What’s the difference between Medicare and Medigap?
With so many different Medicare options available, it can get confusing when trying to differentiate between plan types to determine what type of coverage is best for you. In particular, there can be even more confusion when it comes to comparing Medicare and Medigap. Each option has benefits that the other does not and by contrasting the two, one can clearly see the difference.
Let us start with a simple definition of each. Medicare is health insurance coverage where the government pays a portion of the medical bills directly to hospitals. There are four parts to Medicare coverage. Part A is hospital insurance, and Part B is health insurance. Part C is a program called Medicare Advantage where Parts A &B are covered through a private provider instead of through Medicare, but for an additional premium. Part D covers prescription. Not every Medical Plan will include all four parts.
A big downside to original Medicare is the out-of-pockets costs associated and the fact that there is no cap. With Medigap, Medicare still provides Parts A&B, but a private provider covers all or at least a significant portion of the out of pocket costs. With this program, you still have the option to go to any provider that accepts Medicare, which is essentially everywhere. Medigap does not include prescription drug coverage, so a stand-alone Part D coverage would have to be purchased to cover the cost of prescriptions. With a Medigap policy, as long as you continue to pay your premiums on time, your policy will not be canceled even if you get sick.
Part C of Medicare, Medicare Advantage, is an alternative to Medigap. It is designed to help cover out of pocket costs as well, but there are some significant differences between the two. With Medicare Advantage, Parts A & B are covered by a private provider instead of Medicare and for an additional premium. The out of pocket costs are typically higher than with Medigap, but the monthly costs are usually lower, and it does not base its rates on age or health. Also, Medicare Advantage includes coverage for prescriptions. One con of Medicare Advantage is the fact that the insured is limited to the in-network doctors and hospitals selected by the private insurance provider.
There is a solution to the coverage gaps provided by a standard Medicare policy through both Medicare Advantage and Medigap. If you are considering enrolling in either, do not hesitate to speak with an health insurance professional today.