Medigap VS. Medicare Advantage | Key Differences Explained

A doctor's hands holding a piggy bank.

Many individuals enrolled in Original Medicare choose to purchase a separate Medigap plan to help cover out-of-pocket expenses not covered by Medicare. These Medigap plans are also called Medicare supplement plans. On the other hand, you might choose to enroll in a Medicare Advantage plan instead. You might also hear these plans called Medicare Part C. They combine all your Medicare coverage into a single plan that is easier to manage and maintain. Plus, they can provide additional benefits beyond traditional Medicare coverage. The catch is that you cannot enroll in both a Medigap plan and a Medicare Advantage plan. While neither is mandatory, you can only choose one if you decide to enroll in either. So, what are these plans, and how are they different? Keep reading as we give you all the details on Medigap and Medicare supplement insurance.


What Is Medigap?

Medigap, or Medicare supplemental insurance, is an insurance policy that helps pay for out-of-pocket costs not covered by Medicare. This could be deductibles, copays, coinsurance amounts, or other charges that you might be required to pay out of your own pocket. These plans are not mandatory, and they are not officially part of the Federal Medicare program. These plans are managed and administered by private insurance companies. Each insurance company is allowed to set its own rates on these plans, although the plans are standardized across 47 states. Here is what that standardization means.

There are many different Medigap plans available, such as Plan A, Plan B, Plan G, Plan F, and others. In fact, there are approximately ten different Medigap plans available today. Since the plans are standardized in 47 states, the coverage details of each type of plan will be the same across those states and across insurance companies. This means that the coverage details of Plan A sold by Blue Cross Blue Shield in one state will be the same as another Plan A sold by Cigna in a different state.

Some Medigap plans provide more comprehensive coverage, while the coverage of others is more minimal. Since there are monthly premiums associated with these plans, the plans with higher coverage typically have higher premiums as well. Medigap plans can no longer cover the Medicare Part B deductible, but they can cover almost every other cost associated with Medicare, including the Part A deductible, coinsurance amounts, Part B excess charges, and even foreign medical emergencies.


What Is Medicare Advantage?

So, what is a Medicare Advantage plan? Unlike Medigap plans, Medicare Advantage plans are not standardized. These plans are also managed by private insurance companies, and each insurance company is allowed to set its own rules around rates and coverage details. The only requirement is that a Medicare Advantage plan must provide at least the same minimum level of coverage that is provided by Original Medicare. Many of these Advantage plans provide extra benefits well beyond the benefits provided by Medicare. This includes benefits for dental care, vision care, hearing aids, and even gym memberships. There are also special needs plans available that are designed specifically for individuals with certain health conditions.

Medicare Advantage plans are not available across the country in most cases. Each insurance provider offers its plan options within its service area. This means that you must select a plan that is available in your area if you decide to enroll in coverage. You can use the plan finder tool at to find the plans available in your area. Costs of these plans vary according to the coverage details as well as your location, age, and medical history. While many plans require a monthly premium for enrollees, some Advantage plans have a zero premium. Some will even help pay a portion of your Medicare Part B premium. As you might expect, the best Medicare Advantage plans typically have the highest premiums. If you decide to sign up, you should closely examine the coverage options of your available plans to select the one that is right for you.


Medicare Advantage Plans VS Medigap Plans: Key Differences

A doctor examining an elderly male patient with a stethoscope.

Now that you know about each of these types of plans let’s dive a little deeper into the details of each. We will explore several critical differences between Medigap and Medicare Advantage.


— Coverage Details

One of the most significant differences between Medigap and Medicare Advantage is the coverage. Remember that a Medicare Advantage plan essentially replaces your Original Medicare coverage while a Medigap plan supplements that coverage. Medicare Advantage plans typically require copays and coinsurance amounts when you receive service from your healthcare provider. Many also require that you meet an annual deductible when receiving treatment. Advantage plans are available in both Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO) options in most cases. Some plans have large provider networks, while the network of other plans is much smaller. Most of these plans also provide a prescription drug plan like a Medicare Part D plan.

