Is it Better to Have Medicare Advantage or Medigap?

Medicare Advantage vs. Medigap: Which Is Right for You?

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Many seniors don't realize that Original Medicare doesn't cover 100 percent of all medical expenses. Things like deductibles and dental care are extra and add up. Some estimates say the average retired couple ages 65 and over spends $295,000 on health care.1 While numbers like that might make your head spin at first glance, you can buy supplemental insurance to alleviate those costs.

Medigap and Medicare Advantage are available to help lighten the load. Offered by private insurers, both insurance plans have multiple options, advantages, and disadvantages. So how do you decide between the two? In this article, we'll weigh the pros, cons, and purpose of both to help you make an informed decision.

Medicare Advantage vs. Medigap

Comparing Medigap vs. Medicare Advantage Plans

Plan Features Medigap Medicare Advantage
Cost $20 to $500 per month, depending on plan $25 monthly average
Doctor and hospital visits covered Yes Yes, varying by plan
Enrollment period First 6 months after you turn 65 and are enrolled in Medicare A and B – Your initial enrollment period
– When you turn 65
– Annual enrollment: Oct. 15 to Dec. 7
– Jan. 1 to March 31 (if you already have a Medicare Advantage plan)
Network restrictions Medicare SELECT plans only Yes
Referrals required No Yes
Prescription drug coverage No Yes
Travel coverage Yes (Plans C, D, F, G, M, N) Varies by plan
Copays Varies by plan Yes

From the pros: Steer clear of costly late enrollment penalties and late fees by following our step-by-step Medicare enrollment guide!

What is Medigap?

After paying deductibles, Medicare recipients are still responsible for roughly 20 percent of any approved expenses. Medigap policies, sold by private insurance companies, help cover those out-of-pocket “gaps,” such as copays or extra services Medicare does not provide.

With 10 different plans (eight for seniors who enrolled after Jan. 1, 2020), Medigap is relatively customizable and allows more flexibility in where you get care than Original Medicare. But monthly premiums can be higher and eligibility more restricted after the six-month open enrollment period, which begins on the first day of the month you turn 65. Some states offer Medigap to qualifying seniors under 65, but the monthly premiums might be higher.

From the experts: You must have both Medicare Parts A and B to get (and keep) Medigap. Our comprehensive guide to Medicare Supplement Insurance has the important details on Medigap plans and pricing.

Each Medigap insurance plan has a different combination of benefits. Common benefits across most plans include:

  • Medicare Part A coinsurance and hospital costs
  • Medicare Part B copayment or coinsurance
  • Part A hospice care coinsurance or copayment
  • First 3 pints of blood transfusions

Medigap does NOT cover:

From the experts: Medigap enrollees have the option to add a Medicare Part D prescription drug plan. Our research team analyzed carriers across the nation to find our top Medicare Part D plans for seniors.

Advantages and Disadvantages of Medigap

Because Medicare does not have an out-of-pocket maximum, chronic or critical conditions could spell financial disaster. Medigap plans can minimize that risk, but their value depends on individual circumstances. They aren't equally beneficial for everyone, so it's essential to weigh the pros and cons.

What We Like About Medigap

  • It helps cover out-of-pocket Medicare expenses that can add up.
  • It protects against hefty costs due to chronic illness or major health emergencies. Some plans cover services Medicare doesn't provide, such as health care while you're traveling outside the U.S.
  • It auto-renews annually as long as premiums are paid; private insurance companies cannot revoke Medigap coverage if you're in good standing with Medigap and Medicare.

Things to Keep in Mind About Medigap

  • It has an additional monthly premium.
  • Prices can fluctuate largely by carrier based on different criteria. Some Medigap plans have flat rates, while others vary by state, age, gender, overall health, and even time of year.
  • Certain carriers do not accept or cover preexisting conditions after the initial six-month Medigap enrollment window has passed.
  • It does not cover all expenses (like prescription drugs, some medical equipment, or long-term care).

Medigap Costs

Like any private supplemental insurance, Medigap charges a monthly premium. Insurance companies can set their rates in three different ways.

  1. Community: There is the same set rate for all clients, regardless of age or conditions.
  2. Issue-age: Premiums are based on age at the time of policy enrollment. Younger people usually get lower rates. However, the rates are locked in at purchase, so they don't go up as enrollees age.
  3. Attained-age: Rates are set according to a person's current age, and they will increase as buyers get older.

