You can’t have both, so choose wisely
Medigap vs. Medicare Advantage: What’s the Difference
In this video, you’ll learn about the difference between Medicare Advantage and Medigap. You’ll learn more about Medicare coverage and when to sign up for Medicare. See how you can choose between a traditional Medicare Plus and Medigap plan. Watch as we show you all the small differences between the different options so you can make an educated decision. This video explainer guide will explain the differences between Medicare Advantage and Medigap.
Reviewed by Marguerita ChengFact checked by Suzanne KvilhaugReviewed by Marguerita ChengFact checked by Suzanne Kvilhaug
If you’re ready to enroll in Medicare, or if you’re already enrolled but not sure you have the right type of coverage, you may be wondering whether to choose a Medicare Advantage (MA) plan or go with Original Medicare and pay for Medicare Supplement (Medigap) insurance to cover extra costs.
While Medicare Advantage plans tend to have low or no monthly premiums and offer extra benefits, they restrict your choice of providers and require preauthorization for high-cost treatments, which can delay care. You won’t have those obstacles if you choose Original Medicare with a Medigap plan, but you’ll pay quite a bit more every month.
Key Takeaways
- Original Medicare provides good basic healthcare coverage, but doesn’t include drug coverage and you will need to pay deductibles, coinsurance, and a Part B premium.
- You can buy Medigap supplemental insurance to pay some of your out-of-pocket costs from Original Medicare.
- You can also sign up for a separate Part D plan to cover prescription medication costs.
- Medicare Advantage plans are an alternative to Original Medicare and Medigap plans. They offer everything Original Medicare does, plus usually drug coverage and other benefits—all for a lower cost typically.
- The tradeoff is that Medicare Advantage plans have limited provider networks, require preauthorization for some care, and usually restrict you coverage to your home state.
| Medicare + Medigap | Medicare Advantage | |
| Providers | Lets you see any doctor accepting Medicare, anywhere in the U.S. | Typically restricts you to in-network care |
| Care restrictions | Prior authorization and referrals not typically required | Preauthorizations and referrals are typically necessary |
| Out-of-pocket cost maximum limits | No | Yes, then you don’t pay any costs for covered care for the plan year |
| Prescription coverage | Must be added with a Part D plan | Typically included in MA plans |
| Extra benefits such as vision, hearing, or dental coverage | No | Most plans include at least some of this coverage |
| U.S. travel coverage | Yes, see any doctor accepting Medicare in the U.S. | Non-emergency care outside the plan’s coverage area is typically not covered. |
Medicare Coverage and Its Gaps
Original Medicare includes Part A (hospital insurance) and Part B (medical insurance). Both parts have deductibles, copays or coinsurance, and Part B has a monthly premium. Unlike coverage under the Affordable Care Act (ACA), Original Medicare does not impose an annual out-of-pocket limit. So, you’ll continue to pay these costs regardless of how much they add up to in a year.
For example, let’s say that you need heart bypass surgery. The total costs could exceed $150,000. If the surgery is successful and you recuperate well, you could still face thousands of dollars in coinsurance, copayment, and deductible costs. If you run into complications, your costs could run much higher, especially if you require more than 60 days of hospitalization.
Additionally, certain health needs, such as prescription drugs, hearing aids, eyeglasses, and dental care, are not covered by Original Medicare.
To fill coverage gaps, you have two options. You can enroll in Original Medicare and purchase a Medigap supplemental policy and a Part D plan for drug coverage, or you can choose a Medicare Advantage plan.
Medicare Plus Medigap Supplemental Insurance Policies
About 46% of the 60.6 million Medicare beneficiaries choose Original Medicare, which covers hospitalization, doctor fees, and other medical costs. To be clear, you can stick with that and buy nothing else. You don’t have to add Medigap coverage—only 42% of Medicare recipients did in 2022. But another 47% had other kinds of supplementary insurance such as Medicaid or employer-sponsored insurance. If you don’t have those options, Medigap is recommended in most situations if you can afford it.
While supplementing Medicare with a Medigap policy may be the more expensive option, it has some distinct advantages:
- Both Original Medicare and Medigap insurance plans allow you to seek services from any doctor or hospital in the United States that accepts Medicare.
- Original Medicare and Medigap do not require prior authorization for the vast majority of procedures, or a referral from a primary care doctor.
- Coverage extends throughout the United States, an important benefit for people who travel frequently and those who own multiple homes in different states.
Important
Medigap plans are offered by private Medicare-approved insurance companies. Medigap plans must adhere to federal and state laws.