When it comes to Medigap, you still use your Original Medicare coverage when receiving treatment. However, your Medigap policy helps pay for your out-of-pocket expenses. For example, suppose you visit the doctor and are required to pay a $40 coinsurance amount. Your Medigap plan would pay that $40 for you. The specific expenses covered depend on the plan that you select. The plans with lower premiums typically have lower coverage benefits as well. You should note, however, that Medigap plans do not provide any benefits for prescription drugs. You would need to enroll in a Medicare Part D plan for those benefits, but Medigap would not cover any of your out-of-pocket expenses related to prescription drug coverage.


— Costs

The costs of both types of plans vary according to several different factors. This includes your location, gender, age, and tobacco status. Some Advantage plans are available with no monthly premium. However, you should always check the coverage details of those plans to make sure the plan will meet your needs. Medicare Advantage plans can cost anywhere from $0 to $500 per month. Medigap plans, on the other hand, always require a monthly premium. The cost of Medicare supplement plans can range from $50 to $150 in most cases. If you sign up during your initial enrollment period, you will pay the lowest possible premium. Your Medigap policy will be a guaranteed-issue policy in that case. However, if you wait until an open enrollment period, you will need to go through full medical underwriting. This means that your premium may increase significantly, or you could be denied coverage altogether.


— Doctor Referrals

As you likely know, some health insurance plans require a referral before seeing a specialist. Some Medicare Advantage plans require referrals to see certain doctors. This means that you will need to pay a copay to both your primary care physician and the specialist. This is more typical in HMO plans. However, with Medigap, there is no referral process. Referrals are not required for Medigap to pay for your out-of-pocket expenses. When you visit a physician, your Medigap policy will cover the items laid out in your coverage details whether or not you had a referral.


— Out-of-Pocket Limits

For Medicare beneficiaries, you likely already know that there is no out-of-pocket maximum during the calendar year. This means that you could end up with a hefty medical bill if you have a serious health condition. Suppose you spend a few weeks in the hospital. Your Medicare Part A might cover a lot of those expenses, but your cost-sharing coinsurance amount could be several thousand dollars. With Medicare Advantage, the annual maximum is capped at $7,550 per year. This means that your plan will cover 100% of your expenses once you have paid that amount during the year. If you use providers outside your plan’s network, the maximum is a little higher.

Medigap, on the other hand, attempts to ease the burden on the fact that Original Medicare has no out-of-pocket limit. Since Medigap helps cover your out-of-pocket costs, these plans can really help lower your overall health care costs. These plans have no limit to the amount that you might be required to pay out of your pocket, but most plans help to reduce the amount that you will need to pay when you receive Medicare-covered services.


Benefits Of Medigap Plans

There are many benefits of Medigap health plans. One of the biggest benefits is that they can lower your overall health care costs. Even though these plans have a monthly premium, they can really lower the amount that you might need to pay out of your pocket. When you visit the doctor, you will be required to pay a copay or coinsurance amount under Original Medicare. However, these Medigap plans will cover at least a portion of these amounts.

Similarly, many Medigap plans provide coverage for items not covered by Original Medicare. Several plan options include coverage for up to 365 additional days in the hospital after your Part A benefits have been used. Some plans also include coverage for foreign emergency care and the first three pints of blood in a transfusion. Medicare does not provide coverage for these things, but you might find that having that Medigap coverage is extremely beneficial for you.


Benefits Of Medicare Advantage Plans

Now that you know some of the benefits associated with Medigap plans let’s take a look at the benefits of a Medicare Advantage plan. The first benefit is that these plans often provide many additional benefits beyond Original Medicare. Most plans include dental and vision coverage along with prescription drug benefits. Some Advantage plans even include coverage for hearing aids or free gym memberships. Most people find this additional coverage useful.

Another benefit of Advantage plans is that some of them do not have a monthly premium, and some plans can even cover some or all of your Part B monthly premium. If you do not visit the doctor often, these zero-premium plans can really bring down your health care costs. However, remember that plans with lower premiums typically provide lower benefits when you receive treatment. You should carefully weigh all your options when choosing the right plan for your situation.


Choosing Between Medicare Advantage And Medigap

So, how do you choose between these two types of plans? Remember that you cannot be enrolled in both a Medicare Advantage plan and Medigap, so you must select one or the other. There are several factors that you should consider when making your decision. You should first consider the coverage details and costs of the plans. Carefully consider the full list of benefits provided by each plan and decide whether you need those benefits. Also, remember that the monthly premium is not the only cost associated with each plan. There are other out-of-pocket costs as well, such as copays, deductibles, and coinsurance amounts. You will want to consider the overall cost of each plan option and not just the premium amount.

