Medicare Advantage and Medigap: What’s the Difference?

By Kelly Spors |

The majority of Medicare beneficiaries sign up for plans with additional benefits. Should you—and which kind?

SilverSneakers Medicare Advantage Medigap

From October 15 to December 7, you can review and change your Medicare coverage to make sure it fits your current needs. During this time, we’ll provide useful information and tips to help you along the way.

When you enroll in Medicare, you have an important decision to make: Should you get a plan that provides additional benefits?

Most people do, because the out-of-pocket health care costs associated with Original Medicare (Parts A and B) can be very high. Some people have coverage provided by an employer, such as retiree insurance. But more than half of Medicare beneficiaries choose either a Medicare Advantage plan (Part C) or Medicare Supplement insurance plan (Medigap), according to the Kaiser Family Foundation.

Here’s a look at the key features of Medicare Advantage and Medigap plans—and how to decide if either is right for you.

Medicare Advantage (Part C)

Medicare Advantage (Part C) is a managed care plan, such as a health maintenance organization (HMO) or preferred provider organization (PPO), offered by a private insurance company.

The coverage provided by Medicare Advantage plans can be much more comprehensive than what you’d get from Original Medicare or Medigap. You’ll still receive your Original Medicare benefits—hospital care (Part A) and medical care (Part B). In addition, most will bundle in Part D prescription drug benefits, if you choose them. And many include vision, dental, and hearing care and fitness benefits like SilverSneakers. Find a Medicare Advantage plan that includes SilverSneakers here.

Potential upsides: Medicare Advantage plans are an affordable, attractive option for many people. About half of all Medicare Advantage enrollees pay no monthly payment beyond their Part B premium—which currently ranges from $134 to $428 depending on income—says David Armes, principal of Dover Healthcare Planning LLC, a fee-only Medicare advisor in Long Beach, California.

Medicare Advantage plans also help contain out-of-pocket costs because they have yearly limits on covered hospital and medical services. These limits vary among plans, but they’re currently capped at $6,700 for in-network care, according to the Centers for Medicare and Medicaid Services. Original Medicare has no out-of-pocket maximums.

Potential drawbacks: If your Medicare Advantage plan is an HMO, you will choose in-network providers—your care generally isn’t covered if you use out-of-network providers, with the exception of emergency care. If you have a PPO, you have the option of using out-of-network providers, but you’ll pay more.

Provider networks vary in size from plan to plan. On average, Medicare Advantage networks include 46 percent of doctors and 51 percent of hospitals in a county, according to the Kaiser Family Foundation. If you’re far away from home for extended periods of time—say, you’re a snowbird—sticking to a network can be challenging, and you could end up with high out-of-pocket costs.

Important note: There are never any costs or limitations associated with a SilverSneakers membership. It can be used—at no cost—at any of 14,000 participating locations around the country at any time.

Medicare Supplement Insurance (Medigap)

As its name implies, a Medicare Supplement insurance plan (Medigap) adds to Original Medicare and helps cover costs Original Medicare doesn’t, including deductibles, coinsurance, and copayments.

These plans, which are designated by different letters, are also offered by private insurance companies but are standardized across all states but three (Massachusetts, Minnesota, and Wisconsin). In other words, in the other 47 states, all “N” plans offer the same basic benefits.

Potential upsides: Unlike Medicare Advantage, a Medigap plan can be used with any provider that accepts Original Medicare. That means you have a vast network across the United States. In addition, many provide international coverage; Medicare Advantage plans do not. This makes Medigap especially attractive to seniors who have multiple residences or travel frequently.

Medigap also gives you more hospital options, which may give you access to prestigious or highly specialized facilities. “People who want the best coverage often opt for a Medigap policy,” Armes says.

The most robust Medigap plans can leave you with little or no out-of-pocket health care costs for covered services. Thus, they often appeal to seniors who require ongoing treatment or tend to use many health care services, Armes adds.

Potential drawbacks: Depending on the plan you choose, Medigap premiums can be significantly higher than what you’d pay for a Medicare Advantage plan. Monthly premiums vary from around $25 to more than $500, depending on the plan, where you live, and other factors. Moreover, you have to buy a separate Medicare Prescription Drug Plan (Part D), and you may have to pay extra for vision, dental, and hearing care.

In general, Medigap plans offer fewer perks, though some do provide fitness benefits like SilverSneakers. Find a Medigap plan that includes SilverSneakers here.

How to Choose Which Is Right for You

Deciding between Medicare Advantage and Medigap can be tricky, especially since your health care usage and needs can change over time. Ask yourself a few key questions:

  • Are you comfortable being limited to a network of doctors?
  • How much medical care do you realistically receive in a typical year?
  • Do you prefer to have prescription, vision, dental, and hearing coverage wrapped into a single Medicare Advantage plan?
  • Do you value the travel coverage that some Medigap plans offer?
  • Are you willing to pay a higher premium to reduce your out-of-pocket costs?

With those questions in mind, you can explore a few resources to help you assess your options:

  • Medicare Plan Finder, a tool on the U.S. government’s official Medicare site, lets you search available Medicare Advantage and Medicare Prescription Drug Plans (Part D).
  • Medigap Policy Search, another tool on the official Medicare site, lets you search available Medigap plans.

If you’re looking for Medicare Advantage or Medigap plans that include SilverSneakers, click here.