Medicare Advantage vs. Medigap: What's the Difference?

If you’re ready to sign up for Medicare, the differences between Medicare Advantage vs. Medigap healthcare insurance can be confusing. It’s easy to get lost in the jargon and to feel unsure about which plans are right for you. It might feel challenging to choose between the two, but making sure you have the medical coverage you need, especially as a senior, is crucial to maintaining your quality of life and keeping your medical costs low. That’s why it’s so important to understand the differences between the healthcare insurance plans available to you so you make sure you’re covered and can afford to maintain your health and well-being. It’s a crucial part of planning for retirement and your senior years, so let’s clear up the differences between Medicare Advantage vs. Medigap coverage.

When we look at a Medigap and Medicare Advantage comparison, there are plenty of similarities but there are also some major differences. Original Medicare, also known as Medicare Part A and B, has some coverage gaps that can end up being quite costly to someone on a senior’s income. When it comes to Medicare Medigap plans vs. Medicare Advantage plans, both offer coverage for costs that are not included in Medicare Part A and Medicare Part B plans. But that’s where the similarities end. As we make our way through this guide, you’ll see they each offer very different benefits. It’s important to note that you cannot have both Medicare Advantage and Medigap coverage, so you’ll have to select the plan that’s best for you and it’s best to make sure you’re choosing wisely.

So, what is the difference between Medigap and Medicare Advantage? As we dive deeper into this guide, we’ll go over what’s included in a Medicare Advantage plan vs. Medigap plans in detail. We’ll compare Medicare Advantage plans to Medigap plans so you can see what coverage comes with each. Our goal is to help you make an informed decision on which insurance plan is right for you. Let’s jump in and compare Medigap to Medicare Advantage.

The biggest difference between Medicare Advantage vs Medigap insurance plans is what these two different types of insurance cover.

Medicare Advantage is designed to offer the insured more coverage, including more health-related services and their associated costs. Medicare Advantage consists of all the coverage you get with Medicare Part A and B as well as additional coverage depending on the plans available in your area as well as which Medicare Advantage plan you’ve chosen for yourself. Many Medicare Advantage plans include coverage for vision care, routine dental care, hearing-related services as well as prescription drug coverage.

Medigap, on the other hand, requires you to already have Medicare Part A and B. Its coverage includes the out-of-pocket costs associated with Original Medicare-approved costs. That means Medigap may cover deductibles, copays, and coinsurance related to your Original Medicare coverage. Medigap will not offer insurance for services related to dental care, vision, hearing or prescription drugs.

Medicare Advantage covers treatment from doctors within your plan’s network. When you go out of network for treatment, you will have to pay out-of-pocket. Whereas with Medigap, you are free to choose any doctor that accepts Medicare.

Let’s map out some of the main differences between Medicare Medigap plans vs Medicare Advantage plans. Here is Medigap vs Medicare Advantage compared:

As you can see, when we compare Medigap and Medicare Advantage plans and their coverage, there is a fundamental difference in how they work. Medicare Advantage includes the coverage you get from Original Medicare but it adds to your existing coverage, paying for services that are not covered by Medicare Part A or B. Medigap insurance plans, on the other hand, pay for the gaps or out-of-pocket costs left behind by Original Medicare such as deductibles, copays, and coinsurance. That is the main difference between Medigap and Medicare advantage plans.

Medicare Advantage plans, also known as Medicare Part C, are available through private insurance providers that have been approved by Medicare. These plans all include Original Medicare as well as some extended benefits. The plans you have access to and what they cover will depend on where you live, as they vary from region to region.

Medicare Advantage plans cover everything that is covered by Medicare Part A and Medicare Part B. They often also include coverage for services related to eye care, dental care, hearing care and they may also cover prescription drug costs.

Medicare Advantage plans have significantly lower premiums than Medigap insurance plans. Sometimes they may even have no premium at all, depending on the plan you’ve chosen.

Medicare Advantage plans usually restrict insured parties to doctors and health care providers that are in their plan’s network. If you choose to seek treatment from a doctor outside of the network, you will likely have to pay the costs associated with that care yourself.

When you choose a Medicare Part C plan, you will likely require a referral from your general practitioner to see specialists of any kind.

There are many different Medicare Advantage plans to choose from in most areas, which means that you should take the time to understand the differences in coverage and costs before selecting the plan that is right for you.

