Do Most People Have Medigap or Medicare Advantage?

When you first become eligible for Medicare, you have an important decision to make - whether to get your Medicare benefits through Original Medicare or a Medicare Advantage Plan. Understanding the key differences between these two options can help you determine which type of Medicare coverage may be better for your needs and budget.

What are the Differences Between Medicare Advantage Plan and traditional Medicare, Medigap Plan, and

There are three main ways Medicare beneficiaries can get their Medicare coverage:

Original Medicare consists of Medicare Part A (hospital insurance) and Part B (medical insurance). Original Medicare is managed directly by the federal government. It covers 80% of Medicare Part B medical costs on average, but there are deductibles and copays.

Medigap (also called Medicare Supplement Insurance) is private supplemental insurance that helps pay some of the out-of-pocket costs in Original Medicare like copayments, coinsurance and deductibles.

Medicare Advantage (also known as Medicare Part C) are health plans from private insurance companies that are approved by Medicare. Medicare Advantage Plans must cover all of the same benefits as Original Medicare, but often have different costs and coverage rules. Many Medicare Advantage Plans offer extra benefits Original Medicare doesn't cover, like vision, hearing, dental and wellness programs.

The key differences between these three options are:

·        Cost - Original Medicare Plan has higher out-of-pocket costs unless you also buy a Medigap Plan. Medicare Advantage Plans often have $0 premiums and capped out-of-pocket spending.

·        Coverage - Original Medicare covers you nationwide. Medigap standardizes plans. Medicare Advantage Plans have localized provider networks.

·        Flexibility - Original Medicare coverage with or without Medigap offers more freedom in provider choice. Medicare Advantage Plans have more care management and often require referrals.

·        Benefits - Original Medicare covers medically necessary care. Many Medicare Advantage Plans offer extra benefits like dental and vision.

·        Prescription Drugs - You need to enroll in a separate Medicare type of plan which is Part D Plan to get drug coverage with traditional Medicare. Most Medicare Advantage Plans include Medicare Part D Plan.

Understanding these key differences can help you evaluate whether Original Medicare + Medigap or Medicare Advantage better meets your needs.

How Many Medicare Beneficiaries Have Medigap vs Medicare Advantage?

As of 2022, most people with Medicare are enrolled in Original Medicare - around 83% according to Medicare data. Of those:

·        Around 28% also purchased a Medigap Plan to supplement their Original Medicare benefits.

·        Around 37% are enrolled in a Medicare Part D prescription drug plan.

That leaves around 17% of all Medicare beneficiaries enrolled in a Medicare Advantage Plan instead of Original Medicare in 2022. However, Medicare Advantage enrollment has been growing steadily and is expected to reach 50% by 2025.

Here is a breakdown of current Medicare enrollment:

·        Original Medicare only - 48%

·        Original Medicare + Medigap - 28%

·        Original Medicare + Part D Plan - 37%

·        Medicare Advantage Plan - 17%

So while most Medicare beneficiaries still have Original Medicare, many also purchase supplemental coverage either through a Medigap policy or stand-alone Part D Plan. Enrollment in Medicare Advantage Plans is increasing each year.

Why Do More People Have Original Medicare coverage and Medigap than Medicare Advantage?

There are a few key reasons why more Medicare beneficiaries still choose Original Medicare, often with a Medigap Plan, rather than joining a Medicare Advantage Plan:

1. Freedom of choice - Having Original Medicare allows you to visit any doctor or hospital in the U.S. that accepts Medicare. Medigap Plans also let you see any provider who takes Medicare. Medicare Advantage Plans have provider networks that may exclude your preferred doctors or hospitals.

2. Consistent coverage - Original Medicare and Medigap offer consistent benefits across the U.S. Medicare Advantage Plan options and coverage can vary significantly in different locations.

3. Inertia - Once people enroll in Original Medicare, they tend to stay with what's familiar. The complexity of comparing plans leads many to default to this traditional option.

4. Lack of access - In some rural areas, Medicare Advantage Plans aren't available so Original Medicare is the only choice.

5. Confusion over networks - Many people don't understand that most Medicare Advantage Plans have limited provider networks so they avoid them.

6. Misconceptions - Myths about restrictions, quality of care, and limits on specialists may also deter some from joining Medicare Advantage.

7. Pre-existing conditions - People with pre-existing or chronic illnesses often prefer Original Medicare so as not to risk a plan not covering their care.

However, as more Medigap Plans leave the market and Medicare Advantage enrollment expands, the balance is starting to shift for many Medicare beneficiaries.

Why are More People Choosing Medicare Advantage Over Medigap?

While most Medicare enrollees still opt for Original Medicare, Medicare Advantage enrollment has grown rapidly to 34% as of 2022. Here are some of the reasons more seniors are choosing Medicare Advantage Plans:

1. Lower out-of-pocket costs - Many Medicare Advantage Plans have no premiums and limited copays and deductibles. Without Medigap, Original Medicare's costs are higher.

2. Extra benefits - Most Medicare Advantage Plans include extras like dental, vision and hearing coverage plus gym memberships and allowances for glasses and contacts.

3. Part D drug coverage - Rather than enroll in a separate Part D Plan, Medicare Advantage offers Part D included.

4. Predictable costs - Medicare Advantage Plans limit out-of-pocket spending for the year through a maximum cap. Costs can vary unpredictably with Original Medicare.

