If you're approaching Medicare eligibility or already on Medicare, you've likely encountered the most common question: Should I choose Medigap (also called Medicare Supplement) or Medicare Advantage?
This decision affects your healthcare costs, doctor choices, and coverage for years to come. Unfortunately, most information online comes from insurance companies or agents who earn commissions selling one option over the other.
This guide provides an unbiased comparison based solely on what's best for you, not what generates the highest commission.
Quick Comparison: Medigap vs Medicare Advantage
| Feature | Medigap (Medicare Supplement) | Medicare Advantage (Part C) |
|---|---|---|
| How It Works | Supplements Original Medicare; you keep Parts A & B | Replaces Original Medicare with a private plan |
| Monthly Premium | $100-$300+ (varies by plan and location) | $0-$150 (many plans are $0 premium) |
| Out-of-Pocket Maximum | Varies by plan; some have none | Required; typically $3,000-$8,000/year |
| Doctor Network | Any doctor that accepts Medicare nationwide | Usually limited to plan's network |
| Referrals for Specialists | Not required | Often required (especially HMO plans) |
| Prescription Drug Coverage | Requires separate Part D plan | Usually included |
| Extra Benefits | None (medical coverage only) | Often includes dental, vision, hearing, gym |
| Travel Coverage | Some plans cover foreign travel emergencies | Limited coverage outside service area |
| Best For | Those who want predictable costs and flexibility | Those who want lower premiums and extra benefits |
What Is Medigap (Medicare Supplement)?
Medigap, officially called Medicare Supplement Insurance, is a type of private insurance that works alongside Original Medicare (Parts A and B). It helps pay for costs that Original Medicare doesn't cover, such as:
- Part A deductible ($1,632 in 2024)
- Part B deductible ($240 in 2024)
- Part B coinsurance (typically 20% of approved costs)
- Part A coinsurance for hospital stays
- Some foreign travel emergency coverage
How Medigap Works
When you have Medigap, you still have Original Medicare as your primary coverage. Here's the process:
- You visit any doctor or hospital that accepts Medicare
- Medicare pays its share first (typically 80%)
- Your Medigap policy then pays most or all of the remaining costs
Important: Medigap Plans Are Standardized
Medigap plans are labeled with letters (A, B, C, D, F, G, K, L, M, N). Each letter offers the same coverage regardless of which insurance company sells it. The only differences are price and customer service. Plan G is currently the most popular option.
What Is Medicare Advantage?
Medicare Advantage (also called Part C) is an alternative way to receive your Medicare benefits. Instead of using Original Medicare, you enroll in a private health plan that provides all your Part A and Part B coverage, usually with additional benefits.
How Medicare Advantage Works
When you enroll in Medicare Advantage:
- You're still enrolled in Medicare, but your coverage comes from the private plan
- You typically pay copays for services instead of the 20% coinsurance
- You usually need to use doctors and hospitals within the plan's network
- You may need referrals to see specialists (depending on plan type)
Types of Medicare Advantage Plans
- HMO (Health Maintenance Organization): Must use network providers; need referrals for specialists
- PPO (Preferred Provider Organization): Can see out-of-network providers at higher cost; no referrals needed
- PFFS (Private Fee-for-Service): Can see any provider who accepts the plan's payment terms
- SNP (Special Needs Plans): For people with specific diseases, conditions, or circumstances
Key Differences Between Medigap and Medicare Advantage
1. Doctor and Hospital Choice
Medigap: You can see any doctor or hospital in the country that accepts Medicare. No networks, no referrals, complete freedom.
Medicare Advantage: Most plans require you to use in-network providers. Going out of network may mean paying full price or getting no coverage at all (except for emergencies).
2. Cost Structure
Medigap: Higher monthly premiums, but very predictable costs. With comprehensive plans like Plan G, you pay little to nothing when you receive care.
Medicare Advantage: Lower (often $0) monthly premiums, but you pay copays and coinsurance when you use services. Costs can add up if you need significant care.
3. Coverage When Traveling
Medigap: Works anywhere in the U.S. that accepts Medicare. Some plans also cover foreign travel emergencies up to plan limits.
Medicare Advantage: Coverage is typically limited to your plan's service area. Emergency coverage exists, but routine care outside your area may not be covered.
4. Extra Benefits
Medigap: Covers only medical expenses. No dental, vision, hearing, or fitness benefits.
Medicare Advantage: Many plans include dental, vision, hearing aids, gym memberships, transportation to appointments, and over-the-counter allowances.
