Original Medicare has health care coverage gaps, making it necessary for some individuals to choose another insurance option. Both Medicare Advantage and Medigap are alternatives to traditional Medicare. They are not government-run programs but are available through private insurers. Those with certain disabilities or who are 65 or older are eligible for either plan. Although you can switch between the two plans, you can’t have both Medigap and Medicare Advantage simultaneously.
Medigap vs. Medicare Advantage: Which Is Better for You?
Updated: May 22, 2024
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Key Takeaways
Medigap offers supplemental plans for Original Medicare to fill traditional Medicare gaps. Monthly costs are generally higher than Medicare Advantage plans, but more services are covered, leaving fewer out-of-pocket costs.
Medicare Advantage (Part C) offers an all-in-one policy for Parts A, B and D. While it is convenient and usually has cheaper premiums than Medigap, Medicare Advantage does not cover as many services.
Medigap can benefit those who require more intensive health care coverage, while Medicare Advantage would be a better option for those only needing basic care.
Difference Between Medigap and Medicare Advantage
Although both offer health care coverage to fill the gaps left by Original Medicare, there are many differences between Medigap and Medicare Advantage plans. The differences between the Medicare supplement and Medicare Advantage policies are outlined in the table below.
Comparing Characteristics of Medigap and Medicare Advantage
Issue | Medigap (Medicare Supplement) | Medicare Advantage (Part C) |
|---|---|---|
Structure | Original Medicare plus | Combines Part A, B |
Network Restrictions | No | Sometimes |
Need Physician | No | Sometimes |
Premiums | Usually Higher | Usually Lower |
Copays | No | Yes |
Cost |
|
|
Enrollment | Any time (once eligible) |
|
Nationwide Coverage | Yes | No |
Preventative/Routine | No | Sometimes, but not often |
Prescription Drug | Not usually | Yes |
Original Medicare Coverage and Costs
Original Medicare is available for those 65 and older or who have certain qualifying conditions. It covers Parts A and B. Part A is hospital insurance, and Part B is medical insurance. Your premium depends on your time paying into Medicare taxes and your income.
Part A covers inpatient treatment like skilled nursing, hospitals, hospice and certain home health care services. There are no premiums for people who paid at least 40 quarters of Medicare taxes. Monthly premiums are $278 for those with 30 to 39 quarters of payments or $506 for those with fewer than 30 quarters. There may be a deductible to meet and 20% co-insurance to pay per service.
Part B covers doctor visits and outpatient procedures, with a starting premium of $164.90 per month. The premium is higher for those with incomes of $91,000 or more. Once the $226 deductible is met, the patient usually has a 20% co-insurance responsibility.
Premiums and deductibles are adjusted each calendar year. If you choose to add a supplement plan, your premium will increase.
Gaps in Original Medicare Coverage
There are gaps in Original Medicare coverage that can create a need for other options like Medicare Advantage or Medigap plans. The gaps include co-insurance considerations, medical costs that aren’t covered and the potentially high out-of-pocket costs for long hospital stays.
- 80/20 co-insurance split: There is no out-of-pocket maximum, so paying 20% of the co-insurance costs can become expensive, especially for large inpatient bills.
- Routine services not covered: Original Medicare doesn’t cover dental, hearing and vision, and there is usually no coverage for international travel. It also doesn’t cover prescriptions unless you pay for Medicare Part D prescription coverage, which is included in Medicare Advantage but not Medigap plans.
- Long hospital stays: It can be costly to stay in the hospital long-term on Original Medicare. The initial $1,600 deductible covers the first 60 days. Beyond that, there is $400 daily co-insurance for days 61–90 and $800 daily for days 91 and beyond. If you go past 60 “lifetime reserve days,” you’ll pay the full cost per day.
Medicare supplement (Medigap) and Medicare Advantage plans are two options available to fill the gaps in Original Medicare coverage.
