Even though private insurers sell the Medigap plans, federal rules standardize the coverage. Insurers can offer up to 10 different plans, each labeled with a letter. (See table below for details.) Plans with the same letter include the same benefits, even if different insurance companies offer them, but the premiums can vary widely.
You can go to any doctor who accepts Medicare, and Medigap will fill in the gaps. Medigap does not cover prescription drugs. If you have traditional Medicare and want drug coverage, you’ll need to get a stand-alone Part D prescription drug policy.
How and when to shop for a Medigap policy
You can buy a Medigap policy anytime you have Medicare Parts A and B. This insurance doesn’t have an open-enrollment period during certain times of year, like Medicare Advantage and Part D plans.
But insurers can reject you or charge more if you have preexisting conditions unless you buy a policy during certain times, such as within six months of enrolling in Medicare Part B if you’re 65 or older. Medigap insurers must also offer you a policy regardless of preexisting conditions in other situations, such as if you had been enrolled in a Medicare Advantage plan and you move outside of the plan’s service area.
If you qualify for Medicare before age 65 because of a disability, federal Medigap rules don’t protect you from being rejected or charged more because of your health. But some states have extra protections for people who are younger or older than 65 who might find it difficult to get the lowest prices. Contact your State Health Insurance Assistance Program (SHIP) to find out more about the rules in your area.
You can find out more about Medigap plans available in your area at Medicare.gov or your state insurance department.
How Medicare Advantage is different from Medigap
Medicare Advantage, also known as Medicare Part C, is an all-in-one alternative to original Medicare. Private insurance companies offer Medicare Advantage plans that Medicare approves, and they bundle together Part A hospital coverage, Part B doctor and outpatient services, and usually Part D prescription drug coverage into one package.
If you decide to get coverage through a Medicare Advantage plan, you’ll still have to enroll in Medicare Parts A and B, including paying the premiums for Part A, if you don’t qualify for it free, and Part B. But then you can choose a Medicare Advantage plan and sign up with a private insurer.
The federal government requires Medicare Advantage plans to cover everything that Medicare Parts A and B cover, but they may have different deductibles and copayments. Most Medicare Advantage plans cover prescription drugs, too, and many also help pay for services original Medicare doesn’t cover, such as routine dental, hearing and vision care.
Unlike original Medicare, which covers any doctors and other providers who accept Medicare, most Medicare Advantage plans have a provider network and may charge more or not cover doctors or facilities outside of a plan’s network.
The two most common types of Medicare Advantage plans are health maintenance organizations (HMOs) and preferred provider organizations (PPOs). With HMOs, you usually don’t have coverage for out-of-network providers except in emergencies. PPOs also have a network of doctors, hospitals and other facilities. You may have coverage if you go outside of a plan’s network, but you’ll usually have higher copayments and other out-of-pocket costs.
All Medicare Advantage plans have federal rules that limit annual out-of-pocket costs for services covered under Medicare Parts A and B. In 2022, this is $7,550 or less for in-network health services, and $11,300 or less for covered in-network and out-of-network services combined.
How and when to shop for a Medicare Advantage plan
Before you can get a Medicare Advantage plan, you must enroll in Medicare Parts A and B, including the $170.10-a-month Part B premium for most people in 2022. You also may have to pay a monthly premium to the Medicare Advantage insurer. The average premium for Medicare Advantage enrollees is $19 in 2022, but more than half the plans charge no premium.
You can compare the premiums, copayments and coverage for Medicare Advantage plans in your area, including copays for your drugs, by using the Medicare’s Plan Finder. You can sign up through the Plan Finder or directly with the plan.
You can get a Medicare Advantage plan when you first enroll in Medicare or in some other situations, such as within two months of losing employer coverage. Otherwise, you have to wait until open enrollment Oct. 15 to Dec. 7 for coverage starting Jan. 1. Preexisting conditions do not affect eligibility for Medicare Advantage.
How to choose between Medigap and Medicare Advantage
When considering whether to buy a Medigap policy or enroll in a Medicare Advantage plan, the key decision is whether you want to get your coverage from the federal government through original Medicare or a private insurer that provides Medicare Advantage plans.
If you choose original Medicare, you can use any doctor and facility that accepts Medicare. But you’ll have to buy separate Medigap and Part D drug coverage to fill in the gaps.
If you choose Medicare Advantage, you may have low or no premiums beyond your monthly Part B premiums. But the additional expenses that you pay out of pocket will likely be different, especially as you use more medical services. You usually need to use a provider network. If you go to an out-of-network doctor, the visit might not be covered or you might have a higher copayment.
Most Medicare Advantage plans include prescription drug coverage. Those without are designed for enrollees who have drug coverage from a previous or present employer or another source. You won’t have to buy a separate Part D.
Keep in mind
If you enroll in a Medicare Advantage plan, you cannot use a Medigap policy to cover your out-of-pocket expenses. So you’ll have to pay any deductible, copays or coinsurance yourself. It’s illegal for an insurance company to sell you a Medigap policy if you’re enrolled in a Medicare Advantage plan.
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