Medicare Advantage Plans
Available through private, Medicare-approved insurance companies, Medicare Advantage policies (also known as Medicare Part C) are marketed to consumers by companies like Aetna, Humana, and Kaiser Permanente.
Many Medicare Advantage plans have a $0 premium or a lower premium than most Medigap plans. The average Medicare Advantage premium is projected to be $17 in 2025, while Medigap premiums may run anywhere from around $65 to $450, depending on the type of Medigap plan you choose and your location.
Medicare Advantage plans include Medicare Parts A and B, and many include Part D. Many Medicare Advantage plans also include benefits such as limited dental, hearing, and vision care coverage, which are not covered by Original Medicare.
Most Medicare Advantage plans operate as a health maintenance organization (HMO) or a preferred provider organization (PPO).
In addition to no or lower premiums, Medicare Advantage plans differ from Original Medicare and Medigap plans in other ways:
- HMOs require members to use doctors and hospitals in their networks.
- PPOs generally let members seek services outside the plan’s network, but members may have to pay more for such care.
- Plans typically require you to get a referral from a primary care doctor if you need to see a specialist for care.
- Some 99% of all MA enrollees must get prior authorization for some services, usually costly ones, such as inpatient hospital stays, skilled nursing facility stays, and chemotherapy.
- Plans might not cover care provided outside of the network’s geographical area.
Important
In 2024, the average Medicare beneficiary had access to 43 Medicare Advantage plans. With so many choices, it’s important to take the time to find the best plan for your unique medical needs.
When to Sign Up for Medicare
Whichever route you decide to take, you’ll need to first be enrolled in traditional Medicare. As you approach age 65, it’s important to know which enrollment deadlines apply to you. Begin by checking your eligibility.
To avoid coverage gaps and costly penalties for not enrolling on time, most people should sign up for Medicare Parts A and B in the seven-month window that starts three months before they turn 65.
If you currently receive Social Security benefits, you will be automatically enrolled. If not, you can enroll in Medicare online or at your local Social Security office.
Warning
Failing to enroll in Part B when you become eligible results in a permanent 10% penalty increase in your Part B premium for each full 12-month period that you’re not enrolled.
Delaying Medicare Part B
If you turn 65 and you’re covered by an employer health insurance plan (yours or your spouse’s), you can delay Medicare Part B enrollment as long as you have that coverage. Once the employer coverage ends, you can qualify for a Medicare Part B special enrollment period, which extends for eight months after the job or coverage ends (whichever comes first).
Medicare Part D
Once you’ve enrolled in Medicare, you can sign up for Medicare Part D prescription drug coverage. If you don’t enroll in Part D during the Medicare open enrollment period and decided to enroll later, you’ll end up paying an ongoing penalty once your drug coverage begins. Medicare bases the amount of the penalty on the number of months you went without Part D coverage after your Medicare benefits began. So, the longer you wait, the higher the penalty you’ll pay.
You can avoid the penalty, however, if you have creditable prescription drug coverage—coverage provided by an employer or union, for example. To qualify as creditable coverage, it must pay, on average, at least as much as Medicare’s prescription drug benefit.
Generally, you can keep this kind of drug coverage when you become eligible for Medicare. If you decided to keep a creditable prescription drug benefit and later decide to enroll in a Medicare prescription drug plan, you won’t pay a penalty if you haven’t gone more than 63 continuous days without creditable coverage.
Important
Many Medicare Advantage plans include Part D drug coverage. You also have the option to buy a standalone Medicare drug policy if you enroll in a Medicare Advantage plan that doesn’t include Part D.
Choosing Original Medicare Plus Part D and Medigap
When signing up for Medicare Parts A and B, you’ll have the option to enroll in a standalone Medicare Part D prescription drug plan and a Medigap supplemental insurance plan. You can also add Part D during Medicare open enrollment, which runs from Oct. 15 to Dec. 7 each year.
Selecting Part D Drug Insurance
To get started, go to Medicare.gov and look for plans available in your ZIP code. After creating a Medicare account, you can enter the names of your prescription drugs and compare plan premiums, deductibles, and Medicare star ratings.
If you don’t take many (or any) prescription drugs, consider a plan with a low monthly premium. All plans must cover drugs most commonly needed by Medicare enrollees.
As a provision of the Inflation Reduction Act, beginning in 2025, Medicare has eliminated the so-called Part D donut hole and will cap your out-of-pocket drug costs at $2,000. This gets rid of the coverage gap that past Medicare enrollees experienced.