5. Care coordination - Medicare Advantage Plans have care management programs, disease management services, and 24/7 nurse advice lines to help coordinate care.

6. Innovative models - New types of Medicare Advantage Plans like Special Needs Plans tailored to specific conditions attract more enrollees.

7. Improved quality - Medicare Advantage Plans often have high consumer satisfaction and quality ratings that instill confidence.

8. More choices - With insurers offering regional PPOs with broader networks and out-of-network coverage, Medicare Advantage appeals to more consumers.

For these reasons, Medicare Advantage enrollment is projected to overtake Original Medicare in the next few years if trends continue.

What are the Pros and Cons of Medigap vs Medicare Advantage?

To decide whether Original Medicare + Medigap or Medicare Advantage better meets your needs, consider the pros and cons:

Medigap Pros

·        Freedom to choose any doctor or hospital nationwide that accepts Medicare

·        Predictable copays and coinsurance with no provider network limitations

·        Guaranteed renewable regardless of health changes

·        Standardized plans simplifying comparisons

·        Coverage available worldwide for emergency care

Medigap Cons

·        Requires paying the Part B premium and Medigap premium

·        No coverage for most dental, vision, hearing care

·        No caps on out-of-pocket spending

·        No care coordination services

·        Plans can be more expensive due to underwriting

Medicare Advantage Pros

·        Often $0 monthly premiums

·        Out-of-pocket spending limits cap costs

·        May offer extra benefits like dental and vision

·        Covers prescription drugs

·        Care coordination and chronic disease management

·        Innovative plan designs and options

Medicare Advantage Cons

·        Limited provider networks

·        Provider network changes annually

·        Referrals required for specialists

·        Prior authorizations needed for some services

·        Out-of-network coverage limited or none

·        Regional variability in costs and coverage

Looking at both the advantages and disadvantages can provide greater clarity on which direction may work better based on your healthcare priorities.

How Do I Choose Between Medicare Advantage and Medigap

If you're trying to decide between getting a Medigap policy or enrolling in a Medicare Advantage Plan, here are some tips:

·        Compare premiums, deductibles, copays and maximum out-of-pocket costs

·        Ensure your preferred doctors and hospitals are in-network and the plan's service area

·        Consider your healthcare needs and if extra benefits like dental or vision are worth provider restrictions

·        Look for innovative plan types if you have specific conditions

·        Talk to a state health insurance assistance program (SHIP) counselor for objective guidance

·        Ask insurers you're considering about formulary coverage for any prescription medications you take

Medigap can provide lower costs upfront for Original Medicare but still leave you with potentially high out-of-pocket spending overall. Medicare Advantage limits costs through networks and caps but reduces provider choice. Understanding your priorities and needs around providers, prescriptions, costs and benefits can help determine if Original Medicare + Medigap or Medicare Advantage better fits your situation.

What Happens If You Switch from Medigap to Medicare Advantage?

If you currently have a Medigap Plan but enroll in a Medicare Advantage Plan instead, you may not be able to keep your Medigap coverage. Here's how switching works:

·        When you join a Medicare Advantage Plan, your Medigap insurance is automatically suspended.

·        You won't have to pay your Medigap premium while enrolled in the Medicare Advantage Plan.

·        If you decide to leave the Medicare Advantage Plan and return to Original Medicare, you can resume your existing Medigap coverage if the insurer still offers that policy.

·        Some states require Medigap insurers to allow you to purchase the same policy you had before joining Medicare Advantage if available. Other states don't guarantee this.

·        If your old Medigap policy is no longer available, you may have to shop for a new one. You'll likely have to go through medical underwriting and pay a higher premium based on your health.

Before switching from Medigap to join a Medicare Advantage Plan, it's important to consider these impacts on your supplemental coverage in case you later decide to go back to Original Medicare.

We’re Here to Help

You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give the licensed insurance agents at Bourgeois Insurance a Call at (985) 803-8999. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.

Frequently Asked Questions

Below are answers to some common questions about Medigap and Medicare Advantage Plans:

Can you have both a Medigap and Medicare Advantage Plan? No, it's either/or. You can't use Medigap to pay for Medicare Advantage copays and deductibles. If you join a Medicare Advantage Plan, your Medigap policy will be suspended.

Is Medigap or Medicare Advantage better for healthy seniors? For healthy enrollees who don't take many prescription drugs, a Medicare Advantage Plan can provide comprehensive coverage with little to no premiums. Medigap has higher upfront costs.

Is it better to have a Medigap or Medicare Advantage Plan with a pre-existing condition? Original Medicare with Medigap tends to provide better coverage continuity and flexibility for managing chronic illnesses. Medicare Advantage Plans may try to limit provider access and drug coverage more.

Do Medigap Plans cover long-term care (nursing homes)? No, you need to purchase separate long-term care insurance or qualify for Medicaid to get assistance with long-term custodial care costs. Neither Medigap nor Medicare Advantage cover these expenses.

Can I get Medigap coverage if I'm already enrolled in Medicare? Yes, during Medigap open enrollment when you're first eligible for Medicare, you can buy a Medigap policy without medical underwriting. After this, insurers can deny you coverage or charge higher premiums based on health status.

The Bottom Line

Most Medicare beneficiaries still have Original Medicare, with or without Medigap supplemental coverage. However, Medicare Advantage enrollment is growing quickly. Understanding the key differences between these options, your healthcare priorities, and coverage needs in retirement can help determine if Original Medicare + Medigap or Medicare Advantage better meets your situation.