Medicare Advantage vs Medigap: A Thorough Comparison Guide

Rohan Mathew

Updated on:

Medicare provides health insurance to around 15% of the American population. By 2030, this number is expected to rise from around 44 million people to 79 million.

These beneficiaries receive extensive coverage. But there can also be gaps in seniors’ plans that leave them with out-of-pocket costs if they should face a serious health problem. In order to protect themselves, many people choose to pay for supplemental coverage.

Medicare Advantage and Medigap are two of the most popular options for this kind of coverage. But when it comes to Medicare Advantage vs Medigap, which one is right for you? And what’s the difference anyway?

It’s important to know how they differ because these policies are mutually exclusive and you’re not allowed to be covered under both. So continue reading and we’ll walk you through the basics of each type of coverage and the main differences between them.

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Medicare Coverage

It can be difficult to budget for healthcare costs during retirement. This is because there’s typically no way to know if your expenses each year are going to be big or small.

While traditional Medicare offers good basic coverage, it pays only around three-fourths of the expenses that it approves for medical procedures, doctors, and hospitals. The rest of the total costs are the responsibility of the patient and there’s no limit on how much a person might have to pay in a single year.

You can fill these coverage gaps and reduce the chances of paying too much when you’re experiencing poor health through two options. You can either get a Medicare Advantage plan or a Medicare Plus Medigap Supplemental insurance policy.

You can also compare Medicare plans here.

Medicare Plus Medigap Supplemental Insurance Policies

The majority of Medicare beneficiaries choose traditional Medicare – Parts A and B. These policies cover medical procedures, doctors, and hospitals. Most of these beneficiaries supplement their insurance with:

  • Medigap insurance
  • employer-sponsored insurance
  • Medicaid
  • stand-alone Medicare Part D prescription drug policies

It should be noted that Medicare Supplement insurance policies aren’t endorsed by or connected with the federal government. They’re also not connected to the federal Medicare program.

While it might be the more expensive option, there are a few advantages to Medicap. Both Medigap and Medicare insurance plans cover you for any doctor or hospital in the United States that accepts Medicare. And most doctors and hospitals accept these plans.

There’s also no need for a referral from a primary care doctor or prior authorization.

Coverage includes the entire United States. This could be important for people who spend different parts of the year in different parts of the country. This option is also enticing to people who have certain hospitals and doctors that they prefer to use.

Medicare Advantage Plans

Medicare Advantage policies (Part C) are available from private, Medicare-approved insurance companies. They are marketed to people under the names of Kaiser Foundation Medicare, Humana, and Aetna plans.

They might not have a premium at all. Or they might at least have a lower one compared to the high premiums for prescription drug insurance policies and Medigap.

Medicare Advantage plans cover doctors and hospitals. They also usually include some services that aren’t covered by Medicare and also prescription drug coverage. A little over 30% of Medicare beneficiaries pick one of these plans.

The majority of Medicare Advantage plans operate as either:

  • preferred provider organizations (PPOs)
  • health maintenance organizations (HMOs)

PPOs usually let their members get care outside of the plan’s network, but members might have to pay more for this kind of care. HMOs limit members to only using hospitals and doctors in their networks.

Some plans require a referral from a primary care doctor and/or prior authorization for specialist care or procedures. Plans might not cover care that’s given outside of the network’s geographical area.

Extra benefits that aren’t covered by traditional Medicare might also be offered. These can include gym memberships, routine dental care, and eyeglasses.

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When to Enroll

New beneficiaries can enroll in either Medigap or Medicare Advantage before turning 65 years old. 65 is when seniors finally become eligible for Medicare coverage. The point of this is to give time for your new benefits to activate, which can help in making sure that you don’t experience any gap in your coverage.

For both Medicare Advantage, as well as Original Medicare, the enrollment period starts the first day of the month three months before you turn 65. It then ends on the last day of the third month after that.

Let’s look at an example. Let’s imagine that your 65th birthday is July 20, 2021. This means that your enrollment period will start on April 1, 2021, and it will end on October 30 of that same year.

During this timeframe, you’ll be able to pick the type of Medicare coverage that you need. You can then sign up for it without any penalty rates for late enrollment.

It’s highly recommended that you sign up for your prescription drug coverage, either Medicare Advantage or Part D, as soon as you can. This is because Part D benefits take an extra three months to activate after you sign up.

Open Enrollment Periods

Do you want to switch to a Medicare Advantage plan and already have Original Medicare? If you do, the window to do so opens on October 15 every year and closes on December 7. During this time, you can cancel your Original Medicare plan and seamlessly switch over to Medicare Advantage.

There’s no penalty for doing this during the open enrollment period.

