Medicare Advantage vs. Medigap

Medicare Advantage and Medigap plans are two distinctly different forms of Medicare coverage, with their pros and cons. For example, Medicare Advantage plans are more budget-friendly, but Medigap plans are better for those with health issues. Consider the differences between the two coverage options to make the right choice since you cannot have both types simultaneously.

What’s the Difference Between Medicare Advantage and Medigap?

How Medicare Advantage Works

Medicare Advantage, also known as Medicare Part C, is an alternative to Original Medicare (Parts A and B) that can be purchased from a private health insurance company. People who choose these plans no longer receive their benefits through Original Medicare. Instead, their health coverage is provided entirely through their chosen insurance company.

Pros:

  • Lower monthly cost
  • Most plans include RX coverage in one plan
  • Options can include extras, like gym memberships, dental and vision discounts

Cons:

    • Out-of-pocket costs can reach $8,300 per calendar year for 2023
    • Annual plan changes
    • Providers can be dropped or leave a plan
    • Certain procedures require prior authorization
    • Network restrictions when traveling

How Medicare Supplement (Medigap) Works

With Medigap, Original Medicare is the primary payer; then, a Medigap Plan pays the remaining balance for coinsurance, copays, deductibles (such as the Part B deductible), and more.

Medigap does not use provider networks; you can go anywhere Original Medicare is accepted. This gives you access to far more providers than Medicare Advantage.

Pros:

    • Complete network freedom, go anywhere Original Medicare is accepted in the country.
    • No annual plan changes.
    • Significantly lower out-of-pocket costs than Advantage.
    • Freedom to travel.

Cons:

    • Carries a monthly premium of $150 on average
    • Requires a separate RX plan

Is it Better to Have Medicare Advantage or Medigap? 

Which type of plan will be best depends on the specifics of your situation. If you don’t travel much and don’t mind being a little more restricted about which doctors and healthcare providers you can see, Medicare Advantage (also called Part C) might be better for you. This is particularly true if you’re on a tighter budget or want an all-inclusive plan instead of multiple policies. If you want more flexibility when seeing your doctors and don’t mind not having Part D (prescription drug coverage) included in your plan, then a Medigap and Part D plan would be ideal.

How Do I Choose?

The types of coverage and benefits you’re looking for, the out-of-pocket costs you’re willing and able to pay, and the options available in your area are just a few things you should look into when you make your choice.

Benefits of Each 

Medicare Advantage

  • Enjoy comfortable, dependable coverage within your insurance company’s service area.
  • Avoid paying a lot each month for monthly premiums.
  • The government decides on out-of-pocket limits.
  • You cannot be charged more for pre-existing conditions.
  • Enjoy coverage similar to private insurance you may have had in the past.
  • Advantage plans have Special Needs Plan options available.
  • Optional Gym memberships, prescription drug plans, and dental plans are often included.

For those who don’t mind having to choose from certain network providers for healthcare, Medicare Advantage is sometimes the better choice. It’s often more affordable, and sometimes you don’t have to pay a premium. For those who are used to private insurance, adjusting to Medicare Advantage is easy. Finally, some people prefer an all-in-one plan; if this is the case, Medicare Advantage is ideal. After all, you don’t have to worry about purchasing Medicare Part D with many plans, which can simplify matters and reduce out-of-pocket costs.

Medicare Supplement

  • No annual plan changes.
  • Complete network freedom.
  • Significantly lower out-of-pocket costs for medical care and treatment.
  • No network limits.
  • No annual plan changes.

When you choose your Medicare Supplemental coverage, you don’t get to choose your benefits. Benefits for each lettered plan are standard across all private insurance companies. Some plans offer more robust coverage, while others are more simplified. Dental care, prescription drug coverage, and other additional benefits are not included. You can see any healthcare provider that accepts Medicare benefits, and your Medicare Supplement plan covers you. You also don’t need referrals to specialists, regardless of your health conditions.

Costs of Each

A Medicare Advantage plan (Part C) is often cheaper per month but has additional out-of-pocket expenses for medical care.

    • This plan is usually cheaper than Medicare Part A and Part B plus a Medigap Plan.
    • $0 premium plans exist, but even plans with premiums are often affordable.
    • Some plans even pay your Part B premium. You will need to pay if your plan does not cover your Part B premium.
    • In 2023, the Part B premium is $164.90.

A Medicare Supplement (Medigap) plan is more expensive than an Advantage plan but provides more coverage for medical costs. Medigap may be the best option for those with health issues. The average price of a Medicare Supplement plan is about $150 a month, although costs vary from plan to plan and company to company.

    • Insurance companies set their rates for supplements based on one of three rating methods: community-rated, issue-age-rated, or attained-age rated.
    • Most people don’t pay Medicare Part A premiums, but if you have to pay, your costs will be $274 or $499 a month.
    • You will still have to pay your Medicare Part B premium. In 2023, the Part B premium is $164.90.
    • Before 2020, approximately 66% of people who purchased Medigap policies purchased Plan F. This plan covered the Medicare Part B deductible. However, no plans that cover the Part B deductible are available for new Medicare recipients, so you should count on paying the Part B deductible each year.
    • Since a prescription drug plan will not be included with your supplement, you will need to count on paying for your medications. Alternatively, you can purchase a Part D drug plan. On average, these plans cost approximately $35 a month, but costs go up for those with higher income levels.

Why would I need Medigap if I already have Medicare? 

There are some gaps in coverage for those who only have Medicare, which leaves some enrollees with extra medical expenses. Medigap helps fill in some of those gaps without paying as many private fees. Also, be aware that you cannot purchase a Medigap policy if you don’t already have Medicare.

Making the Decision 

Choosing between Medicare Advantage and Medigap is not an easy decision. With Policy Guide’s assistance, you will have access to the knowledge and expertise of professional agents who can help you compare different health plans, prices, and policies to ensure that you make an informed decision. Let us guide you through this process, so that your chosen plan best suits your needs.

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Mark Prip

Since 2003, Mark Prip has been leading  Policy Guide, Inc., providing knowledgeable information about Medicare, life insurance, and dental coverage to clients in over forty states. With his unparalleled hands-on experience aiding countless Medicare beneficiaries in selecting an appropriate health plan - it's clear that he is a prime example amongst other competitors for expertise and assistance. Mark has held is Florida Health & Life Insurance License (E051889) since 2003. View his license profile on the Florida Department of insurance website.