Medicare Advantage vs. Medigap

Medicare Advantage and Medigap plans are both sold through private insurers, but there are major differences. Medigap is supplemental and helps to fill gaps by paying out-of-pocket costs associated with Original Medicare while Medicare Advantage plans stand in place of Original Medicare and generally provide additional coverage. You can choose to buy one or the other, but you cannot have both a Medigap policy and a Medicare Advantage plan at the same time.

Key Takeaways
  • Medicare Advantage is a money-saving choice if you are in good health with few medical expenses. Otherwise, Medigap is generally better for those with serious medical conditions.
  • You cannot have Medicare Advantage and Medigap at the same time. But you are able to switch between the two plans should your health care costs change.
  • Medicare Advantage covers dental and vision. Medigap doesn’t help with these services.

How Are Medicare Advantage and Medigap Different?

The biggest difference between Medicare Advantage and Medicare supplemental insurance (Medigap) is the way they work.

Medigap is intended simply to cover some of the gaps (also known as cost-sharing) that Original Medicare doesn’t pay for — coinsurance, copayments and deductibles, for instance. Original Medicare only pays 80 percent for Medicare-covered services such as doctors’ services and outpatient medical services and supplies.

Medicare Advantage plans are an alternative to Original Medicare. Sold by private insurers, these plans cover everything that Original Medicare does but may offer extra benefits for things that Medicare doesn’t, including dental and vision care.

Licensed insurance advisor John Clark explains the main difference between Medicare Supplement plans and Medicare Advantage plans.

You may have fewer choices in terms of doctors and health care providers in some cases with Medicare Advantage plans. With Medigap, you have access to any doctor or provider who accepts Medicare.

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

Biggest Differences Between Medicare Advantage and Medigap
Choice of Doctors
  • Medicare Advantage: Requires you to use doctors in the plan’s network or you have to pay more out-of-pocket.
  • Medigap: You can use any doctor or hospital that accepts Medicare.
Costs
  • Medicare Advantage: An average $21 a month premium (for 2021) on top of your Medicare Part B premium.
  • Medigap: The average Medigap cost is $2,100 per year ($175 per month), and covers about $1,600 in out-of-pocket expenses per year, on average.
Coverage
  • Medicare Advantage: Covers Medicare Parts A and B, but most provide extra benefits, including vision, dental, hearing and prescription drugs.
  • Medigap: You still have Original Medicare Parts A and B, and the choice of eight different Medigap plans each providing different levels of coverage.
Out-of-Pocket Limit
  • Medicare Advantage: Plans must cap annual out-of-pocket costs at $7,550 for in network services and $11,300 for in- and out-of-network services combined.
  • Medigap: A Medigap policy can ease concerns about Medicare's lack of caps or limits. Each plan has specific benefits with specified out-of-pocket costs.
Prescription Drug Coverage
  • Medicare Advantage: Plans may include prescription drug coverage.
  • Medigap: You have to buy separate Medicare Part D prescription drug coverage.
Referrals
  • Medicare Advantage: You may be required to get a referral from your primary care doctor to see a specialist.
  • Medigap: Referrals from your primary care doctor are not required.
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Is Medicare Advantage or Medigap Coverage Your Best Choice?

Generally, if you are in good health with few medical expenses, Medicare Advantage is a 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.

Senior Writer Terry Turner talks through the differences between Medicare Advantage and Original Medicare with Medigap coverage.

Positives of Medicare Advantage Plans

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

If dental or vision coverage is important to you, you might choose Medicare Advantage, since 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.

Did You Know?
The average monthly premium for Medicare Advantage plans was $0 to more than $100 a month in 2014. Medigap plans averaged $150 to $200 a month.

Positives of Medigap Plans

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. This will allow you to see any doctor who accepts Medicare.

While Medigap premiums are generally higher than 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.

Did You Know?
With Medigap, out-of-pocket expenses are generally low to none. Medicare Advantage out-of-pocket expenses in 2021 can range from $0 to $7,550 per year.

Can You Switch Between Medicare Advantage and Medigap?

If you originally sign up for Medicare Advantage and decide it isn’t right for you, you can switch to Medigap supplemental coverage. You can also switch from Medigap to a Medicare Advantage plan.

However, you have to follow certain rules and there may be some problems if you decide to switch down the line.

Tom Parkin, Senior Marketing Consultant at Senior Market Sales, explains whether or not you can switch between Medicare Advantage and Medigap plans.

If you are in a Medicare Advantage plan, you can make a switch to a different Medicare Advantage plan during Medicare’s open enrollment period, which runs from October 15 through December 7 each year.

You may also not be able to get a Medigap policy if you give up your Medicare Advantage plan. When you first qualify for Medicare, insurers are required to sell you a Medigap policy. But after that initial enrollment, there’s no guarantee that they will sell you one.

Insurers can also charge you more for a Medigap policy if you have serious medical problems when you decide to switch from a Medicare Advantage plan.

A handful of states protect your ability to switch back to Original Medicare with Medigap coverage.

States That Allow You to Switch Year-Round
  • New York
  • Connecticut
  • Washington
States That Allow You to Switch During Enrollment Periods
  • California
  • Massachusetts
  • Maine
  • Missouri
  • Oregon

Rules guaranteeing your ability to switch vary between each of these states. You should check with your state’s rules to determine what applies in your case.

Last Modified: November 10, 2021

6 Cited Research Articles

  1. U.S. Centers for Medicare & Medicaid Services. (2020, April 8). Final Contract Year 2021 Part C Benefits Review and Evaluation. Retrieved from https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/final%20cy%202021%20part%20c%20bid%20review%20memorandum_4-8-2020_7.pdf
  2. White, J. (2020, January 24). Medigap vs. Medicare Advantage: What's’ the Difference? Retrieved from https://www.thestreet.com/personal-finance/insurance/health-insurance/medigap-vs-medicare-advantage
  3. U.S. Centers for Medicare & Medicaid Services. (2019, April 1). Announcement of Calendar Year (CY) 2020 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter. Retrieved from https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf
  4. Curto, V. (2017, October). Pricing Regulations in Individual Health Insurance: Evidence from Medigap. Retrieved from https://scholar.harvard.edu/files/vcurto/files/Curto_Medigap.pdf
  5. Consumer Reports. (2014, October 14). Medigap vs. Medicare Advantage; Know the Difference Before You Choose. Retrieved from https://www.consumerreports.org/cro/news/2014/10/medigap-vs-medicare-advantage-consumer-reports/index.htm
  6. U.S. Centers for Medicare & Medicaid Services. (n.d.). Medigap & Medicare Advantage Plans. Retrieved from https://www.medicare.gov/supplements-other-insurance/whats-medicare-supplement-insurance-medigap/medigap-medicare-advantage-plans