Medigap Insurance Reviews and Ratings

It's easy to feel overwhelmed when you're searching for a Medigap plan that aligns with your health care needs and budget. Explore our detailed Medicare Supplement Insurance reviews to learn which carriers stood out among the competition.

What Is Medicare Advantage?

Medicare Advantage (also called MA or Part C) includes Original Medicare (Part A and Part B), along with additional benefits and often Part D (prescription drug) coverage. When shopping for a Medicare Part C plan, you have several options, including a traditional HMO or PPO. Some plans come with a preset list of in-network services and doctors, while others allow you to see both in-network and out-of-network providers. Many plans also cover routine extras like vision and dental care, but there may be network and referral restrictions. As with Medigap, you buy Medicare Advantage through private insurers approved by Medicare.

Pro Tip: You cannot get Medicare Advantage if you have a Medigap plan, and vice versa.2 But you can switch from one to the other at certain enrollment times.

Medicare Advantage Plans may offer extra coverage, such as:

  • Vision
  • Hearing
  • Dental
  • Health and wellness programs (like gym discounts)
  • Medicare-covered prescription drugs (Part D)
  • Emergency and urgent care
  • Medical transportation, adult day care, and over-the-counter medication

Medicare Advantage does NOT cover:

  • Copays
  • Coinsurance
  • Deductibles
  • Some services deemed unnecessary by Medicare (dependent on plan)

Did You Know: Federal regulations require all Medicare Advantage carriers to set an out-of-pocket limit to help protect you from huge bills. Our Medicare Part C guide breaks down these maximum costs.

Pros and Cons of Medicare Advantage Plans

Medicare Advantage combines the separate hospital, doctor, and other Medicare parts into one plan, which can save money and time. But you need to know the details and downsides to figure out if Medicare Advantage is your best solution.

What We Like About Medicare Advantage Plans

  • It has lower monthly premiums than Medigap.
  • It combines multiple Medicare plans into one policy (usually Parts A, B, and D) and often covers prescription drugs.
  • It covers additional benefits that Original Medicare does not, like dental and hearing aids.
  • It usually places a cap on out-of-pocket spending.

Things to Keep in Mind About Medicare Advantage Plans

  • Not all medical facilities or doctors accept Medicare Advantage.
  • There are wide cost variations.
  • Plans and coverage vary widely by location and benefits.
  • Numerous options make comparing plans difficult.
  • Some plans (often $0 premium plans) have high out-of-network fees and out-of-pocket maximums.

Things to Consider When Choosing Medigap vs. Medicare Advantage

Age

Some Medigap plans have rates based on age, either issue age (your age when you buy the policy) or attained age (meaning prices go up as you grow older). Make sure to find out how rates are factored and if coverage differs by age throughout the policy.

Employment status

Many companies offer Medicare Advantage plans or subsidies for retiring employees. Those turning 64 should check their employer benefits before retiring or signing up for Medicare supplemental insurance.

Location

Both Medigap and Medicare Advantage offer different coverage in different states, and not all plans provide coverage during travel. Seniors who live in multiple states or travel throughout the year need to make sure their coverage travels with them.

Medical Conditions

Do you have a chronic illness that requires regular attention? Do you need several prescription medications? Are you relatively healthy and only need to see a doctor a few times a year? Older adults with chronic conditions or those at risk of frequent or urgent hospital care might pay more out of pocket. Pick plans based on the amount of coverage you likely need, and also consider possible future needs, such as emergency or long-term care.

Out-of-Pocket Expenses

Most insurance policies have extra expenses. Some Medigap and Medicare Advantage plans have out-of-pocket limits. For example, Medigap Plans K and L have a limit of $6,620 and $3,310, respectively, in 2022.3 niors should estimate their typical annual medical expenses to get the policy that is closest. Use Medicare's out-of-pocket cost estimator to get an idea.

Enrollment Periods

Enrollees can only receive guaranteed Medigap coverage during their six-month Medigap open enrollment period. The clock automatically starts the month you turn 65 and enroll in Medicare Parts A and B. After that, you may not be able to get Medigap if you don't meet insurers' underwriting requirements.4 Prices may also go up after open enrollment ends. To get the best Medigap prices and options, sign up during the Medigap open enrollment period.

