Medigap vs. Medicare Advantage
By Daniel Petkevich
May 25, 2020
What's the difference between value and fee-based plans?
A Tale of Two Kids
Speak with a Medicare Advocate
Imagine you have two kids, one named "Fee", and the other named "Value". One weekend, you tell Fee and Value to each build identical treehouses, one on each of the two trees in your backyard. Your kids ask how you'll pay for them and you tell Fee that he can bring you receipts for materials and tools he purchases from the nearby hardware store and, if you think they're reasonable, you'll pay him back. Value get reimbursed differently. You give him $50 and tell him to spend it however he wants as long as he builds the treehouse. If he spends less than $50, he can keep the difference.
This example roughly illustrates the difference between fee-based and value based plans in health care. In the former, providers (such as doctors and hospitals) are reimbursed by Medicare for each service they perform. Medicare actually has a list of how much they'll reimburse for each medical procedure that could possibly be administered to you. This is how Original Medicare and Medigap coverage work.
Medicare Advantage (MA) plans are value-based. The government gives MA carriers a fixed amount of money per person they insure. This is called a capitation fee, after the word "capita", referring to "per head". The plans can spend this money however they want as long as their members have quality health outcomes. One way MA plans do this is by taking more control of what services you can use and when. For example, unlike Medigap plans or Original Medicare, MA plans require you to see in-network doctors rather than any doctor you like. Many also require your primary physician to refer you to a specialist. You can't go straight to one.
The value based nature of Medicare Advantage plans allows some of them to be zero premium. Some of them even pay part of your Part B premium. This can be appealing to folks looking to save money today, but remember that insurance is all about paying less today to decrease the chances of paying a lot more tomorrow.
Recommended Articles
Does Medicare Cover Hepatitis C Treatment?
Nov 22, 2022
What's the Deal with Flex Cards?
Dec 15, 2022
Can Medicare Advantage Plans be Used Out of State?
Jun 12, 2023
Does Medicare Cover an FMT?
Dec 2, 2022
What Does Medicare Cover for Stroke Patients?
Jan 20, 2023
How Are Medicare Star Ratings Determined?
Sep 6, 2023
Does Medicare Cover Hoarding Cleanup?
Jan 10, 2023
Does Medicare Cover Cervical Disc Replacement?
Jan 20, 2023
Estimating Prescription Drug Costs
May 25, 2020
Does Medicare Cover Medical Marijuana?
Jan 6, 2023
Does Medicare Cover Kidney Stone Removal?
Nov 23, 2022
Does Medicare Cover the Urolift Procedure?
Dec 6, 2022
Can Medicare Help with the Cost of Tyrvaya?
Jan 12, 2023
Does Medicare Cover Air Purifiers?
Nov 18, 2022
Does Medicare Cover Inspire for Sleep Apnea?
Dec 27, 2022
Medicare Advantage MSA Plans
May 17, 2023
What Is a Medicare Advantage POS Plan?
May 10, 2023
14 Best Ways for Seniors to Stay Active in Washington, D.C.
Mar 11, 2023
More of our articles
10 Top Medicare Supplement (Medigap) Companies for 2025
13 Best Ways for Seniors to Stay Active in Columbus
13 Best Ways for Seniors to Stay Active in Phoenix
14 Best Ways for Seniors to Stay Active in Nashville
14 Best Ways for Seniors to Stay Active in Seattle
2024 Cost of Living Adjustment
2025 Medicare Price Changes
Can I Change Medicare Advantage Plans Any Time? | Medicare Plans
Can I Laminate My Medicare Card?
Denied Coverage? What to Do When Your Carrier Says No
Do I Need Medicare If My Spouse Has Insurance?
Do I Need to Renew My Medicare?
Do You Need Books on Medicare?
Do You Need Medigap if You're Eligible for Both Medicare and Medicaid?
Does Medicare Cover Abortion Services?
Does Medicare Cover Bariatric Surgery?
Does Medicare Cover Cardiac Ablation?
Does Medicare Cover Chiropractic Visits?
Does Medicare Cover Cold Laser Therapy (CLT)?
Does Medicare Cover COVID Tests?
Does Medicare Cover Diabetic Eye Exams?
Does Medicare Cover Disposable Underwear?
Does Medicare Cover Driving Evaluations?
Does Medicare Cover Exercise Physiology?
Does Medicare Cover Geri Chairs?
Does Medicare Cover Hearing Aids?
Does Medicare Cover Hypnotherapy?
Does Medicare Cover Ilumya?
Does Medicare Cover Jakafi?
Does Medicare Cover Macular Degeneration?
Does Medicare Cover Mental Health?
Does Medicare Cover Nuedexta?
Does Medicare Cover Scleral Lenses?
Does Medicare Cover Shock Wave Therapy for Plantar Fasciitis?
Does Medicare Cover SIBO Testing?
Does Medicare Cover Xiafaxan?
Does Medicare Cover Zilretta?
Does Medicare Pay for Bunion Surgery?
Does Medicare Pay for Funeral Expenses?
Does Retiring at Age 62 Make Me Eligible for Medicare?
Explaining IRMAA on Medicare
Explaining the Different Enrollment Periods for Medicare
Fair Square Bulletin: We're Revolutionizing Medicare
Finding the Best Dental Plans for Seniors
Finding the Best Vision Plans for Seniors
Gap Health Insurance: The Secret Sidekick to Your High-Deductible Plan
How Does Medicare Pay for Emergency Room Visits?
How Medicare Costs Can Pile Up
How Much Does a Pacemaker Cost with Medicare?
How Much Does Xeljanz Cost with Medicare?
Is Balloon Sinuplasty Covered by Medicare?
Is Fair Square Medicare Legitimate?
Is Gainswave Covered by Medicare?
Is HIFU Covered by Medicare?
Last Day to Change Your Medicare Part D Plan
Medicare 101
Medicare Guaranteed Issue Rights by State
Medicare Supplement Plans for Low-Income Seniors
Moving? Here’s What Happens to Your Medicare Coverage
Plan G vs. Plan N
Should You Work With A Remote Medicare Agent?
The Fair Square Bulletin: October 2023
What Happens to Unused Medicare Set-Aside Funds?
What If I Don't Like My Plan?
What is a Medicare Beneficiary Ombudsman?
What Is a Medicare Supplement SELECT Plan?
What Is Medical Underwriting for Medigap?
What is Plan J?
What Is the Medicare Birthday Rule in Nevada?
What is the Medicare ICEP?
When Can You Change Medicare Supplement Plans?
Which Medigap Policies Provide Coverage for Long-Term Care?
Get the Fair Square Bulletin
Medicare savings tips, helpful guides, and more.
Virgil Insurance Agency, LLC (DBA Fair Square Medicare) and www.fairsquaremedicare.com are privately owned and operated by Help Button Inc. Medicare supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. This is a solicitation of insurance. A licensed agent/producer may contact you. Medicare Supplement insurance is available to those age 65 and older enrolled in Medicare Parts A and B and, in some states, to those under age 65 eligible for Medicare due to disability or End-Stage Renal disease. Virgil Insurance Agency is a licensed and certified representative of Medicare Advantage HMO, HMO SNP, PPO, PPO SNP and PFFS organizations and stand-alone PDP prescription drug plans. Each of the organizations we represent has a Medicare contract. Enrollment in any plan depends on contract renewal. The plans we represent do not discriminate on the basis of race, color, national origin, age, disability, or sex. Plan availability varies by region and state. For a complete list of available plans please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov. © 2025 Help Button Inc
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.
MULTIPLAN_FairSquareMedicare_01062022_M