There are many upsides to choosing healthcare coverage through a Medicare Advantage plan. First, Medicare Advantage plans have much lower premiums than Medigap and sometimes, these plans have no premiums at all. You are still on the hook for your Medicare Part B premium, but you can save a lot of money month to month with a Medicare Advantage plan. However, Medicare Advantage plans don’t cover your Original Medicare deductibles, copays and coinsurance.

Your Medicare Advantage plan can also include coverage for services such as routine eye exams, eye glasses, contacts, dental cleanings, and treatment, as well as services associated with hearing care. With Original Medicare and Medigap, you will not get these services covered. However, there may be a deductible, copay, and coinsurance for these services as well.

Medicare Advantage restricts the doctors you can seek treatment from to those that are in your plan’s network, so if you find you aren’t very flexible when it comes to which doctors you’re willing to use, this could be a downside for you. You may also be required to seek a referral from your general practitioner to see a specialist.

Medicare Advantage plans come with a lot of upsides, but some of the downsides might be deal-breakers which might make Medigap a better option for you.

Medigap insurance is sometimes referred to as Medicare supplement insurance and it is designed to fill the gaps left behind by Original Medicare. Original Medicare Part A covers inpatient services and hospital visits. Original Medicare Part B provides coverage for outpatient medical services. However, both Original Medicare parts come with deductibles, copayments and coinsurance which can end up costing patients a lot of money. That’s where Medigap comes in. Medigap coverage may include your deductibles, copay amounts as well as any coinsurance you owe on medical services covered by Original Medicare.

Medigap does not add some types of coverage to Original Medicare. You will not get vision, dental, or hearing coverage with your Medigap plan and you will need to sign up for Medicare Part D to get prescription drug coverage. However, with some Medigap plans, you may be covered for medical services during travel as well as emergency room visits while you are abroad.

There are several Medigap plans that you can choose from offering different levels of coverage, each with their own costs. If you’ve decided to choose a Medigap plan, it’s a good practice to compare and contrast the differences between each available plan to find the one that best suits your specific health situation.

There are numerous pros and cons associated with Medigap that you should consider before making your decision. For instance, Medigap is very worthwhile when you decide you want to stay with Original Medicare. The gaps in coverage left by Medicare Part A and B can add up to some significant out-of-pocket costs to you, but with Medigap, you’ll see much of those out-of-pocket fees are covered.

When you choose a Medigap plan you’ll be able to choose any doctor that accepts Medicare, which expands your choices a great deal. Opening up your healthcare provider options like this can mean you get to keep the family doctor you’re familiar with and who you trust. With Medicare Advantage plans, you have to stick to doctors in your plan’s network. The lack of choice is often the deal-breaker for people deciding between Medigap plans vs Medicare Advantage plans. Some people are unwilling to switch doctors, which gives Medigap the advantage.

It’s true that Medigap premiums can be significantly higher than Medicare Advantage premiums and that could turn a lot of people off of Medigap insurance. However, Medigap can also save you a great deal of money when it comes to out-of-pocket costs. Medigap can actually end up costing you much less than a Medicare Advantage plan in the long run, depending on your unique healthcare situation. You can do some calculations that take into account what you might spend in a year in out-of-pocket costs associated with your medical care and compare those costs with the annual premium costs. Your estimates may indicate which is the best option for you.

Finally, there are fewer options to choose from when choosing a Medigap insurance plan, which can be a bad thing but it can also be a really good thing, making your decision-making much easier than if you were to choose a Medicare Advantage plan.

When looking at the difference between Medicare Advantage and Medigap insurance plans, the choice that is right for you will depend entirely on your unique situation. There are several factors to take into consideration when you’re deciding between Medicare Advantage plans vs Medigap. First, you’ll want to think about your health and lifestyle and how these things might increase or decrease your need for medical treatment. You’ll also want to consider your access to doctors and care based on where you live and how far you might be from doctors that are in a plan's network. The cost of medical care and your benefits are also considerations that are highly important when deciding which plan is best for you.

Compare Medigap and Medicare Advantage benefits in these areas to find out which is best for you. Let’s take a closer look at how these factors may affect your decision.