DO I REALLY NEED SUPPLEMENTAL INSURANCE WITH MEDICARE?
There is no requirement to buy supplemental insurance with Medicare. However, individual medical needs may mean you can benefit from a Medicare supplement like Medigap or coverage through Medicare Advantage. Some examples of people who can benefit from these alternatives include:
- Those with international insurance needs
- People who want extended hospital coverage
- Prescription drug takers who could benefit from Medicare Advantage
Medicare Supplement: What Is Medigap?
When you sign up for Original Medicare, you can also purchase supplemental plans. Medigap is one such plan, often called Medicare supplement insurance. Traditional Medicare has several coverage gaps, including care-based gaps, cost coverage, co-insurance, copays, deductibles and out-of-pocket costs that aren’t covered, as well as international travel. Since supplement insurance is not available through the government, private insurers work to close those gaps with Medicare supplement coverage like Medigap plans.
Medicare Supplement Plans
Medicare supplement plans are available through private carriers. They are labeled A–N, excluding vowels. Medigap plans A–D are not the same as Medicare plans. For instance, Medigap Plan A is not the same as Medicare Part A. Plans are standardized across all states except for Massachusetts, Minnesota and Wisconsin, which handle their plans differently.
Insurance companies don’t have to offer every plan, but they must offer at least Medigap Plan A, Plan C and Plan F. Rules have changed as of January 1, 2020. Plan B can no longer cover Medicare Part B deductibles for new enrollees. Because of this change, new beneficiaries can no longer purchase Plans C or F. If you were eligible for Medicare before the cutoff date, you may still be able to buy either Plan C or F.
The table below outlines each Medigap supplement plan. If there is a deductible, services aren’t covered until it’s met.
Medigap Plans
- * These plans are no longer offered to new enrollees.
- ** This is a high deductible plan in some states. The high deductible plan option includes a $2,700 deductible.
- *** Medigap will pay 100% of covered services for plans K and L after you meet your out-of-pocket yearly limit and Part B deductible.
- † This pays 100% of the Part B co-insurance, with a copayment of up to $20 for some office visits and up to a $50 copayment for some ER visits.
HOW TO CHOOSE MEDICARE SUPPLEMENT
There are several things to consider when choosing a Medicare supplement plan. Insurers can use medical underwriting to determine your rate if you aren’t in a Medigap Open Enrollment Period or don’t have Medigap protections. Some providers offer discounts, such as multipolicy, paying annually or by electronic transfer or being a woman, married or a nonsmoker.
Other factors that may determine which Medicare supplement to choose include:
- In-network physicians
- International travel plans
- Network flexibility
- Overall lifestyle
- Hospital choices
To be eligible for a Medigap plan, you must already be enrolled in both Medicare Parts A and B. Each Medigap plan is for an individual. Spouses will have to enroll in their own Medigap plan.
Medicare Part C: What Is Medicare Advantage?
If you decide Original Medicare with a Medigap supplement isn’t for you, Medicare Advantage is an alternative option. Also known as Part C, Medicare Advantage is available through private insurers. A Medicare Advantage plan is comparable to Original Medicare Parts A, B and D plans rolled into a single policy, though hospice care is not included.
Although there can be out-of-pocket fees for copays and co-insurance, Medicare Advantage imposes out-of-pocket maximums, which can benefit some plan holders. Dental, hearing and vision expenses, which aren’t included in Original Medicare, may also be available. Premiums for Medicare Advantage are relatively low, around $20 monthly, and are in addition to your $164.90 Medicare Part B premium (which can be higher, depending on income).
CAN I SWITCH FROM MEDICARE ADVANTAGE TO MEDIGAP?
Yes, you can switch from Medicare Advantage to Medigap. You can only buy Medigap if you are enrolled in Original Medicare Parts A and B, so you will have to drop Medicare Advantage.
If you switch plans, you could lose valuable guaranteed issue rights, including pre-existing condition waivers. You might also face provider-imposed penalties.
