Medicare authorizes private insurance companies to offer Medicare Supplemental Insurance, also known as “Medigap” coverage, to fill in the financial gaps of Original Medicare. The purpose of this coverage is simple: Its sole purpose is to close the financial gap for the Medicare beneficiary. With a few exceptions, Medigap plans do not offer additional services beyond Original Medicare (Parts A and B).

There are 10 Medigap plans offered currently (not all plans are available to all participants – but that is for another discussion). Each planÂoffers a different level of coverage, up to 100% of the cost of covered services.Â

First, the good:Â

1. Medigap plans do a great job filling the financial gap left by original Medicare. The most comprehensive plan – Plan G – covers all the costs you are responsible for except the $240 Part B deductible. Once you meet the deductible, you will no longer receive a bill for authorized covered services. You can see any participating Medicare physician for any approved service and be 100% covered. Other plans offer somewhat less coverage but still substantially lower your financial exposure.
2. Medigap plans are standardized, meaning any participating insurance company offers the same plan. The only difference is in the premium they charge.ÂCarriers can set theirÂown price for coverage (within reason—they are monitored by Medicare).Â
3. Medigap plans, like Medicare, are national coverage. If a physician accepts Medicare, your Medigap plan will pay its part without comment.ÂCarriers cannot require prior authorization or retroactively disallow a procedure if it’s covered by Medicare; itis covered, period.
4. Medigap plansÂhave guaranteed enrollment if you enroll duringÂyour open enrollment period. During this one-time period, you are guaranteed acceptance to the plan –Âno medical underwriting.
5. A small percentage of physicians bill Medicare patients (legally) up to 15% in “excess charges.” Medicare will not pay excess charges, but Medigap policies like Plan G will pay 100%.

Now, the not-so-good news.

1. Medigap plans can be expensive.Additionally, Medigap premiums are age-bracketed, meaning your premium increases each year you are enrolled. Over many years, Medigap participants can see substantial increases in premiums.Â
2. Medigap plans allow you to enrollÂduringÂa six-month period beginning with your enrollment in Part AÂand/or Part B. If you miss this window, you are not guaranteed acceptance and canÂbe denied coverage.ÂThis is the case for example, even if you have employer coverage and elect Part A, it will delay your enrollment in Part B. Yes, I know. It’s not your fault. You did nothing wrong, but the six-month window started with your enrollment anyway. It’s a quirk of the system and one of the hidden consequences of electing Part A with other coverage.
3. Changing a Medigap plan (or carrier) is extremely difficult once you enroll. Medicare allows limited exceptions (like moving out of state or the carrier discontinues the plan). Still, unless your reason for change falls into one of the few allowed exceptions, you cannot switch plans and be guaranteed acceptance to the new plan.Â
4. Medigap plans do not cover prescription drugs outside of those prescribed in a hospital. You must enroll in Medicare Part D – for an additional monthly premium.
5. Medigap plans – like Medicare – do not cover any form of elective procedure.Â

My two cents: Medicare Supplemental Insurance plans can provide stellar added health coverage, but they come at a steadily increasing cost thatÂmust be factored into your decision-making.ÂFor the MedicareÂBeneficiaryÂthat can afford the coverage, it offersÂby far the most complete and flexible Medicare experience.Â

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Medicare Advantage (MA) plans, or Medicare Part C, are an alternative to Original Medicare. Under the MA program, Medicare contracts private insurance companies to offer a comprehensive one-stop alternative to traditional Medicare. 

The plans offered include Medicare Part A and Part B coverage. Most MA plans provide Part D (prescription drug) coverage and many offer extra benefits such as limited dental, vision and hearing coverage.Â

When you join a Medicare Advantage plan, the private health insurance company entirely manages your health coverage. MA plans work like the health insurance you receive through an employer. You select providers and facilities from the plan’s network. Plans come in both HMO (in-network coverage only) and PPO (in-network and out-of-network coverage).Â

In PPO plans, you must use in-network providers and facilities to receive the lowest-priced care. If the MA plan offers out-of-network care, it’s normally more expensive.

Let’s look at some pluses and minuses of Medicare Advantage plans.Â

First, the good:Â

1. MA plans are less expensive than Medigap plans. Many plans have $0 monthly premiums, no copay for a primary doctor, and low copays for specialists.Â
2. As noted above, MA plans provide one-stop health coverage, including prescription drug benefits, as well as vision, hearing, dental, and fitness benefits.
3. Because most MA plans provide prescription drug coverage, participants see significant savings in this vital area.

Now, the not-so-good:Â

1. While premium costs can be low or even $0, out-of-pocket costs (incurred when you use your benefits) can be high – ranging up to an out-of-pocket maximum for the year of $8,000 or more (depending on the plan’s limits).Â
2. Unlike Medigap plans, MA plans do not allow you to see any participating Medicare provider. Your choices are restricted to the carrier’s network.
3. Unlike Medigap plans and Original Medicare, private insurance companies offering MA plans may require pre-authorization and review before they approve a procedure. Additionally, they may require a step therapy approach where they approve a lower-cost alternative before they sign off on a higher-cost procedure or medication.Â

My two cents: Despite its limitations, Medicare Advantage plans provide good coverage at affordable costs. An MA plan is an effective alternative for Medicare beneficiaries who struggle to afford Medigap and Part D premiums or prefer to receive only one bill and deal with one carrier.

When selecting an MA plan, it is important to ensure that trusted providers and needed medications are covered. Doing this can go a long way toward reducing the impact of the MA plan network.