The thought of paying a monthly premium to improve your healthcare coverage may not be a pleasant thought. After all, isn’t free hospital insurance and low-cost medical insurance one of the perks of Medicare you look forward to? While Medicare comes with valuable coverage for seniors, relying on original or basic Medicare alone can be an expensive mistake because it leaves you with serious gaps in coverage. 

Here’s what you should know about Medicare supplement insurance, also known as a Medigap plan, how it differs from Medicare Advantage, and why it’s worth the cost. 

What is Medicare Supplement Insurance? 

A Medigap or Medicare Supplement insurance plan can help you save on out-of-pocket expenses you face after Medicare pays its share of your medical bills. Medigap plans are standardized and there are 10 different plans available, although the number and type varies by state and provider. Depending on the plan, you may have coverage for the copays and coinsurance you pay with Medicare and coverage for some of the deductibles of Medicare. 

As an example, Medigap Plan A pays all of the copays and coinsurance of Medicare Part A and Part B, although it won’t cover the deductibles. Plan F, by comparison, covers almost all deductibles and copays but it’s the most expensive. 

Just note: plans sold starting in 2020 won’t cover the Part B deductible. 

After you sign up for Medicare Part B, you have 6 months to buy a Medigap policy without the insurance provider checking your medical history and using it to consider whether you can qualify. After 6 months, unless there are unique exceptions in your state, you need to go through a medical underwriting process to buy coverage. 

How Is it Different From a Medicare Advantage Plan? 

You can only have a Medicare Advantage Plan or Medicare Supplement insurance: you can’t have both. That means it pays to consider which will save you the most money and choose wisely. Both plans are designed to fill the gaps of traditional Medicare but they differ in many ways. 

A Medicare Advantage Plan is different than Medigap coverage. It comes with the same Part A and Part B coverage as traditional Medicare plus it usually includes vision and dental coverage and out-of-pocket maximums. Many plans even include Part D prescription coverage. The average premium is about $30 and some plans have no premiums. 

You can think of a Medicare Advantage Plan as a PPO or HMO. You’re still part of Medicare but you’ll need to choose in-network providers when possible. In exchange, you get coverage for some services not covered by Medicare and you’ll have an out-of-pocket maximum. 

Is a Medigap Plan Worth the Cost?

About two-thirds of Medicare recipients only have traditional or original Medicare which includes Part A (hospital) and Part B (medical) insurance. Original Medicare can be a big help on medical expenses but it comes with coinsurance, copays, and deductibles that can lead to hefty medical bills. 

Traditional Medicare also has no out-of-pocket maximum. That means a major operation, surgery, or expensive prescriptions can be financially devastating. With a Medigap policy, you won’t have to worry about 

Medigap plans are more expensive than Medicare Advantage Plans but they offer the most comprehensive coverage available. With a Medicare Supplement insurance plan, you have peace of mind knowing you won’t face financial hardship over major illnesses or medical expenses. You can also easily predict your healthcare expenses in retirement. 

As a general rule, a Medigap policy is the best choice for supplementing your Medicare coverage. A Medicare Advantage Plan should be considered if you can’t afford a Medicare Supplement plan.