Is it Better to Have Medicare Advantage or Medigap?
Medicare Advantage may offer additional benefits not included in Original Medicare, while Medigap can help cover out-of-pocket costs.
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Many people don’t realize that Original Medicare doesn’t cover 100 percent of all medical expenses. Things like deductibles and dental care are extra and can add up for all Medicare beneficiaries, including older adults. Luckily, Medigap and Medicare Advantage are available to help lighten the load. Offered by private insurance carriers, 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. We also spoke with Ryan Kocher, Medicare Chief Growth Officer, Cigna Healthcare, who offered his insights on choosing the right plan type for your needs.
Comparing Medigap vs. Medicare Advantage Plans
| Plan Features | Medigap | Medicare Advantage |
|---|---|---|
| Monthly premium | $20 to $500 per month, depending on plan | $18 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 | Varies by plan |
| Prescription drug coverage | No | Yes (for most plans) |
| Travel coverage | Yes (Plans C, D, F, G, M, N) | Varies by plan |
| Copays | Varies by plan | Yes |
Pro Tip: Steer clear of late enrollment penalties by following SeniorLiving.org’s 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 those who enrolled after Jan. 1, 2020), Medigap is relatively customizable and may allow 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 individuals under 65, but the monthly premiums might be higher.
FYI: You must have both Medicare Parts A and B to get (and keep) Medigap.
Each Medigap insurance plan has a different combination of benefits. Common benefits across many plans may 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:
- Prescription drugs
- Vision or dental care
- Hearing aids
- Eyeglasses
- Private-duty nursing
- Long-term care
Pro Tip: Medigap enrollees have the option to add a Medicare Part D prescription drug plan. Our research team analyzed carriers across the nation to select SeniorLiving.org’s recommendations for Medicare Part D plans.
Advantages and Disadvantages of Medigap
Because Medicare does not have an out-of-pocket maximum, chronic or critical conditions could become very costly. Medigap plans may 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.
Pros About Medigap
- Helps cover out-of-pocket Medicare expenses that can add up
- Can help protect against hefty costs due to chronic illness or major health emergencies
- Some plans may cover services Medicare doesn’t provide, such as health care while you’re traveling outside the U.S.
- 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
Cons About Medigap
- 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
- Does not cover all expenses (like prescription drugs, some medical equipment, or long-term care)
From the Experts: Kocher comments, “Medigap plans are guaranteed renewable for life even if you have or develop health problems. This means you can keep your Medigap policy, regardless of health, as long as you stay enrolled and pay your premium. Medigap enrollees can see any doctor who accepts Medicare, making it an attractive choice for those who value choice and/or who travel often.”
Medigap Costs
Like any private supplemental insurance, Medigap charges a monthly premium. Insurance companies can set their rates in three different ways:
- Community: There is the same set rate for all clients, regardless of age or conditions.
- 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.
- 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 may have several options to choose from, 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 may be able to 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 Medicare Advantage carriers to set an out-of-pocket limit to help protect you. 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 may save money and time. Kocher notes that “Medicare Advantage plans are popular because they offer extra benefits beyond Original Medicare, such as dental, vision, and hearing, and many provide Part D drug coverage.” But you need to know the details and downsides to figure out if Medicare Advantage is the right solution for you.
Pros About Medicare Advantage Plans
- May have lower monthly premiums than Medigap
- Combines multiple Medicare plans into one policy (usually Parts A, B, and D)
- May cover additional benefits that Original Medicare does not, like dental and hearing aids
- Usually places a cap on out-of-pocket spending
Cons 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
So how do you decide between a Medicare Advantage and Medigap plan? Kocher says, “Both plans are good options, but finding the right fit for you depends on your unique health status, lifestyle, and budget. Medicare Advantage plans are a good fit for people who are budget conscious or have health conditions that require close attention. Medicare Supplement plans are good for people who are willing to pay a little more to be able to see any doctor who accepts Original Medicare or frequently travels outside the United States. Medicare Advantage plans typically include drug coverage, while Medicare Supplement plans do not. Since Medicare Supplement plans don’t offer drug coverage, you can add a Prescription Drug Plan for an additional premium.”
Consider some of the following differences between Medigap and 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 calculated 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. Medicare recipients 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? Those with chronic conditions or those at risk of frequent or urgent hospital care might pay more out of pocket. Pick plans based on the coverage you likely need, and also consider possible future needs, such as emergency or long-term care.
Out-of-Pocket Expenses
Some Medigap and Medicare Advantage plans have out-of-pocket limits. For example, Medigap Plans K and L have a limit of $7,060 and $3,530, respectively, in 2024.3 You should estimate your typical annual medical expenses to help find a policy that offers enough coverage. You can use Medicare’s out-of-pocket cost estimator to get an idea.
From the Experts: “Above all, you know yourself and your health care needs. Learn about the different plan types and choose one that best suits your budget, lifestyle, and health status,” Kocher says. “Medicare.gov is a good resource to find and compare plans. You can also ask friends and family members who have Medicare about their experiences.”
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 may be able to switch plans or go back to Original Medicare during this time.
>> Useful Resource: CareFirst Medicare Advantage Plans Review
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?
- You need more or different benefits
- You’re overpaying for benefits you don’t use
- You want to switch insurance companies
- 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.
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
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.
Both Medigap and Medicare Advantage plans have special enrollment periods (SEPs) for special circumstances and changes in your life. Examples may 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.
Medicare.gov. (2021). Medicare Advantage Plans cover all Medicare services.
Centers for Medicare & Medicaid Services. (2021). K & L Out-of-Pocket Limits Announcements.
Medicare.gov. (2021). When can I buy Medigap?
Medicare.gov. (2021). Medicare & You.
