Tip: Because Medigap plans and Medicare Advantage plans are both designed to fill the gaps left by regular Medicare coverage, you should NOT consider purchasing both.
Like the parts of Medicare, Medigap plans are identified by the letters of the alphabet. There are 10 different Medigap plans: A through D, F, G, and K through N. Additionally, the benefits for all Medigap plans are standardized, so all same-lettered plans include the same benefits. This makes it easy to compare plans sold by different insurance companies because the only difference is often cost.
It’s also important keep in mind how Medigap plans are rated, which effects how the costs rise over time. There are three ratings: (1) Issue-Age-Rated, in which the premiums are set based on your age at the time of purchase, (2) Community-Rated, in which the premiums are the same for everyone in a defined community, and (3) Attained-Age-Rated, in which the premiums change to reflect your age as you get older. Of the three, only Attained-Age-Rated plans have premiums that rise as you get older. Thus, it is recommended that you find a Medigap plan that is either Issue-Age-Rated or Community-Rated.
Once you’ve processed the above, it’s a good idea to research senior health plan quotes in your area.
By: Kevin Nystrom
What does Medigap cost? Figuring this out requires a little education, and some old-fashioned research. Below you will find a breakdown of how all Medigap plans are priced, and how to find the best price where you live.
Medigap Cost Basics
The first thing to understand about Medigap plans, also called Medicare supplemental insurance plans, is that the benefits for every plan are standardized. This means that the benefits for Medigap Plan A offered by one insurance company will be the same as the benefits for Plan A offered by any other insurance company.
Tip: All Medigap plans are named by letter. Currently, there are 10 Medigap Plans: A through D, F, G, and K through N. This chart summarizes the benefits of all Medigap plans.
Once you know which plan has the right benefits for your needs, you simply need to find the insurance company that offers the best price. But there are a few things to keep in mind about how the prices for Medigap plans are set.
How Medigap Plans are Priced
While the benefits of all Medigap plans are standardized, the costs are not. Insurance companies are free to set the price for premiums for their plans however they see fit. They can also determine if the costs will rise as you get older. There are three ways that insurance companies rate their plans that determine how the costs rise over time:
- Community-Rated (also called No-Age-Rated): Everyone in the community with the same Medigap plan pays the same monthly premium, regardless of age.
- Issue-Age-Rated: The monthly premium is based on your age when you buy the plan. Premiums are more for older purchasers.
- Attained-Age-Rated: The initial premium is based on your age when you purchase the plan, AND, the premium goes up as you age.
It’s recommended that you lock in a price with a Community-rated, or Issue-Age-Rated plan. While the premiums may be more expensive at the outset, they will not rise based on age like the Attained-Age-Rated plans.
Tip: Because the benefits for all plans are subsidized, go with the insurance company that offers the best price, and try to find a plan that is Community-Rated or Attained-Age Rated.
Other Factors Affecting Medigap Costs
Medical Underwriting: This refers to the practice of insurance companies using your medical history to determine the cost of your plan, or in some cases, deny offering you coverage. More health problems = higher costs. However, everyone is offered an open enrollment period, during which insurance companies cannot use medical underwriting. For most people open enrollment lasts for six months after the day they turn 65.
High-Deductible plans: Insurance companies in your area may offer high deductible options for Plans F and J. This means your monthly premiums will be lower, but you’ll have to pay more for medical services before your Medigap coverage kicks-in.
Medicare Select: This is a type of Medigap plan with lower costs, but that requires policy-holders to use a pre-defined network of hospitals, and sometimes doctors. Medicare Select plans are not available in all states.
Now that you know the factors affecting Medigap costs, the next step is to see what plans insurance companies are offering in your area. Get a quote to compare Medigap plans now.
Author: Chris Mihm
Not knowing where and when to find affordable senior health insurance can be frustrating for many people. The fact that insurance information is confusing and full of industry jargon only further serves to aggravate the situation. According to the Kaiser Foundation, lack of affordable senior health insurance is restricting patients’ ability to get the proper care and medical treatment they need. This is a problem that can be addressed, to a large degree, with proper education.
Here are some easy to understand facts and information that pertain to affordable senior health insurance plans. This information can help you choose the right coverage for yourself, your parents, or other seniors that you care about.
The first step is to see if you qualify for Medicare. Medicare is intended to be used by people who are 65 years of age, or older. There are provisions that also provide Medicare health benefits to specific individuals who are younger than 65. People who suffer renal diseases or have become disabled generally who are not yet 65 can meet the qualifications for Medicare.
After you sign up for Medicare you then want to consider additional options. Although Medicare provides a moderate amount of health benefits to nearly 50 million people in the US, it was never meant to be used as a standalone health package. If this is the only health care benefits that you currently have, you most likely do not have enough coverage to take care of all your medical needs. Even using low cost health clinics that are in your community is not enough help to make up the difference.
If you are concerned that Medicare will not meet all your health care needs you will need to select one of the following: A) Medicare Advantage Plan or B) Medigap insurance.
A) Medicare Advantage Plan
With Medicare Advantage, qualified individuals can sign up for plans that often offer more health care benefits and extended coverage options. Medicare Advantage is handled through private insurance companies and provides health care services covered under Medicare Parts A and B and may offer additional services not covered under Medicare. Medicare Advantage plans are usually HMOs but some are PPOs. These plans can even include prescription coverage. Medicare Advantage plans are typically only good within a local coverage area and not all doctors accept these plans. In general Medicare Advantage plans premiums are lower than Medigap plans but copayments for certain health benefits can be much more expensive. While this is often an affordable senior health insurance plan that helps you lower health care costs, it can end up costing more if you have many health insurance needs.
B) Medigap is a popular term used for Medicare supplemental insurance. When you sign up for this type of plan, the policy will help bridge the difference (gaps) between actual health care charges and the amount of money that Medicare pays. Like Medicare Advantage, Medigap is also offered by private health insurance companies but is highly regulated. Each private company must offer the same exact benefits so it makes comparing Medigap plans very easy. Medigap plans are PPO plans and often have national networks of doctors. Medigap insurance is the best way for you cut your out-of-pocket expenses and protect you from the high cost of procedures not completely covered under Medicare.