Your Health and Lifestyle

Choosing a health insurance plan will carry more weight for patients who struggle with chronic conditions or who might face an increased risk of developing conditions that may require more care. For instance, if you foresee the need for extensive treatments and care from your doctors, you’ll want to take into account any out-of-pocket limits that come with Medicare Advantage plans. These maximums will prevent you from having to pay unthinkable amounts to maintain the level of care your condition requires. On the flipside, you’re going to be able to have more choice with a Medigap plan, opening up your care options to doctors and specialists you want to work with rather than those that are in your plan’s network. Your condition may also require daily medications that may be covered by your Medicare Advantage plan.

Lifestyle choices can also increase our risk of health complications, and you might require additional coverage for certain life choices. For instance, if you travel a lot, you may want to choose a Medigap plan that includes travel health insurance. With this option, you don't have to worry about out-of-network care when you travel. You may also take part in activities that come with an increased risk of injury which could make any out-of-pocket limits that come with a Medicare Advantage plan a deciding factor.

Consider your current health and lifestyle and pinpoint how any conditions you have or lifestyle choices you make may affect whether or not a Medicare Advantage plan is right for you, or if you’ll find more benefit from Original Medicare and Medigap insurance.

Access to Doctors and Care

Your choice between Medigap and Medicare Advantage plans may be an easy one if you live in a smaller town or rural area and there is limited access to doctors and health care providers that are in the networks of available Medicare Advantage plans in your area. If you live in an area that has fewer medical resources, Original Medicare and Medigap may be your only option. Medigap gives you the freedom to choose from any doctor that accepts Medicare, whereas Medicare Advantage plans often require the patient to choose medical professionals that are in the plan’s network.

If you do live outside of highly populated areas and you’re leaning towards a Medicare Advantage plan, consider how far you will have to travel to see the doctors and health care providers in your network. Assess whether or not the added travel time is worth it.

Cost of Care and Benefits

Medicare Advantage plans have the potential to save you money, with much lower premiums and potential coverage, depending on your plan, for dental, vision, hearing, and prescription drugs. To assess the full cost of your Medicare Advantage plan, take into consideration the cost of premiums as well as copays, deductibles, coinsurance, and out-of-pocket costs your plan entails. At the same time, take note of the limits your plan might place on out-of-pocket expenses.

Now take a look at the costs associated with Medigap insurance as well as Medicare Part D for your prescription drug coverage. Your premiums with Medigap would likely be much higher than they may be with a Medicare Advantage plan, but your Medigap plan might cover more of your out-of-pocket costs including deductibles, copays, and coinsurance.

Depending on your options and current health situation, a more affordable option may emerge.

As your health, lifestyle, and access to medical care providers change, you may wonder if you’re able to switch your coverage from Original Medicare and Medigap to Medicare Advantage or vice versa. While it is possible, there is a slight snag.

During the yearly open enrollment period, which runs from October 15th to December 7th each year, you can switch between Medigap coverage and Medicare Advantage. Everyone enrolled in Medicare has the option to switch between Medicare Advantage and Medigap insurance.

However, it is only when you first enroll in Medicare that Medigap insurance providers are obligated to insure you. That means that even if you suffer from a chronic illness, or have a pre-existing condition, they cannot turn you away. When you switch to an Original Medicare and Medigap plan from a Medicare Advantage plan, however, there is the possibility that your premiums might be higher based on those preexisting conditions. If your health is poor enough, they may even reject the idea of insuring you at all.

There are some states that have laws in place to protect you from this, however, so if you are considering switching from Medicare Advantage to Medigap, look into the rules in your state.

Now that we know the difference between Medicare Advantage plans vs Medigap, you may be wondering when you can sign up. For most people, you will become eligible for Medicare coverage when you turn 65. You can begin the process 3 months in advance of your 65th birthday. This is the start of your initial enrollment period, which extends from 3 months prior to your 65th birthday and goes on for 7 months. If you’re already receiving Social Security, your enrollment in Medicare will be automatic. This automatic enrollment is for Original Medicare, which is Medicare Part A and Part B.

If you do not sign up for Medicare during your initial enrollment period, you may incur late enrollment fees. For instance, for each 12-month term that you delay enrollment in Medicare Part B, a 10% Part B penalty may apply to your premiums.

You can also enroll in Original Medicare, Medicare Advantage or Medigap plans during the yearly general enrollment period which is between January 1st and March 31st.

Our content is created for educational purposes only. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Everdays encourages individuals to seek advice from their own investment or tax advisor or legal counsel.