Selecting a Medigap Supplemental Plan
Medigap policies are plans available through private insurance companies, but they are not on Medicare’s site. Plans are labeled A, B, C, D, F, G, K, L, M, and N, and each offers a different standardized coverage. For example, every Plan G policy must offer the same basic coverage, but some plans may offer more, and costs may vary among providers.
Plan F and Plan G offer high-deductible options in some states. Some, but not all, plans include emergency medical benefits during foreign travel.
Standardization of plans lets you confidently compare insurers’ prices for each lettered plan, allowing you to concentrate on choosing the plan that best fits your needs. Medigap plans do not have Medicare star ratings.
All plans cover Part A coinsurance and hospital costs (up to 365 days) after you exhaust your Part A benefits. Most plans also cover your Part B coinsurance and copayment costs. Plan F provides the most comprehensive coverage, including payment of your annual Medicare Part B deductible ($240 in 2024).
However, Plans C and F are not available to people who turned 65 on or after January 1, 2020. If you were Medicare-eligible prior to 2020, but did not enroll, you may be eligible for Plans F and C when you do enroll. Plan D and Plan G have similar benefits to Plan C and Plan F, but they don’t cover the Part B deductible.
You can enroll in Medigap in the first month that you are 65 years old and enrolled in Medicare Part B. The enrollment period extends for six months, during which time you can switch to a different Medigap plan if you choose. If you switch, you have a 30-day “free look period” to decide if you want to cancel or keep it.
Important
As of Jan. 1, 2020, any Medigap plan sold to new Medicare beneficiaries does not cover the annual Part B deductible.
Choosing a Medicare Advantage Plan
Medicare Advantage plans must provide Part A and B coverage, and most include prescription drug coverage. But other factors vary. Some require a referral to see a specialist, while others do not. Some may pay a portion of out-of-network care, while others will cover only doctors and facilities within an HMO or PPO network. And costs such as premiums, deductibles, copays, and out-of-pocked maximums are all different across plans.
Plan Your Selection With Care
Selecting a plan with a $0 or low annual premium can be important. But it’s also essential to analyze costs such as copayments, coinsurance, and hospitalization costs to get an accurate estimate of your annual expenses.
Since care is often limited to in-network physicians and hospitals, the quality and size of a particular plan’s network also should be an important factor in your choice.
Head to Explore Your Medicare Coverage Options at Medicare.gov to start your search. The “Compare” tool lets you see a side-by-side comparison.
The National Committee for Quality Assurance (NCQA), an insurance rating organization, tracks what consumers think of Medicare Advantage plans’ services and physicians, and whether plans meet certain quality standards.
In 2024, only two Medicare Advantage plans earned a 5-star rating from the NCQA, 25 earned 4.5 stars, and 123 earned a 4-star rating. Be sure to check the ratings for plans available in your state.
Key Differences: What to Consider When Choosing
Your lifestyle, health, and finances may play roles in determining the best type of plan for you: Original Medicare plus Medigap or Medicare Advantage. Here are a few things to consider:
Costs
Often, Medicare Advantage plans offer lower premiums, especially if they include prescription drug coverage. If not, you’ll need to buy a separate Part D plan.
Review the cost of premiums, copays, and other out-of-pocket expenses, along with coverage limits. If a plan includes extra benefits, like dental or vision services, assess how much of the costs it covers. Typically coverage is limited.
Compare all the associated costs of a Medigap plan versus Original Medicare with Medicare Part D. For each plan, calculate all costs, including premiums, coinsurance, copayments, and deductibles.
Choice of Doctors
Original Medicare allows you to seek services from any U.S. doctor or hospital that accepts Medicare. Most Medicare Advantage plans restrict you to in-network service providers and may cover less, or none, of the costs of using out-of-network providers.
Under Medicare Advantage HMO plans, you must get a referral from your primary doctor to seek specialist care. Medicare Advantage PPO plans, however, do not require a referral. Original Medicare doesn’t require a referral to see a specialist.
Local Conditions and Convenience
Availability of doctors and hospitals can vary by location. When choosing a Medicare Advantage plan, rural residents may have fewer options than urban dwellers. Compare plans to find one that has providers you can easily access.
Lifestyle Factors
Original Medicare might provide the best coverage if you travel frequently within the United States, have multiple residences in different states, or want to keep you current doctor. If you’re not yet enrolled in Medicare and want to remain with your current physician, ask them if they participate in any Medicare Advantage plans or accept Original Medicare.
