Key Takeaways

  • You have choices for how you receive your health care services through Medicare.

  • What are the Medicare plans? The two main options are (1) Original Medicare, plus a Medigap plan or (2) a Medicare Advantage plan.

  • Which Medicare plan is best for you? You should first consider your personal health, lifestyle, and financial situation.  

If you're 65 or older, you're eligible to apply for Medicare. At that point, you'll have to consider all the ways you can receive Medicare coverage: Original Medicare only or with retiree health insurance from an employer, Medicare Advantage, or Original Medicare combined with Medigap (also called a supplemental plan, or supplement). These last two options are similar in that they are two different ways of covering many of the same services.

What are my Medicare choices?

There are four key criteria to consider when choosing a Medicare plan type:

1. Difference between Original Medicare and Medicare Advantage

Original Medicare (Medicare Parts A & B) covers basics like hospital services (Part A) and doctors' visits and other outpatient services (Part B). It is called Original Medicare because it was the first type of Medicare program created. Adding the optional Part D plan to Original Medicare covers prescription drugs, while adding a Medigap plan (supplement plan) covers the cost gaps in Original Medicare coverage.

Medicare Advantage (MA) plans are a privately managed alternative to government-run Original Medicare. A Medicare Advantage plan covers all the services of Original Medicare and typically includes Part D (but not always). Many people often ask, "Are Medicare Advantage plans worth it?" This type of plan may offer additional services that Original Medicare does not cover (such as dental, hearing, or vision coverage). It is important to check the "enhanced benefits" for the particular plan you are considering enrolling in.

2. Advantages of choosing Original Medicare combined with a Medigap policy (versus Medicare Advantage)

What exactly is Medigap? A Medigap policy can help pay some of the remaining healthcare costs not covered by Medicare, including coinsurance and deductibles. If you purchase a Medigap policy within 6 months of starting Part B when you’re initially eligible, you have guaranteed issue protection. This means that the insurance company cannot reject your Medigap application for any reason. If you do not enroll in Medigap during your initial eligibility period, the insurance company may consider things like your health history when deciding enrollment and cost.

So what are the benefits of selecting Original Medicare plus Medigap instead of a Medicare Advantage plan?

  • More flexibility in choosing a provider: The most significant advantage of Original Medicare plus Medigap is that it allows you to see any provider who accepts Medicare. This may be a good fit if you have ongoing medical issues.

    Medicare Advantage plans, in contrast, are more restrictive in terms of the provider networks they work with. Many require members to choose a Primary Care Physician (PCP) from within their network. The PCP coordinates the member’s care including, in some cases, referrals to specialists. If you’re in a rural or isolated area, you may have difficulty finding MA plans that work with your local healthcare providers.
  • Controlled costs: If you have a history of cancer or a recent diagnosis of heart disease, chronic obstructive pulmonary disease (COPD), diabetes, or another chronic condition that will require frequent doctor visits, Original Medicare plus Medigap may be a better fit. Your monthly payment will be the same every month, no matter how many doctor visits occur—so a Medigap policy can actually reduce your total costs. This can be especially helpful if you’re trying to get a diagnosis for a new health condition and need to seek second opinions.
  • Standardized plans: Medigap has standardized types of policies that each pay for the same things, which makes comparing costs relatively simple. These policy types are used all over the country (with the exception of Massachusetts, Minnesota, and Wisconsin, who have their own standardization), making decisions easier when moving to another state.

    Medicare Advantage plan options differ by where you live, can change every year, and often go by different names depending on the state.

3. What are some of the disadvantages of choosing Original Medicare combined with a Medigap policy (versus Medicare Advantage)?

The main disadvantage is that Original Medicare plus a Medigap plan may be more expensive depending on your personal health care situation. Medigap plans can be two to three times the cost of a Medicare Advantage plan. With Original Medicare, a Part D drug plan, and Medigap there are three different cards to keep track of and two monthly bills to manage. 

Medicare Advantage plans are designed to navigate the system, contain costs, and increase collaboration among providers. Many people value having a Primary Care Physician (common with many of these plans) to take charge of some of the decisions and find the appropriate specialists.

4. What if I sign up for a Medigap policy and then change my mind? Can I drop it and just use Original Medicare, or switch to a Medicare Advantage plan?

Both options described above are available. Some things to consider if you’re wondering “When can I switch Medicare plans?”:

  • When purchasing a Medigap policy, there is a 30-day trial period. You are allowed to switch within 30 days of enrollment from one type of Medigap policy to another.
  • You may also cancel your Medigap plan and get a refund. After the first 30 days, the Medigap policy can still be cancelled but not refunded. To cancel the Medigap policy, contact the insurance company. However, if you terminate your Medigap policy, you may not be able to purchase a new one if you have health issues—or it may cost you significantly more than when you first enrolled.
  • If Medicare Advantage is preferred, it is possible to switch from a Medigap policy to Medicare Advantage during the annual Medicare Open Enrollment period from Oct. 15 through Dec. 7. During this time, anyone with Original Medicare can switch to a Medicare Advantage plan. It is important to also cancel your Medigap policy, as it does not work with the Medicare Advantage plan.

Who can help me choose a Medicare plan?

For more information on plans, consider discussing these options with a licensed Medicare benefits adviser. They can be accessed for free by taking our Questionnaire, created by the nonprofit National Council on Aging or call your local State Health Insurance Assistance Program (SHIP) for federally-funded Medicare counseling. Seeking professional advice (and doing research upfront) can make a huge difference to both health and finances for years to come.