There are three main eligibility periods to enroll in or switch to a Medicare Advantage plan:

  • Initial Enrollment is when an individual first becomes eligible for Medicare.
  • Open Enrollment is Oct. 15 to Dec. 7 annually to join, change, or leave plans.
  • Medicare Advantage Open Enrollment is Jan. 1 to March 31 annually. Those already enrolled in Medicare Advantage can switch plans or go back to Original Medicare during this time.

Can I Switch From Medicare Advantage to Medigap or Vice Versa?

You may be able to switch from Medicare Advantage to Medigap or vice versa if you decide that one fits your needs better than the other after enrolling. However, you cannot be enrolled in both Medigap and Medicare Advantage at the same time.

Why switch?

  1. You need more or different benefits.
  2. You're overpaying for benefits you don't use.
  3. You want to switch insurance companies.
  4. You want a lower premium.

How to switch will depend on which plan you're starting with.

Switching From Medigap to Medicare Advantage

If you're thinking about switching from your Medigap plan to a Medicare Advantage plan, you can make the move during the Medicare Annual Enrollment Period from Oct. 15 to Dec. 7.

FYI: If you drop your Medigap policy to join a Medicare Advantage plan, you may not be able to get it back. Rules vary by state and your situation.5

Switching From Medicare Advantage to Medigap

Individuals with Medicare Advantage can change over to Medigap during specific times of the year.

  • Medicare Advantage Trial Period: During the first 12 months after enrolling in Medicare Advantage, you can switch back to Original Medicare and apply for Medigap
  • Medicare Annual Enrollment Period: Oct. 15 – Dec. 7.
  • Medicare Advantage Open Enrollment Period: Jan. 1 – March 31.

Did You Know: Both Medigap and Medicare Advantage plans have special enrollment periods (SEPs) for special circumstances and changes in your life. Examples include moving to a long-term care hospital or nursing facility.

Understanding the facts and features of Medicare can be challenging! Our editor-in-chief, Jeff Hoyt, explains how to avoid missing out on valuable Medicare benefits.

Don't Leave Your Hard-Earned Benefits Behind. Call to get connected with a licensed agent. (855) 954-2561 | TTY: 711

Senior Living is an online lead generator that helps connect consumers with licensed insurance agents. MEDICARE ADVANTAGE AND PDP: This site provides referrals to representatives of Medicare Advantage organizations and stand-alone PDP prescription drug plans that have Medicare contracts. Enrollment in any plan depends on contract renewal. The plans represented do not discriminate on the basis of race, color, national origin, age, disability, or sex. To learn more about a plan's nondiscrimination policy, please contact the plan. 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. Generally, Medicare is available for people age 65 or older, younger people with disabilities and people with End Stage Renal Disease. You must have both Part A and B to enroll in a Medicare Advantage plan. Members may enroll in the plan only during specific times of the year. Some Medicare plans are not available in all areas, and costs, coverage, and benefits vary by location. MEDICARE SUPPLEMENT: 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. Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. PRIVATE SITE: This is a non-government website, and is not endorsed by the Centers for Medicare & Medicaid Services (CMS), the Department of Health and Human Services (DHHS), or any other government agency. The purpose of this communication is to connect individuals with a licensed insurance agent. Contact will be made by an insurance agent or a phone representative who can connect you to a licensed insurance agent. AGREEMENT TO TERMS: If you use submit your information through this website, you agree to the Privacy Policy and Terms & Conditions linked below, and to be contacted by a licensed insurance agent or a phone representative who can help connect you to a licensed insurance agent in your area to help review your coverage and options. NOT ALL PLANS OFFERED: The licensed agent to whom you are connected may not offer all plans in your area. Any information provided is limited to those plans the licensed agent does offer in your area. To explore all plans, please contact Medicare.gov or 1-800-MEDICARE.

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Written By

Jeff Hoyt

Editor in Chief

Since graduating from Harvard with an honors degree in Statistics, Jeff has been creating content in print, online, and on television. Much of his work has been dedicated to informing seniors on how to live better lives. As Editor-in-Chief of the personal… Learn More About Jeff Hoyt

Citations
  1. Fidelity. (2020). How to plan for rising health care costs.

  2. Medicare.gov. (2021). Medicare Advantage Plans cover all Medicare services.

  3. Centers for Medicare & Medicaid Services. (2021). K & L Out-of-Pocket Limits Announcements.

  4. Medicare.gov. (2021). When can I buy Medigap?

  5. Medicare.gov. (2021). Medicare & You.