The windows for Medigap enrollment are a little different from Original Medicare and Medicare Advantage. Your window to enroll in a Medigap plan starts on the month when you turn 65. The initial open enrollment period then lasts for six months.

In certain states, you can change to a Medicare Advantage plan or switch your Medigap plan for up to one year after the initial signup. During the initial signup, you can purchase any Medigap plan that’s offered in your state.

You also won’t be penalized for pre-existing conditions and you can’t be refused coverage during this time. However, if you decide to apply for Medigap coverage after the open enrollment window, you could end up paying more or even be denied insurance coverage.

Choosing Traditional Medicare Plus a Medigap Plan

Traditional or regular Medicare is made up of Part A (hospital insurance) and Part B (medical insurance). You can supplement this coverage with a Medigap supplemental insurance plan and a stand-alone Medicare Part D prescription drug plan. While signing up for Medicare will get you into Parts A and B, purchasing these supplemental policies will be your own responsibility.

Finding Part D, Drug Insurance

To get started, you’ll want to find the plans that are available in your geographical area. After you make an account at, you can enter the names of the drugs that you use and then compare deductibles, plan premiums, and Medicare star ratings.

If you don’t take a lot of prescription medications, you should look for a plan that has a low monthly premium. All of the plans have to cover most drugs that are used by people with Medicare. If you have high prescription medication costs, you should look into plans that cover your drugs in the donut hole (coverage gap).

Choosing a Medicare Advantage Plan

Medicare Advantage Health Plans are quite similar to private health insurance. The majority of visits, such as surgery, lab work, and office visits, are covered after a small co-pay. Plans can offer a PPO or HMO network and all plans put a yearly limit on total out-of-pocket costs.

Each plan has different rules and benefits. Many provide prescription drug coverage and some require that you get a referral to see a specialist.

Some will only cover facilities and doctors that are in the PPO or HMO network while others will pay a portion of out-of-network care. Choosing a plan that has a no annual premium, or a very low one, can be important.

However, it’s also important that you check on coinsurance and co-pay costs. This is especially important for expensive procedures and hospital stays. This will help you figure out your possible annual costs.

Because care is usually limited to hospitals and doctors that are in your network, the size and quality of a specific plan’s network should be an important consideration for your choice.

What to Consider in Making Your Decision

Your finances, health condition, and lifestyle can all influence whether traditional Medicare plus Medigap or Medicare Advantage will be the right choice for you. Let’s go over some of the most important factors that you should take into consideration.

The Costs

Medicare Advantage plans might save you money. However, you need to make sure that you check if prescription medication benefits are included. If they aren’t, you’ll then have to purchase a separate Part D plan if you want that coverage.

You also want to check the cost of any co-pays, premiums, and other out-of-pocket costs. You also want to see if there are any limits in their coverage. If there are extra benefits included, such as help with dental bills and hearing aids, make sure that you know how much of those expenses are going to be covered.

Compare these expenses against those of buying stand-alone Medicare Part D prescription drug policies and Medigap. Figure out what the premiums as well as the amount of any out-of-pocket costs that the policies might make you pay.

Choice of Doctors 

Traditional Medicare will let you use any doctor in America that takes Medicare. Most Medicare Advantage policies will limit you to using doctors in their network. They also might cover less, or none, of the costs that come with out-of-town and out-of-network providers.

A positive of Medicare Advantage managed care plans is that care is coordinated. This means that your primary care doctor is going to be in the loop about the findings of specialists.

You need a prior authorization for procedures or a referral to see a specialist with traditional Medicare. However, you’ll need to make sure that the care is coordinated and that your doctors are in communication with each other.

Local Conditions and Convenience

In some places where hospitals and physicians are scarce, it’s crucial that you look into both the networks of available Medicare Advantage plans as well as the locations of providers who accept regular Medicare.

Are those doctors taking new patients? Will you be able to travel far in order to be treated at an emergency room or see a provider?

Lifestyle Factors 

If you currently have a doctor whom you’d like to keep, have multiple residences, or travel frequently, then regular Medicare might be a good choice for you. Ask your current doctor if they participate in any Medicare Advantage plans and/or accept regular Medicare.

For people who travel often, choosing regular Medicare plus a Medigap insurance policy that covers emergency care in other countries may be a smart pick. Also, people who spend a lot of time in other parts of the country might find it difficult to stay in-network for medical care. They may be better off with regular Medicare and a Medigap insurance policy.

The Importance of Knowing the Difference When It Comes to Medicare Advantage vs Medigap

As we can see, Medicare Advantage and Medigap aim to accomplish similar goals. However, they do so in different ways. By knowing the differences when it comes to Medicare Advantage vs Medigap, you’ll be able to make more informed and confident decisions about your healthcare concerns.

Are you looking for other helpful healthcare articles like this one? If so, then make sure to check out the rest of our blog today for more!