Next, you should consider your lifestyle and overall health. If you are generally healthy and rarely visit the doctor, a plan with lower benefits and a lower premium might be your best option. However, for those with multiple health conditions, you may benefit more from a plan that offers the highest level of benefit. Also, remember that you will likely need to purchase a separate Medicare Part D plan if you decide to go with Medigap, but prescription drug coverage is included with most Medicare Advantage plans.

Finally, the availability of plans and providers in your area can have an influence on which plan you select. You might find that the list of network providers for an Advantage plan in your area is minimal. In that case, you may decide that Original Medicare with a Medigap policy is right for you. This could significantly increase the list of providers from which you could receive treatment. If you are having trouble deciding between the two, you should consult a licensed insurance agent in your area. They can help you find the plans available to you and make the right decision based on your personal situation.


Switching Between Medicare Advantage & Medigap

What if you select a plan and later decide that it is not right for you? Can you switch between Medicare Advantage and Medigap? The answer is yes, although there are a few things that you should be aware of when attempting to switch plans. The most common scenario is the situation where you want to take advantage of the lower premiums of a Medicare Advantage plan while you are younger and switch to a Medigap plan in your older years. This is allowed, but there is a caveat to switching.

If you sign up for Medigap during your Medicare initial enrollment period, the policies are generally guaranteed-issue policies. This means that you are guaranteed coverage, and the insurance companies who sell the policies cannot charge you more because of pre-existing health conditions. However, if you wait and switch to Medigap during an open enrollment period, you must go through the full underwriting process. This means that your premiums will likely be higher due to your age and any health conditions you may have. It might even mean that your application for Medigap could be denied. So, even though you can switch between the plans, it is best to select one when you first become eligible for Medicare and stick with it.


The Bottom Line

Medigap and Medicare Advantage are quite different, but they can both be extremely beneficial to enrollees. Medicare Advantage combines all your Medicare coverage into a single policy that typically makes things easier to manage. These plans usually provide extra benefits, like dental and vision coverage, along with coverage for prescription drugs. Medigap is purchased along with Original Medicare to help lower your out-of-pocket expenses for things not covered by Medicare. Medigap helps pay for things like deductibles, copays, and coinsurance. Selecting the right plan depends on your personal financial and health situation.


Frequently Asked Questions


What is the downside to Medigap plans?

One of the most significant downsides to Medigap insurance is that it provides no prescription drug benefits. If you need this coverage, you need to enroll in a separate Medicare Part D plan. Most Part D plans have copays, deductibles, and coinsurance. However, Medigap will not provide coverage for those expenses associated with your Part D plan. Even given this fact, Medigap plans offer many great benefits, and they are an excellent option for many Medicare enrollees.


What is the biggest disadvantage of Medicare Advantage?

One of the biggest disadvantages of Medicare Advantage is that the plans are not standardized. Coverage details and costs vary from plan to plan, and the details also vary from state to state. The plans available to you depend on the area in which you live, and the insurance companies who administer the plans might change coverage details from year to year. This means that your Advantage plan could change without much warning, and this could have a huge effect on your health care expenses.


Can I enroll in both Medicare Advantage and Medigap?

No, you cannot enroll in both Medicare Advantage and Medigap. First, you should know that neither plan is mandatory. You might decide to simply enroll in Original Medicare. You could also decide to enroll in Original Medicare and add a Part D plan. You are not required to purchase Medigap or an Advantage plan. However, if you decide to purchase one of these plans, you cannot purchase the other. If you opt for Original Medicare with a Medigap policy, you cannot sign up for a Medicare Advantage plan. It is possible to switch between the two, but that could cost you higher premiums if you change plans during an open enrollment period.


Do I need Medigap if I already have Original Medicare?

Whether or not you need Medigap depends on your personal financial situation, overall health, habits, and lifestyle. Medigap is not mandatory. If you have Original Medicare, you are not required to purchase a Medigap plan. You should carefully consider your situation and the coverage details provided by the different Medigap plans to determine whether one is right for you. In many cases, they can help lower your overall health care expenses. However, for some, they are not beneficial and would simply be an added expense.