If you travel abroad, consider choosing Original Medicare plus a Medigap plan that covers emergency care in foreign countries. Due to network restrictions, a Medicare Advantage plan might not offer the coverage you need if you travel outside your state.
Your Health
If you have a chronic condition, review the out-of-pocket limits of Medicare Advantage plans, which could protect you from exorbitant costs. You may also want to see if you’re eligible for a Medicare Advantage Special Needs Plan. Some of these offer targeted coverage for people with particular chronic conditions, such as cancer or diabetes.
However, Original Medicare plus Medigap generally allows you more provider choices and may offer more coverage for specialist care.
Review the cost of drugs and equipment (such as diabetic supplies) to determine whether a plan will meet your needs.
More Benefits
Do you think you would really use the extra benefits such as vision and hearing coverage that come with many Medicare Advantage plans? A 2024 Commonwealth Fund survey found that three out of 10 MA recipients didn’t use any available benefits. Medicare is so concerned about unused benefits that in 2025, it will require MA insurers to send letters to recipients mid-year listing any supplemental benefits they haven’t used in the first six months of the year.
Often, supplemental benefits provided with MA plans offer limited coverage and may have high coinsurance rates. Prior to annual open enrollment periods, review any coverage you’re considering and compare it to other available options.
Can You Switch? Yes, But There’s a Catch
Your health care needs can change over time, due to medical conditions or your lifestyle. The cost savings of a Medicare Advantage plan might be a good choice while you’re relatively healthy, but as you age, you may want more choice in specialist providers with less hassle from preauthorization requirements. And if you’re healthy and want to hit the road, you might need Original Medicare to cover your health care needs while away from home.
Switching between the two forms of Medicare (or between Medicare Advantage plans) is an option for everyone during the annual open enrollment period, which runs from Oct. 15 to Dec. 7 each year.
Switching Back to Original Medicare
If you switch from a Medicare Advantage plan back to Original Medicare (Parts A and B), you must also sign up for Medicare Part D at the same time if you think you’ll want drug coverage. Otherwise, you could incur a Part D late enrollment penalty.
And private insurers may deny you Medigap coverage if you have a pre-existing condition. In some cases, the provider will approve you for Medigap coverage, but at a higher rate. When you first enroll in Medicare Parts A and B, Medigap providers must offer you a policy, regardless of your medical condition. But they are not required to provide Medigap coverage after your initial enrollment period.
Some states have enacted laws to address this. In Connecticut, for example, Medigap insurance plans are guaranteed-issue year-round, so insurers must provide coverage to anyone without medical underwriting.
If you live in a state that doesn’t offer this protection, switching between a Medicare Advantage plan and Original Medicare might pose a risk.
Warning
Never pay a Medicare broker directly for their assistance. Brokers are paid by insurance companies to sell their policies. If you suspect Medicare Advantage fraud, please call Medicare at 1-800-633-4227 or the Investigations Medicare Drug Integrity Contractor at 1-877-772-3379.
Frequently Asked Questions (FAQs)
Why Do I Need Medigap If I Already Have Medicare?
Medigap pays costs that would otherwise be your responsibility with Medicare. These may include your Part A deductible, coinsurance or copayments when you receive care, and care you get when you’re travelling overseas.
How Do I Choose Between Medicare Advantage and Medigap?
Consider the different features of the plans, along with your priorities, such as budget, travel plans, and health conditions. While Medicare Advantage can be more affordable for people with long-term health issues, Original Medicare with Medigap offers the flexibility of a larger provider network.
What Are the Benefits of Medicare Advantage?
Medicare Advantage plans may offer more coverage than Original Medicare. For instance, many Medicare Advantage plans cover hearing aids, vision care, and dental care. Plus, many Medicare Advantage plans have $0 premiums or lower premiums than Medigap plans.
The Bottom Line
Before deciding on a Medicare Advantage plan or Original Medicare with Medigap, take the time to conduct a thorough analysis. Each type of plan has distinct advantages and disadvantages.
While cost is important, also consider your personal preferences and health care needs. If you want to keep your current doctor or you worry about having a good choice of providers in the future, Original Medicare with Medigap might be your best choice. But if cost is your biggest concern, you might need a Medicare Advantage plan.
Generally, after your initial enrollment in Medicare, you must wait until the Medicare open enrollment or Medicare Advantage open enrollment periods to switch plans. Make sure you know when open enrollment periods begin and end. Also, learn more about the penalties and consequences of enrolling late or changing from one type of plan to another.
Read the original article on Investopedia.