Medicare Advantage vs. Medigap

Original Medicare — Medicare Part A and Part B — has several gaps in coverage. These include services and items that Original Medicare does not cover as well as cost sharing for certain services that require out-of-pocket spending for what is covered.

Medicare Advantage or Medigap plans are designed to fill in some of the gaps.

Medicare Advantage or Medigap work in different ways to address some of these gaps. You cannot have both a Medicare Advantage and a Medigap plan at the same time. So, it’s important to consider how each may work for your particular needs and budget.

Medicare Advantage plans are an alternative to Original Medicare. Sold by private insurers, these plans cover everything covered by Original Medicare but may also offer extra benefits for things that Medicare doesn’t. Additional benefits may include prescription drug coverage along with hearing, dental and vision care.

Most Medicare Advantage plans include Medicare Part D prescription drug plans, so there usually isn’t a need to enroll in a separate Part D plan.

You can purchase a Medicare Advantage plan after enrolling in Medicare Part A hospital insurance and Medicare Part B medical insurance. When you enroll, your Medicare Advantage plan takes the place of your Medicare Part A and Part B coverage.

The average monthly premium for a Medicare Advantage plan in 2023 is around $18 per month, according to AHIP — a trade association representing health insurance companies. But the average varies widely based on where you live.

Individual state averages range from $0 per month in Alaska to $70.77 in Minnesota, according to the U.S. Centers for Medicare and Medicaid Services. Premiums vary on the plans available where you live, the amount of coverage and other factors.

Premiums are not the only cost to consider when choosing a Medicare Advantage plan.

In addition, you typically have to continue paying your monthly Medicare Part B premium — which in 2023 is $164.90 or higher depending on your income. This is in addition to any premium you have to pay for your Medicare Advantage plan.

Your maximum out-of-pocket (MOOP) costs also vary by state — from just above $2,600 in Nevada to more than $7,200 in New Jersey.

Medicare Advantage plans usually have lower monthly premiums than Medigap plans. They may also include prescription drug coverage. You have to enroll in a separate drug plan if you choose Medigap.

If dental or vision coverage is important to you, you might choose Medicare Advantage because Medigap doesn’t help with these services. Medicare Advantage may also be better for you if you are flexible on which doctors you are willing to see, since you will have to use in-network health care providers to cut out-of-pocket costs.

One of the biggest disadvantages of a Medicare Advantage plan is that it limits your choice of doctors, hospitals and other health care providers. Medicare Advantage plans rely on health care provider networks — if you go to a doctor or other provider not in your network, you typically have to pay more of the cost.

While Original Medicare is the same across the United States, Medicare Advantage plans may only cover your health care in a specific area. If you move to a new state, you may have to replace your plan.

There are a wide variety of Medicare Advantage plans available — but they are not available in all areas. You may have a confusing number of Medicare Advantage plans to choose from if you live in a densely populated area, such as a major city. But you are more likely to have limited options in rural areas.

Medigap is intended simply to cover some of the gaps that Original Medicare doesn’t pay for — coinsurance, copayments and deductibles, for instance.

Original Medicare only pays 80% for Medicare-covered services such as your doctors’ services and any outpatient medical services and supplies. A Medigap plan can help cover some or all of that 20% gap that you have to pay for out-of-pocket.

Medigap cannot be used to pay for anything that Medicare Part A and Part B does not cover. This means you can’t use Medigap to cover prescription drugs or the hearing, vision and dental services that Original Medicare does not cover.

If you have Original Medicare and a Medigap policy, you may also benefit from a Medicare Part D prescription drug plan to help cover prescription drug costs.

The average cost of a Medigap plan varies widely by ZIP code and depends on which plan you choose, along with your age and gender.

When shopping for a Medigap policy, compare the prices of the same plans from different insurers. For instance, compare Plan G from one insurer to a Plan G from another insurer. This will give you a clearer picture of different prices for the same coverage.

Ask the insurer about how the plan is priced or “rated.”

Different Medigap plans cover different out-of-pocket expenses associated with Original Medicare. If you qualified for Medicare after Jan. 1, 2020, you can no longer buy a plan that covers your Part B deductible.

But you can find plans that cover your Part A and Part B coinsurance, additional hospitalization and skilled nursing facility stays and other out-of-pocket costs.

Most Medigap plans do not have maximum out-of-pocket limits since they effectively cover the gaps in Medicare that cause out-of-pocket spending for things like hospitalization, doctors visits and other services. You seldom have out-of-pocket costs if you have Medigap.

