Fair Square Medicare Wordmark

Medigap vs. Medicare Advantage

treehouse

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.

Recommended Articles

air purifier stock image

Does Medicare Cover Air Purifiers?

Nov 18, 2022

Indianapolis skyline at night stock image

13 Best Ways for Seniors to Stay Active in Indianapolis

Mar 9, 2023

a chart explaining different enrollment periods on medicare

How Do I Sign up for Medicare? A Simple How-To Guide For You

Apr 8, 2022

Senior person holding tissue roll near a toilet bowl, using walker to walk to the bathroom stock photo

Does Medicare Cover Oxybutynin?

Dec 2, 2022

woman sitting up in bed experiencing back pain stock photo

Does Medicare Cover a Spinal Cord Stimulator?

Nov 19, 2022

Senior woman fretting in front of her laptop stock photo

How Medicare Costs Can Pile Up

Oct 11, 2022

Physiotherapist showing workout record on exercise bike

Does Medicare Cover Exercise Physiology?

Jan 11, 2023

Cover image

Does Medicare Have Limitations on Hospital Stays?

Mar 15, 2024

woman in a hospital wearing a bandana being shown information by her doctor stock photo

Medicare Advantage Plans for Disabled People Under 65

Mar 24, 2023

Senior woman smiling after vaccination stock photo

Does Medicare Cover Flu Shots?

Dec 9, 2022

cartoon hospital and male doctor stock image

Can I Have Two Primary Care Physicians?

Oct 3, 2022

doctor examining a patient's varicose veins stock photo

Does Medicare Pay for Varicose Vein Treatment?

Nov 18, 2022

Cover image

Is Fair Square Medicare Legitimate?

Jul 27, 2023

Teenager Helping his Grandfather at Home stock photo

Does Medicare Cover Geri Chairs?

Dec 7, 2022

Fair Square

Building the Future of Senior Healthcare

Aug 25, 2022

Medicare 2025 What you need to know in the new year stock image

How is Medicare Changing in 2025?

Dec 21, 2022

Plastic surgeon handles a silicon implant

Does Medicare Cover Breast Implant Removal?

Jan 5, 2023

senior woman doing botox stock photo

Is Botox Covered by Medicare?

Jan 19, 2023

More of our articles

14 Best Ways for Seniors to Stay Active in Washington, D.C.

2024 Fair Square Client Retention and Satisfaction Report

2024 Fair Square NPS Report

2025 Medicare Price Changes

Can I Choose Marketplace Coverage Instead of Medicare?

Can I Laminate My Medicare Card?

Can Medicare Advantage Plans be Used Out of State?

Can Medicare Advantage Plans Deny Coverage for Pre-Existing Conditions?

Comparing All Medigap Plans | Chart Updated for 2025

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 Medicare Supplement Plans Cover Dental and Vision?

Do You Need Medigap if You're Eligible for Both Medicare and Medicaid?

Does Medicare Cover Abortion Services?

Does Medicare Cover Cardiac Ablation?

Does Medicare Cover Cartiva Implants?

Does Medicare Cover Cervical Disc Replacement?

Does Medicare Cover Compounded Medications?

Does Medicare Cover Diabetic Eye Exams?

Does Medicare Cover Hepatitis C Treatment?

Does Medicare Cover Ilumya?

Does Medicare Cover Ketamine Infusion for Depression?

Does Medicare Cover Kidney Stone Removal?

Does Medicare Cover LVAD Surgery?

Does Medicare Cover Medical Marijuana?

Does Medicare Cover Ofev?

Does Medicare Cover Orthodontic Care?

Does Medicare Cover Ozempic?

Does Medicare Cover Physicals & Blood Work?

Does Medicare Cover PTNS?

Does Medicare Cover Scleral Lenses?

Does Medicare Cover SI Joint Fusion?

Does Medicare Cover Stair Lifts?

Does Medicare Cover Urodynamic Testing?

Does Medicare Cover Vitamins?

Does Medicare Cover Wart Removal?

Does Medicare Cover Xiafaxan?

Does Medicare Pay for Antivenom?

Does Your Medicare Plan Cover B12 Shots?

Explaining the Different Enrollment Periods for Medicare

Fair Square Client Newsletter: AEP Edition

How Does Medicare Pay for Emergency Room Visits?

How Much Does a Medicare Coach Cost?

How Much Does a Pacemaker Cost with Medicare?

How Much Does Medicare Cost?

How Much Does Medicare Part A Cost in 2025?

How Much Does Open Heart Surgery Cost with Medicare?

How to Become a Medicare Agent

How to Enroll in Social Security

Is Balloon Sinuplasty Covered by Medicare?

Is Emsella Covered by Medicare?

Is HIFU Covered by Medicare?

Is Vitrectomy Surgery Covered by Medicare?

Medicare 101

Medicare Advantage MSA Plans

Medicare Deductibles Resetting in 2025

Medicare Savings Programs in Kansas

Medicare Supplement Plans for Low-Income Seniors

Moving? Here’s What Happens to Your Medicare Coverage

Should You Work With A Remote Medicare Agent?

The Fair Square Bulletin: October 2023

Turning 65 and Thinking of Keeping COBRA? Here’s Why It Usually Backfires

What Are Medicare Part B Excess Charges?

What Is Medical Underwriting for Medigap?

What is Plan J?

What is the 8-Minute Rule on Medicare?

What is the Medicare ICEP?

What to Do When Your Doctor Doesn't Take Medicare

What's the Difference Between HMO and PPO Plans?

Why You Should Keep Your Medigap Plan

Will Medicare Cover it?

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.

About

Medicare 101

Current Clients

Medicare Supplement Plans

Medicare Advantage Plans

Fair Square 2025

Terms of Use
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. © 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

Fair Square Medicare

FSM symbol - 50