Whether Medigap or Medicare Advantage saves you more money will depend on your individual circumstances and healthcare needs. While we cannot say exactly which one will save you the most money in the long run, we can give you some clear guidelines to make an informed Medicare Insurance decision.
Medigap: Pay More Now and Less Later
Medigap policies can be more expensive than Medicare Advantage plans each month, but they usually also provide more comprehensive coverage. Medigap plans are designed to fill in the “gaps” not covered by Original Medicare. Those gaps can really add up in the form of coinsurance, hospital deductibles, foreign travel emergencies, and hospital stay caps.
Those with certain Medigap plans can expect to pay little or nothing out-of-pocket for Medicare-covered services. Our clients who select a Medigap plan G usually only have to pay their one-time calendar year part B deductible of $240 each year and nothing else in the form of hospital bills. Here is a good overview chart that shows what you would have to pay with (and without) a Medigap plan G plan.
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Medicare Advantage: Pay Less (or Nothing) Now and More Later
Medicare Advantage plans are usually less expensive than Medigap when it comes to monthly premiums. In fact, there are many “zero premium” Medicare Advantage plans can be purchased without an additional monthly bill. Many Medicare Advantage plans also included a bundled Part D drug plan, so this can save you even more money each month.
Medicare Advantage plans, however, usually have higher out-of-pocket expenses in the form of co-pays and co-insurance. These costs can add up to thousands of dollars each year.
The good news is these Medicare Advantage out-of-pocket maximums are capped at a maximum of $8850. That number represents the most you would pay for all out-of-pocket covered medical expenses on a Medicare Advantage plan each calendar year. While this is a lot of money, at least you will know that your medical expenses won’t get too out of control in one year on a Medicare Advantage plan. Note: Some Medicare Advantage plans have a lower out-of-pocket maximum than the number listed above.
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So which will save you the Most Money: Medigap or Medicare Advantage?
The short answer is, as we stated at the beginning, it depends on your health needs.
In general, if you have significant healthcare needs and expect to have a lot of out-of-pocket expenses, a Medigap policy may save you more money in the long run.
However, if you have relatively few healthcare needs and are willing to use providers within a smaller specific network, a Medicare Advantage plan may be less expensive.
According to the Kaiser family foundation, those with Medicare Advantage had more cost-related medical problems than those with Medigap so keep that in mind.
The challenge is no one really knows about future healthcare needs. You may be healthy now, but how about in 10 years? Switching from Medicare Advantage to Medigap is not always easy and may not be possible if you have preexisting conditions.
Our general recommendation is to purchase a comprehensive Medicare supplement plan such as Medigap Plan G when you are first eligible if you can afford it. If you are unable to afford the Medigap monthly premium each month, then go with a Medicare Advantage plan. See Instant Medicare Insurance pricing here.
Both Medigap and Medicare Advantage are (way) better than nothing.
Bottom line: Whether you go with Medicare Advantage or Medigap, both plans will protect you much more than those who have not purchased any additional insurance beyond Original Medicare. Medicare alone often pays for just 80% of procedures and only pays a portion of hospital stays. That can leave patients with large medical bills. According to NPR, Medical expenses are the leading cause of bankruptcy for those 65 and over (source). Having a Medigap or Medicare Advantage plan will protect you from runaway medical bills.
It’s important to consider your own health needs and budget when comparing Medigap and Medicare Advantage. Our licensed agents at Senior65.com can help you compare the costs and benefits of both options. Please give us a call at 800-930-7956. There is never a service fee or hidden cost to work with our team, and no one can sell the same Medicare insurance plan for less than at senior65.com.