Paying for Medicare, as we all know, is way more complicated than it needs to be.
That’s because your Part A and Part B coverage (Original Medicare) only covers a handful of things, leaving you entirely unprotected from some of the most common medical expenses.
For our clients, two solutions have emerged as the most popular way to “fix” Medicare: the Medicare MSA Plan and Medigap Plan G. Both are valuable and viable ways to fill in the gaps of Original Medicare, but they get it done in quite different ways.
Which plan is best for you? Read on to find out.
MSA vs Medigap Plan G: Which is better? [Overview]
In this guide, we’ll be comparing the Medicare MSA Plan with Medigap Plan G. Here are some of the main points that will be explored:
- MSA Plans are a form of Medicare Advantage, while Plan G is a form of Medicare Supplement (Medigap). The best choice for you will depend on several factors, including your health, finances, and personal preferences.
- The Medicare MSA Plan is the only form of Medicare that comes with a tax-advantaged savings account. You can use the funds in your MSA account to pay for health expenses, or save for future use.
- Medigap Plan G is our most popular Medicare Supplement, because it covers all the gaps in Original Medicare and has low premiums.
- Your personal benefits manager can help you decide whether which plan type is best for you.
What’s the difference between MSA and Medigap?
The Medicare MSA Plan and Medigap Plan G are similar in that they are both ways to improve your Medicare coverage. But beyond that, they work quite differently. Understanding that difference is key to choosing the plan option that’s best for you.
The Medicare MSA Plan: A new, consumer-directed way to pay for Medicare
The Medicare MSA Plan is a two-part healthcare strategy that gives consumers more control of how their healthcare dollars are being spent. The first part is a high-deductible Medicare Advantage plan that covers all the same stuff as Medicare Part A & B (and oftentimes more).
The second part of the MSA Plan is the Medical Savings Account (MSA). The MSA is a tax-advantaged savings vehicle that is only available to people who are enrolled in an MSA Plan.
Every year, your MSA Plan makes a contribution to your MSA. You can use these funds, tax-free, to pay for qualified medical expenses. Or, let the money grow year-after-year to keep you protected from large or unexpected health issues down the line. The whole point of the MSA is that it’s your money, and you decide how to spend it.
MSA vs Medigap Plan G Pros & Cons
Medicare MSA Plans:
PROS |
CONS |
|---|---|
| Covers everything that Medicare Part A and Part B do, and usually more | High-deductible plans can be expensive if you have a medical emergency or hospital visit |
| Makes it possible to earn interest on your healthcare dollars, encouraging a healthy lifestyle in the process | Not always ideal for individuals with serious or ongoing health issues |
| MSA funds can be used to pay for a Part D plan, dental work, prescription glasses, LASIK, hearing aids, and a whole lot more |
Medigap Plan G: The most popular Medicare supplement on the market, for good reason
As far as Medicare Supplement plans go, it doesn’t get much better than Plan G. This is the “one-stop-shop” of Medigap plans, offering coverage for everything that Original Medicare doesn’t. With Plan G, the only out-of-pocket cost you’ll be responsible for is the Part B deductible of about $203.
Plan G is a valuable choice for anyone who has a higher risk of being hospitalized. That’s because Plan G kicks in when Original Medicare stops, covering all hospital costs, copays, coinsurance, and even the 20% that Part B doesn’t cover.
Medigap Plan G:
PROS |
CONS |
|---|---|
| Pays for all Medicare expenses except the Part B premium | Does not cover dental, vision, or prescription drugs (Part D) |
| Great low-risk protection | Lacks the savings potential of an MSA Plan |
What’s the advantage of MSAs over Medigap?
One of the biggest advantages that an MSA Plan has over Medigap is the savings potential. An MSA has the built-in potential to accumulate big funds over time. When a health crisis arises, you will have the tax-free funds standing by to pay for it, protecting your retirement savings in the process.
On the other hand, MSA Plans do come with more risk than Medigap. If you’re on an MSA Plan and you have a health emergency, for example, you could be immediately on the hook for a total deductible between $4,000 and $6,000.
What’s the advantage of Medigap Plan G over the Medicare MSA Plan?
Medigap Plan G offers more comprehensive coverage than the MSA Plan. All of the “gaps” in Original Medicare are covered, including skilled nursing care, Part B excess charges, and more. In addition, the Part A deductible is covered, meaning all you have to take care of is the Part B deductible ($203).
Generally speaking, Medigap Plan G could be a better choice for any individual with potential health risks.
Get a No-cost, Top-to-bottom Medicare Consultation with a Real Expert
Choosing between an MSA vs Medigap Plan G requires some careful forethought. While the MSA Plan comes with some tantalizing earning potential, it also has more inherent risk than Medigap. In most cases, it all comes down to your health and preferences.
Your Personal Benefits Manager is an expert resource in all things Medicare, including both Medicare Advantage and Medicare Supplement Plans. As a member of the MediGap Advisors family, you can schedule a free consultation with your PBM.
Together, we can chart out your ongoing Medicare strategy, and in all likelihood, save you a lot of money in the process.
Here are some additional articles on MSA & Medigap Plan G: A Complete Guide to Medigap Plan G | Mastering Your Medical Savings Account: What Can an MSA Pay For?
Here are some additional pages related to this article: Medicare Medical Savings Account (MSA) | FAQs About Medicare
Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage.