Medigap vs. Medicare Advantage

About

Medicare 101

Current Clients

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

Talk to one of our Licensed Medicare Agents today to find the right plans for you.

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.

Speak with a Medicare Advocate

Talk to one of our Licensed Medicare Agents today to find the right plans for you.

Your Medicare One-Stop-Shop

Your guide to Medicare Parts A & B, Medicare Advantage, and Medigap. 100% free.

Get the Fair Square Bulletin

Medicare savings tips, helpful guides, and more.

888-454-2383

info@fairsquaremedicare.com

About

Medicare 101

Current Clients

Medicare Supplement Plans

Medicare Advantage Plans

Fair Square 2026

•

Notice of Privacy Practices

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. © 2026 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

Fair Square Medicare

Medigap vs. Medicare Advantage

What's the difference between value and fee-based plans?

A Tale of Two Kids

Speak with a Medicare Advocate

Speak with a Medicare Advocate

Recommended Articles

More of our articles

Your Medicare One-Stop-Shop

About

Medicare 101

Current Clients

Medicare Supplement Plans

Medicare Advantage Plans