Medigap Plan G Versus Medicare Advantage

If you are nearing retirement age, you may be wondering what your options are for health insurance. Once you’ve enrolled in Original Medicare (Parts A and B), there are two main types of Medicare plans to choose from: Medicare supplements or Medicare Advantage plans. In this article, we’ll compare and contrast the two types of plans so that you can make an informed decision about which one is right for you.

When is Medigap Plan G better than Medicare Advantage?

While there are about ten different Medicare supplements (also called Medigap) plans available, Plan G remains one of the most popular. Medicare beneficiaries like the financial predictability of supplements, and Plan G is an easy one to incorporate into your budget. Let’s discuss when Plan G might be a better choice than a Medicare Advantage plan.

There is quite a bit to understand about how each of these policies works. But one important thing to know for now is that Medicare Advantage plans utilize provider networks. To get the most of your benefits and have the least out-of-pocket costs, you must see a provider within your plan’s network. That can be difficult for many people, but especially those in more rural areas who have very few (if any) providers to choose from. Medicare supplement plans, on the other hand, do not rely on networks. As long as your provider accepts Medicare (as 96% do), they will also accept your Medigap plan.

As we mentioned earlier, Medicare supplements have very predictable costs. You should first understand what costs might remain after Parts A and B have paid. For example, you’ll be responsible for a certain amount each day you’re in the hospital with Part A. With Part B, Medicare works as an 80/20 split, with you paying 20% of the cost for services. If you have Medigap Plan G, almost all of those remaining costs are taken care of by the plan. The only thing it doesn’t cover is the Part B deductible, which is $233 in 2022.

When is Medicare Advantage better than Medigap Plan G?

Now let’s take a look at Medicare Advantage plans and how they compare to Plan G. There are several types of Medicare Advantage plans, but the most popular are Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Both of these have their own provider and facility networks.

For instance, if you have an HMO plan, you’ll need to seek care from a doctor who participates in the HMO network. Except in emergency situations, going outside the network will cause you to pay completely out-of-pocket for services.

PPO plans are similar but do offer some out-of-network benefits. However, you’ll still pay more than if you would have stayed within the PPO network. Again, this is a start contrast to Medigap plans, which are accepted nearly everywhere. But, if you live in an area that has many providers who participate in HMO or PPO networks, an Advantage plan might be a great choice for you.

Another reason you may choose an MA plan instead of a supplement is due to the low costs of an Advantage plan. Some Part C plans (another name for Medicare Advantage plans) offer premiums as low as $0 per month. Compare this to Plan G, which can range in price from $100 – $200 per month for a newly-eligible beneficiary. Now, keep in mind that a $0 premium does not mean these plans are “free.” There are other costs like deductibles, copayments, and coinsurance amounts that you will be responsible for with one of these plans. There are hundreds of Advantage plans on the market, so you’ll need to review a summary of benefits to understand what your expenses could be.

One more reason Medicare Advantage plans are a popular choice is because of the extra benefits they offer. Medigap Plan G, as well as the other supplements, only offer coverage for services that are approved under Parts A and B. Medicare Advantage plans, however, often include lots of extra benefits.

Again, since there are so many Part C plans, you’ll have to look at each plan to find out what additional services are included, but the most notable are benefits for routine dental, vision, and hearing care. Some MA plans also include prescription drug coverage. If you had a Medigap plan instead, you would need to purchase a Part D plan for prescriptions and also a separate policy to get insurance for dental, vision, and hearing services. That’s a lot to keep track of!

Both Medigap Plan G and Medicare Advantage plans are a great way to supplement your coverage under Original Medicare. They both have their pros and cons, so you’ll need to weigh them for yourself. Luckily, you don’t have to do that alone! One of our licensed Medicare advisors can help you break down your coverage under each and find the one that makes the most sense for your situation.