Understanding the True Costs
Medigap Costs
- Part B Premium: $174.70/month (2024 standard amount) - you pay this regardless
- Medigap Premium: $100-$300+/month depending on plan, age, and location
- Part D Premium: $15-$100/month for prescription drug coverage (separate plan)
- Out-of-Pocket Costs: With Plan G, you only pay the Part B deductible ($240/year), then everything else is covered
Total Monthly Cost Example (Plan G): $174.70 (Part B) + $150 (Medigap) + $30 (Part D) = approximately $355/month
Medicare Advantage Costs
- Part B Premium: $174.70/month - you still pay this
- MA Plan Premium: $0-$150/month (many plans are $0)
- Copays: $0-$50 per doctor visit, $100-$500 per hospital admission
- Out-of-Pocket Maximum: $3,000-$8,000/year
Total Monthly Cost Example ($0 premium plan): $174.70 (Part B) + $0 (MA plan) = $174.70/month, plus copays when you use services
The Hidden Cost of Medicare Advantage
While the $0 premium looks attractive, Medicare Advantage costs can vary dramatically based on how much healthcare you use. A healthy year might cost you very little beyond the Part B premium, but a year with hospitalizations, surgeries, or cancer treatment could cost you $5,000-$8,000 in out-of-pocket expenses.
Pros and Cons of Each Option
Medigap (Medicare Supplement)
Advantages
- Predictable, low out-of-pocket costs
- See any Medicare-accepting doctor nationwide
- No network restrictions or referrals
- Great for travelers and snowbirds
- Coverage is guaranteed renewable
- Easier to budget for healthcare expenses
Disadvantages
- Higher monthly premiums
- No extra benefits (dental, vision, etc.)
- Must buy separate Part D drug plan
- Premiums increase with age
- Medical underwriting may apply after initial enrollment
Medicare Advantage
Advantages
- Lower monthly premiums (often $0)
- Extra benefits included (dental, vision, etc.)
- Drug coverage usually included
- Out-of-pocket maximum protects from catastrophic costs
- All-in-one plan simplicity
- Care coordination may improve outcomes
Disadvantages
- Network restrictions limit doctor choice
- May need referrals for specialists
- Prior authorization often required
- Limited coverage when traveling
- Costs unpredictable if you get sick
- Plans change every year; may need to switch
Which Option Is Right for You?
Consider Your Situation
Medigap May Be Better If You:
- Travel frequently or live in multiple states
- Want to see any doctor without restrictions
- Prefer predictable, budgetable costs
- Have ongoing health conditions requiring specialists
- Can afford higher monthly premiums
- Value peace of mind over extra benefits
Medicare Advantage May Be Better If You:
- Stay in one geographic area most of the year
- Are comfortable with a network of doctors
- Want lower monthly premiums
- Value extra benefits like dental and vision
- Are generally healthy and use little healthcare
- Prefer an all-in-one plan
Can You Switch Between Medigap and Medicare Advantage?
From Medicare Advantage to Medigap
You can switch from Medicare Advantage back to Original Medicare and Medigap during the Annual Election Period (October 15 - December 7) or during the Medicare Advantage Open Enrollment Period (January 1 - March 31).
Warning: Medical Underwriting May Apply
If you switch from Medicare Advantage to Medigap after your initial enrollment period (the 6 months after you turn 65 and enroll in Part B), insurance companies can deny you coverage or charge higher premiums based on your health conditions. This is a major consideration before choosing Medicare Advantage.
From Medigap to Medicare Advantage
You can switch from Medigap to Medicare Advantage during the Annual Election Period. No health questions are asked for Medicare Advantage enrollment, so switching in this direction is easier.
Frequently Asked Questions
Can I have both Medigap and Medicare Advantage?
No. It's illegal for a company to sell you a Medigap policy if you're enrolled in Medicare Advantage (with limited exceptions). You must choose one or the other.
What's the most popular Medigap plan?
Plan G is currently the most popular choice. It covers everything Plan F covers except the Part B deductible ($240/year). Since Plan F is no longer available to new Medicare enrollees (as of 2020), Plan G offers the most comprehensive coverage available.
Are $0 premium Medicare Advantage plans really free?
No. You still pay your Part B premium, and you'll have copays, coinsurance, and deductibles when you use services. The plan premium is $0, but your total costs depend on how much healthcare you need.
Which option is better for cancer patients?
This depends on your situation, but many people facing serious illnesses prefer Medigap because it allows access to any specialist nationwide without network restrictions, and costs are more predictable. However, Medicare Advantage's out-of-pocket maximum can provide protection against unlimited costs.
Do I need a separate drug plan with Medigap?
Yes. Medigap does not cover prescription drugs. You'll need to enroll in a standalone Part D plan for drug coverage.
Can my Medigap premium increase?
Yes. Most Medigap policies use "attained-age" pricing, meaning premiums increase as you get older. Premiums can also increase due to inflation and healthcare cost increases. However, the insurance company cannot raise your premium based on your health status.