You can only switch at predetermined times throughout the year:
- Within the first three months of Medicare enrollment
- Open enrollment: January 1 – March 31
- Annual Election Period: October 15 – December 7
- Special Enrollment Periods: losing coverage, living situation changes, other enrollment opportunities and special situations
Cost of Medigap vs. Medicare Advantage
The cost of Medicare Advantage vs. Medigap can vary widely, from less than $100 to several hundred dollars monthly. Insurance providers can determine Medigap rates based on:
- A single community price
- The age you are when you get your plan (issue age)
- Premium based on your attained age, which increases each year
Asking which premium method the insurer uses can help determine your cost, which doesn’t include your Original Medicare premiums. Your gender, location and plan choice will also factor into your Medigap premium.
Deductibles, like in Plans F and G, and copays, like in Plan N, may also factor into your out-of-pocket costs. Plans K and L have out-of-pocket limits, which may help keep out-of-pocket costs down.
Like Medicare supplement plans, Medicare Advantage rates can vary widely by plan, insurer and other factors. Premiums can be anywhere from $0 per month to over $100 per month, with an average of $18 monthly. Medicare Advantage costs are generally lower than Medicare Part B premiums, which start at $164.90 and are paid in addition to Medicare Advantage premiums.
There can be deductibles, copays and co-insurance to meet. Once you reach your Medicare Advantage out-of-pocket maximum — which can be high and varies by plan insurer — for the plan year, the insurer covers eligible expenses at 100%.
IS MEDIGAP OR MEDICARE ADVANTAGE RIGHT FOR ME?
Choosing between Medicare Advantage vs. Medicare supplemental insurance is a highly personal decision. Medicare Advantage is most beneficial for people who usually only seek regular medical care. Medigap may be a better fit for those needing more frequent medical attention, including costly services like surgeries.
Medigap vs. Medicare Advantage FAQs
Choosing between Medigap vs. Medicare Advantage depends on your individual needs, and you may have questions. Here are the answers to the most common questions asked about the topic.
What is Medigap?
Medigap is a supplement to Original Medicare Parts A and B, which are required to be eligible for Medicare supplement insurance. It fills in the gaps left behind and is sold by private insurers. Medigap can pay for copays, co-insurance and deductibles you incur when using traditional Medicare. Once Medicare has paid its approved total, the Medigap insurer will pay its portion.
What is the difference between Medicare Advantage and Medicare Supplement?
Medicare Advantage is a replacement for Original Medicare, while Medigap plans enhance Original Medicare Parts A and B. Sold by private insurers, Medicare Advantage may offer more benefits, like coverage for dental, hearing and vision. Medicare Advantage combines Original Medicare Parts A, B and D but doesn’t provide hospice care coverage.
Is it better to have Medicare Advantage or Medigap?
Whether it’s better to have Medicare Advantage or Medigap depends on your needs and finances. It may be worth speaking with a private insurer to discuss your options, including plan choices, premiums and out-of-pocket costs for each plan option. Depending on how often you need medical care and the type of care needed, you might find that Medigap or Medicare Advantage is the best choice.
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About Mandy Sleight
Mandy Sleight is a licensed property, casualty, life and health insurance agent with 20 years of experience in the industry. She has worked for major insurance companies like State Farm and Nationwide, and most recently as the Operations Coordinator for a startup employee benefits company.
Sleight holds a business administration and management degree from the University of Baltimore and a master's in business administration from Southern New Hampshire University. She uses her vast knowledge of insurance and personal finance to create easy-to-understand and engaging content to help readers make smarter choices with their budgets and finances.
sources
- Medicare.gov. "How to compare Medigap policies." Accessed January 17, 2023.
- Medicare.gov. "Long-term care hospital services." Accessed January 16, 2023.
- Medicare.gov. "Medicare Costs." Accessed January 16, 2023.