Two plans — Plan K and Plan L — do have maximum out-of-pocket limits. Plan K’s is $6,620 and Plan L’s is $3,310 for 2023.

Medigap helps cover your out-of-pocket expenses if you decide to stick with Original Medicare.

The biggest advantage of Medigap may be your choice of doctors. You have more doctors and hospitals to choose from since you can go to any provider that accepts Medicare.

If your doctor is not in a Medicare Advantage plan you’re considering and you don’t want to switch doctors, you may want to consider Medigap.

While Medigap premiums are generally higher than those of Medicare Advantage, Medigap will likely charge you lower out-of-pocket expenses. You’ll need to calculate how much you expect to pay for health care over a year and compare that to your annual premium cost.

Finding a Medigap plan that works for you can be less confusing because there are only eight types to choose from. This can simplify enrolling in Medicare.

Costs are the leading disadvantage of Medigap. Medigap plans tend to have higher monthly premiums than Medicare Advantage plans. You also still have to pay your Medicare Part B monthly premiums.

If you didn’t become eligible for Medicare before Jan. 1, 2020, Medigap can no longer pay for your Medicare Part B deductible.

To be eligible for a Medigap plan, you have to be 65 years or older and be enrolled in both Medicare Part A hospital insurance and Medicare Part B medical insurance.

You are not guaranteed that your application for a Medigap policy will be accepted if you don’t purchase a plan when you are first eligible for Medicare. Even if you are accepted after the initial enrollment period, you may have to pay more for a Medigap policy.

Medigap policies are standardized in 47 states and the District of Columbia. But costs may vary state-to-state for the same plan.

With a Medigap plan, you have access to any doctor or provider who accepts Medicare. By contrast, you may have fewer choices in terms of doctors and health care providers with a Medicare Advantage plan.

Legally, you cannot have Medigap coverage with a Medicare Advantage plan. However, you may be able to switch between the two plans.

Medicare Advantage and Medigap plans can provide different options to best suit your circumstances. You should compare Medicare plans carefully to make sure you’re getting the best coverage for your particular financial situation and health care needs.

Typically, average monthly premiums for Medicare Advantage coverage tend to be lower than the average for someone with Original Medicare, a Medigap plan and Medicare Part D prescription drug coverage. But premiums are just one part of the cost and coverage equation.

Medicare Advantage plans frequently provide benefits that Medigap doesn’t. These include vision, hearing and dental services. Most plans also include prescription drug coverage.

If you have Original Medicare with a Medigap plan, you will have to buy an additional Medicare Part D prescription drug plan to help with medication costs. You will also have to buy separate dental and vision insurance or pay out-of-pocket for those services.

Medicare Advantage plans may require you to use doctors and hospitals within their networks. With Original Medicare and Medigap, you are covered so long as the doctor accepts Medicare — regardless of where you are or where you travel in the U.S.

Out-of-pocket costs may be a significant difference to compare when choosing between Medicare Advantage or Medigap. Depending on your health care needs, they can be significantly higher with Medicare Advantage than with Medigap.

If you are in good health with few medical expenses, Medicare Advantage can be a suitable and money-saving choice. But if you have serious medical conditions with expensive treatment and care costs, Medigap is generally better.

Speaking with a licensed insurance agent about your particular health situation can help you decide which is best for you. Since you are not allowed to have Medicare Advantage and Medigap at the same time, you have to choose carefully to make sure you have suitable coverage for your specific situation.

Weighing what options are most important to you and talking with a licensed insurance agent about your particular wants and needs can help you make an informed choice between Medicare Advantage and Medigap.

Deciding which type or combination of Medicare plans is right for you depends on your health care needs now and in the future. There are several factors you should consider. Talking with one or more Medicare advisors may help you make a more informed decision on the best coverage for you.

There are several questions you can ask yourself to help narrow down whether Medigap or Medicare Advantage might be a better fit for you.

If you’re considering Medicare Advantage, these are some questions you should ask yourself.

If you answered “Yes” to the majority of these questions, you may want to focus mainly on Medicare Advantage plans.

You may want to ask yourself the following questions if you are considering a Medigap plan.

If you answered “Yes” to a majority of these questions, you may want to learn more about Medigap options.

When making a decision, it’s important to consider your financial situation and the quality of your health. Talking with a Medicare advisor can help guide you to a clearer understanding of what type of Medicare coverage is best for you.

Editor Samantha Connell contributed to this article.