Medigap or Medicare Advantage Plans, Which is Better?, #130

The path towards healthcare coverage in retirement starts with enrolling in Medicare Part A and B. However, it’s only the first step! Signing up for supplemental coverage will save you from out-of-pocket costs beyond the cost of Medicare Part B. On this episode, I’m going to cover Medigap and Medicare Advantage plans, their pros and cons, and how to decide which plan is best for you.

You will want to hear this episode if you are interested in... Understanding Medicare and supplemental coverage, and Medigap [0:56] Exploring Medicare Advantage and its various plan types [5:16] Deciding which supplemental coverage is right for you [8:37] Closing the Medigap

Signing up for Medicare is great, but it doesn’t cover everything. Such as 20% of doctor’s bills, outpatient services, chemotherapy, and more. Thankfully, you have the option to sign up for supplemental coverage through Medigap or Medicare Advantage plans. But which is better? The answer depends on you and your medical needs. The best way to make this choice is to weigh the pros and cons of each supplemental coverage plan. 

The benefit of a Medigap plan is that you have a fixed monthly premium instead of unexpected out-of-pocket costs. Additionally, all doctors, clinics, specialists, and hospital systems that accept Medicare will accept your Medigap supplemental insurance. One potential downside to Medigap plans is that they don’t include prescription drug or dental coverage. However, those can be purchased separately. All coverage for Medigap plans is the same, so find the lowest-cost option when shopping.

Breaking down Medicare Advantage plans

Medicare Advantage is a different type of supplemental coverage. Rather than purchasing additional insurance, Medicare Advantage is like buying into a separate network. By agreeing to use the doctors, specialists, and hospitals in your local area, your monthly premiums are typically much less than Medigap. In some cases, plans cost as little as $0 per month because a portion of your Medicare Part B premium goes to the insurance company. However, whenever you use a portion of your plan, expect to pay co-pays with an out-of-pocket maximum of $8,300 for 2023.

The three main Medicare Advantage options are an HMO, PPO, or a hybrid HMO POS plan. Health Maintenance Organization (HMO) plans are the most restrictive of the three. Monthly premiums can be as low as $0, but you can only use in-network doctors and facilities, pre-authorizations and referrals are required to see specialists, and one doctor generally oversees all parts of your health care. Preferred Provider Organization (PPO) plans offer a wider range of options, more flexibility, and the ability to use in-network or out-of-network providers without referrals. However, out-of-network providers can cost more. Finally, Health Maintenance Organizations with a Point of Service option (HMO POS) plans have the restrictions of an HMO with the flexibility to get out-of-network referrals at a higher cost. Listen to this episode for more on supplemental health care coverage in retirement!

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