How Medigap Policies Differ from Medicare Advantage Plans
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All those Ms — Medicare, Medicaid, Medicare Advantage, Medigap! No wonder so many people are confused about what each means. And a big chunk of that perplexity is related to the difference between Medigap and Medicare Advantage.
That’s because most people only have a dim understanding of what is meant by the term supplement. Technically, only Medigap counts as Medicare supplemental insurance — in fact, that’s its formal name — but MA plans may offer extra benefits that can be considered to supplement Medicare.
It’s important to understand the precise differences between these two forms of coverage more succinctly so that you can see at a glance how they compare.
Eligibility: To be eligible for Medicare Advantage, you must be enrolled in Parts A and B and live in the service area of the plan you choose. Medigap requires that you be enrolled in both Part A and Part B. You must buy a policy based on where your home is, which must be within the United States or its territories.
Choice of plans: Almost all Medicare beneficiaries have at least 2 MA plans available to them; many have at least 10, and in some dense urban areas, folks may have more than 50 plans to choose from. Each plan has a different mix of costs and benefits from the next.
If you’re 65 or older, you have the choice of a maximum ten Medigap policies, each with its own set of benefits that are standardized by law, making them easy to compare.
Preexisting medical conditions: A MA plan can’t refuse to accept you on the basis of any past or present medical conditions, with the single exception of kidney failure (ESRD). Any MA plan must provide exactly the same coverage for people who have Medicare because of disabilities as they do for people age 65 and older.
If you’re 65 or over, a Medigap insurer can’t deny you coverage or charge you higher premiums based on current health status or preexisting conditions, provided that you buy a policy within certain time periods that give you these protections under federal law.
Outside those time periods, the insurer can take current and past health problems into account. If you’re under 65, you’re not entitled to federal guarantees, but some state laws provide similar protections.
Coverage: MA plans must cover the same Part A and Part B services and benefits that traditional Medicare does but can charge different co-pays and deductibles and provide some extra services.
Medigap policies mainly cover the out-of-pocket expenses of traditional Medicare, depending on which policy you buy. Some policies extend Medicare coverage (for example, by covering more days in the hospital).
Geographical range: Most MA plans (HMOs and PPOs) allow you to go only to doctors and hospitals in their own provider networks and within their local service area or, in some cases, to go outside the network for a higher co-pay. PFFS plans allow you to go to providers throughout the country, but you need to be sure that they accept these plans before you visit them for consultation or treatment.
If you receive services from doctors or providers anywhere in the country, Medigap covers your co-pays for that service, depending on the terms of your policy. (However, a type of policy known as Medigap SELECT covers only providers within a limited service area, with no coverage for any you see outside it.) Some policies cover medical emergencies outside the United States — a benefit Medicare doesn’t cover.
Prescription drugs: Most MA plans provide Part D drug coverage as part of their benefit packages. By law, no new Medigap policies have provided coverage for prescription drugs since Part D began in 2006.