Seniors often enroll in a Medicare supplement (Medigap) or a private Part C Medicare Advantage (MA) plan to avoid being ruined by out-of-pocket expenses that bare-bones "original" Medicare doesn't pay in full. The question is: which is better for one's physical and financial health in the long run–MA or Medigap?
Medicare Advantage Plans vs Medicare Supplements: An Overview
Private insurance companies sell and administer MA plans that provide all the coverage of original Medicare, with one big hitch: they manage care through provider networks–HMOs and PPOs. This means the MA insurers decide which doctors and hospitals (called allowed providers) patients can use. MA programs have widely varying monthly premiums. MAs always involve cost-sharing, meaning patients pay of out-of-pocket deductibles, co-pays and co-insurance for medical services. Sometimes these charges can add up to thousands of dollars.
Medicare supplements, also sold by private insurers, are standardized into eleven different plans that offer different combinations of benefits and fill some or all gaps Medicare does not pay. Medigaps do not use networks: patients are free to go to any hospital, surgery center or doctor in the USA that accepts Medicare. Medigap Plan A is the cheapest and least comprehensive, while Plans F and G are the most expensive and benefit-rich, and effectively fill all Medicare coverage gaps without further co-pays, co-insurance and unexpected out-of-pocket outlays.
Medicare vs Medicare Advantage vs Medigap: Example Out-of-pocket Costs for Typical Services
What can one expect to pay for services, not including premiums, when relying on straight Medicare, a Medigap plan, or a Medicare Advantage plan? Here are a few of the more common medical scenarios seniors may encounter:
Hospital Inpatient Care
- Original Medicare–Patient pays a flat $1,100 for the first 1-60 days. Readmissions are "free" if they occur within two months of a previous discharge. Hospital days 61-150 cost $275 to $550 per day. After that, patient pays 100% (Medicare pays nothing).
- Medigap Plans F and G–Patient pays nothing for all care up to a maximum of 365 days.
- Medicare Advantage–Plans vary greatly. Under the terms of popular Blue Cross and Humana plans, the patient pays $80 to $225 per day for the first five-to-seven days, and $0 thereafter; under another plan the patient pays $550 for each in-network admission or readmission, and $800 for each out-of-network hospital stay, regardless of the number of days.
Doctor Office Visits
- Original Medicare–The patient pays 20% of each Medicare-approved charge from any physician who accepts Medicare (Medicare pays 80%).
- Medigap–Under Plan F the patient pays nothing, and under Plan G a single yearly charge of $155, for unlimited visits to all U.S. physicians who accept Medicare.
- Medicare Advantage–Plans vary. Examples: $10 - $35 co-payment per in-network office visit, often more for each out-of-network visit. MA plans often have two tiers, one for primary care physicians, another higher one for specialists.
Nursing Home (Skilled Nursing Facility)
- Original Medicare–Patient pays nothing for 20 days following a hospitalization at least 3 days long (not counting the hospital discharge day); then patient pays up to $137.50 a day for the next 80 days.
- Medigap–Under Plans F and G, the patient pays nothing for up to maximum of 100 days.
- Medicare Advantage–Plans vary. Under a typical plan, the patient pays nothing for the first 15 days and $100 per day for next 85 days; under another common plan, the cost is $0 a day for 20 days, then $130 a day (nearly the same as original Medicare coverage).
Outpatient Services and Surgery
- Original Medicare–Medicare pays 80%, patient pays 20% for the doctor and ambulatory surgical center facility charges. If an outpatient hospital facility is used the charges vary, but generally the patient pays no more than $1,100.
- Medigap Plans F and G–Patient pays nothing for doctor or ambulatory or hospital facility.
- Medicare Advantage–Plans vary. Patient usually pays between $45 and $100 per in-network visit, more if the procedure is performed at an out-of-network facility.
Home Health Care
- Original Medicare and Medigaps cover this service 100% for any Medicare-authorized agency. Medicare Advantage plans similarly pay for all home care visits, but only if patients use a designated in-network agency.
Emergency Room (ER) Care
- Original Medicare–The patient pays 20% of the ER doctor's bill plus up to $1,100 for the ER facility charge (which is waived if patient is admitted to the hospital for the same condition within 3 days of the ER visit).
- Medigap Plans F and G–Patient pays nothing for doctor or facility.
- Medicare Advantage–Plans vary, but a $50 co-pay is typical (waived if you are admitted to the hospital for the same condition within a day of the ER visit).
Prescription Drugs
- Original Medicare–Patients pay widely varying premiums to private insurers for Part D plans. Most of these plans restrict the actual drugs available, and they all involve cost sharing, confusing rules and the notorious donut hole.
- Medigap Plans F and G–Drugs are not covered nor available via Medigaps. However, cost-saving strategies that can reduce Rx costs as much as 80% are available.
- Medicare Advantage–Many plans have integrated drug programs.
Yearly Maximum out-of-pocket (MOOP)
What is the most an individual should expect to pay for all services used, not including annual plan premium?
- Original Medicare–There is no cap. MOOP can theoretically be unlimited if a very expensive illness or injury strikes.
- Medigap–Plan F $0; Plan G $155.
- Medicare Advantage–Plans vary. Typically MOOPs range from $3,000 to $8,000 and up for in-network services, more for going out-of-network. Some MA plans include drugs, vision, dental and hearing services. These optional enhancements are not covered by original Medicare or by Medigaps. These extras often have limited dollar benefits and separate unlimited MOOPs that often don't help in reaching the plan's "regular" MOOP.
Medicare provides a website that explains how much it pays for most medical situations.
George Daleiden - I was a science major in college and later a career member of the Institute of Food Technologists. I worked in the processed food and ...
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