Are you new to Medicare, are your out-of-pocket expenses too high, or have you noticed that Original Medicare isn’t enough to cover your medical needs but don’t know which policy is best for you? There are many options, and it all depends on your personal preferences. Would a Medigap plan be the right fit, or would a Medicare Advantage plan like a PPO be better for you? We have reviewed the two to help you make your decision. There is no right or wrong.
What should you consider when reviewing Medigap with a Medicare Advantage PPO plan?
We will list a couple of essential things you should consider when reviewing the different insurance policies.
1. Your open enrollment status
The first thing you should check is, have you missed your Medigap open enrollment?
If you missed it, you might have to go through medical underwriting. The medical underwriting process for Medigap insurance usually consists of a series of medical questions inside of the application. If you answer “yes” to specific health-related questions, the insurance company could deny your application. If a Medigap plan fits your needs better, it can still be worth applying. Worst-case scenario; you can keep your current insurance plan if you are denied.
During your open enrollment, you have guaranteed issue rights. These rights prohibit insurance companies from denying or overcharging you for a Medigap policy. It is important to note that there might be a different rule in your state, so make sure to check the guaranteed issue rights in your state. If you are in your open enrollment period, a Medigap insurer can’t deny you if you have a medical condition, and you won’t have to do any medical exams.
2. Your monthly premium and other costs
It is also essential to think about your premium. Medigap plans may have a higher monthly premium than a PPO Medicare Advantage plan.
Keep in mind that most PPO Advantage and Medigap plans have a monthly premium, which would be on top of what you pay for Medicare part B. If you have a Medigap plan, you would have to pay for part B and a Part D Prescription plan if you don’t have sufficient prescription coverage through your employer. This can make a Medigap plan look more expensive, and this isn’t always the case because we haven’t talked about the coinsurance, deductibles, or co-payments yet. These out-of-pocket costs are much lower if you have Medigap and sometimes even low to no cost. The out-of-pocket costs with a PPO Advantage plan may be higher depending on which company and plan you have. For 2021 the out-of-pocket maximum for a Medicare Advantage plan was $7.750 (only for Part A and B, prescriptions not included). If you have a PPO plan, there will be two annual limits on your out-of-pocket costs. One limitation for in-network costs and the other for combined in-network and out-of-network costs. Keep this in mind when you are reviewing the insurance plans. The lowest monthly option might not be the cheapest or best policy for you.
3. The extra benefits you want or need
Do you need dental, vision, transportation, fitness, or hearing benefits?
These are all examples of the benefits often offered in Medicare Advantage plans. A Medigap plan most likely won’t provide all of these benefits. However, Medigap plans have started to add additional benefits such as vision, hearing, and over-the-counter pharmacy allowance. Other things you should keep in mind are how often do you travel? Some Medigap policies offer emergency health care services when you are outside of the U.S. Do you need an extensive network of providers, or will you go to the same provider each time. This can influence the price of your visits significantly.
Should you pick Medicare Advantage PPO or Medigap?
Medigap (also called Medicare Supplements) pays after Medicare to fill the gaps. This will leave you with low out-of-pocket costs. Often, you will not even have a doctor co-pay. However, these plans often have a higher monthly premium than most Medicare PPO plans. If you only consider the monthly premiums and not the out-of-pocket costs. The total price that you would spend yearly could be lower.
Medicare PPO plans most likely have more benefits and lower premiums, and if you use the network of preferred doctors, you will get the best co-pays. If you often choose out of the network providers for your medical needs, it can end up being more expensive. With these types of plans, you pay as you go; you will have to pay your co-pay at the time of each service. These services go from doctor visits to lab work, hospital stays, surgeries, and more. Some people rather have a lower monthly premium, and they don’t mind the out-of-pocket costs, while other people rather have lower out-of-pocket costs. It’s entirely up to you.
Overview of the two types of health insurance: Medigap and Medicare Advantage PPO.
Medicare Advantage PPO plan
Medicare advantage (part c) has six different plans. All Medicare Advantage plans include Medicare parts A and B.
– Medicare Part A: includes hospital services, limited skilled nursing facility care, limited home healthcare, and hospice care
– Medicare Part B: includes medical insurance for the diagnosis, prevention, and treatment of health conditions
The Preferred Provider Organization plan (PPO) is offered by a private insurance company and lets you choose any provider who accepts Medicare. This means that with this plan, you can go to network doctors, health care providers, and hospitals, or you can use out-of-network providers. If you choose to get your healthcare from out-of-network providers, it will likely be more expensive than within the network.
Often Prescription plans are covered within this plan; however, if it is not covered, you won’t enroll in a Medicare Drug Plan (part D). It is important to pick your plan carefully.
- You can keep flexibility in the providers you visit
- You won’t need to choose a primary doctor
- A referral is not required (in most cases)
- Save money by using in-network specialists
- Most likely prescription drug coverage
- Easy to match your budget since you can choose your providers
- Most likely covers dental, vision, and hearing visits
- additional health perks, such as fitness memberships and transportation to medical appointments
- Out-of-network providers are more expensive.
- You must continue to pay your Medicare Part B premium.
- Can charge a deductible amount for both the plan and the prescription drug portion of the plan.
- Typical co-payment amounts may vary.
- It charges a 20 percent coinsurance that you will have to pay out-of-pocket after your deductible has been met.
- With a Medicare PPO plan, you will have both an in-network max and out-of-network max.
- Medicare PPOs aren’t as widely available as HMOs.
- Annual Changes to the benefits formulary, pharmacy network, provider network, premium, and co
- Payments/coinsurance may change on January 1 of each year.
- You can’t enroll in Part D drug prescription coverage
Medigap (also known as Medicare Supplement Insurance) exists to cover out-of-pocket costs, such as co-payments or deductibles. You will still have Original Medicare parts A and B. Medigap functions as an add-on policy to Original Medicare. These policies are standardized and go by letters: A, B, C, D, F, G, K, L, M, and N in most states. Each lettered plan’s benefits are the same, no matter which insurance company sells it. You will have access to any Medicare-appointed doctor in the U.S.
Medigap Pros & Cons
- Medigap will help fill some gaps that Original Medicare doesn’t cover.
- You will have access to providers nationwide who accept Medicare.
- Most Medigap plans will help pay the Part A deductible.
- You can get a supplemental plan covering Part A and Part B coinsurance.
- There are plans with low to no cost payments.
- With Plan F, you don’t have to worry about out-of-pocket expenses.
- Standardized – 10 plans that have precisely the same coverage no matter which company.
- A Medicare Supplement company cannot cancel your policy for using the policy too much. your policy will renew every year automatically
- You have the option to change your Medigap plan or company at any time you want.
- You have 30 days to drop the coverage and receive your premium back when your policy is approved.
- Pays for deductibles, co-pays coinsurance
- Medigap plans do not cover prescription drugs.
- More expensive, your rate most likely increases
- You have to have Part A and Part B.
- Do not cover routine dental, vision, or hearing care.
- After your Guarantee issue right ends, it might be hard to get approved if you have certain health conditions.
- Medigap Has fewer benefits than Medicare Advantage plans.