Medicare Advantage vs. Medigap

As a Medicare beneficiary, you have four essential options for your health insurance coverage: 

  • Original Medicare (Medicare Part A and Part B)
  • Original Medicare and a Medicare Supplement Insurance plan (also called Medigap)
  • Medicare Advantage
  • Prescription drug coverage (Medicare Part D) either via a standalone Prescription Drug Plan or a Medicare Advantage plan

In this article, we compare Medicare Supplement Insurance and the Medicare Advantage program to help you better understand the difference between each type of insurance and to help you decide which option makes the most sense for your health insurance considerations.

Senior couple walking in a forest

Medicare Advantage vs. Medicare Supplement Insurance

In order to understand the differences between Medicare Advantage and Medicare Supplement Insurance, it may help to familiarize yourself with the basics of each type of coverage. 

  • Medicare Advantage
    A Medicare Advantage plan is sold by a private insurance company and offers the same benefits as Original Medicare. Some Medicare Advantage plans also provide additional benefits that are not covered by Original Medicare.

    Some of the more popular benefits that can be offered by some Medicare Advantage plans include coverage for needs such as dental, vision and hearing care and prescription drugs. Some Medicare Advantage plans even provide coverage for certain perks like gym memberships. 
  • Medicare Supplement Insurance
    A Medicare Supplement Insurance plan is also sold by a private insurance company and provides coverage for some of the out-of-pocket expenses associated with Original Medicare. These can include costs such as Medicare deductibles and coinsurance, as well as emergency care received outside of the U.S. 

The Main Difference between Medigap and Medicare Advantage

So what’s the key difference between these two types of insurance? 

  • Medicare Advantage provides coverage for certain health care benefits, and some plans may offer additional benefits not covered by Original Medicare.
  •  
  • Medicare Supplement Insurance provides coverage for certain out-of-pocket costs not covered by Original Medicare.

In short, if you’re satisfied with the benefits offered by Original Medicare but want some help paying for your out-of-pocket Medicare costs, a Medicare Supplement Insurance plan might be something for you to consider. If you aren’t completely satisfied with your Original Medicare coverage and would like to find a health insurance plan with some additional coverage, you may want to consider a Medicare Advantage plan.

It’s important to note that you cannot enroll in both a Medigap plan and a Medicare Advantage plan simultaneously.

Now that we’ve highlighted some of the main differences between these types of insurance, let’s compare five additional features of each type of plan: cost, availability, eligibility, enrollment opportunities and popularity.

Cost of Medigap plans and Medicare Advantage plans

Because Medicare Advantage plans and Medigap plans are sold by private insurance companies — and because some plans offer more benefits than others — plan costs can vary greatly from one plan and one service area to another.

The average cost of a Medicare Advantage plan that offers prescription drug coverage in 2019 will be $40 per month.1 Some Medicare Advantage plans offer a $0 monthly premium. $0 payment premium plans may not be available in all areas.

To compare Medicare Advantage plan costs in your area, you can request a quote comparison with no obligation to enroll, or you can call a licensed insurance agent at   TTY Users: 711, 24 hours a day, 7 days a week.

multiple generations of a family at a picnic

Medicare Advantage and Medigap plan availability

When comparing Medicare Advantage and Medicare Supplement Insurance, you may want to consider the availability of each type of plan where you live.  

In 2019, there will be a total of 2,734 different Medicare Advantage plans available nationwide.1 The Medicare Advantage plans available to you will depend on where you live, so be sure to check with a licensed insurance agent to learn more about your options.

In contrast, there are 10 standardized Medicare Supplement Insurance plans to choose from in most states, though not all 10 are made available in every state.

Medicare Advantage and Medigap eligibility

In terms of eligibility, anyone who is over the age of 65 and who is eligible for and enrolled in Original Medicare is also qualified to apply for either a Medicare Advantage or Medicare Supplement Insurance plan.

One key difference is for people under the age of 65. If you are under 65 but qualify for Medicare because of a disability, you may still qualify for a Medicare Advantage plan. (The primary exception is End-Stage Renal Disease, which usually requires enrollment in a special type of Medicare Advantage plan called a Special Needs Plan.)

Federal law does not require insurance companies to provide Medigap plans for people under 65, and only 30 states have laws that mandate this extension of coverage availability. Your ability to apply for Medicare Supplement Insurance under the age of 65 will depend largely on where you live.

How do I enroll in Medicare Advantage or Medicare Supplement Insurance?

Medicare Advantage plans and Medicare Supplement Insurance plans also have different respective enrollment opportunities. Here are some of the enrollment periods you should be aware of: 

  • The first opportunity you have to enroll in a Medicare Advantage plan is during your Initial Enrollment Period. This period starts three months before your 65th birthday, includes your birth month and lasts for an additional three months. If you are under 65 and qualify for Medicare due to a disability, your initial enrollment period begins once you have received Social Security or Railroad Retirement Board disability benefits for 22 full months and lasts for another 7 months.
  •  
  • You can also enroll in a Medicare Advantage plan during the annual Medicare Open Enrollment Period. This enrollment period (also referred to as the Annual Election Period) happens each year. It starts on October 15 and ends on December 7. You can also switch Medicare Advantage plans or leave a Medicare Advantage plan during this period.
  •  
  • Your first opportunity to enroll in a Medicare Supplement Insurance plan is during your Medigap Open Enrollment Period. This period starts at the beginning of the month during which you are 65 or older and enrolled in Medicare Part B. Your Medigap Open Enrollment Period lasts for 6 months.

    You can apply for a Medicare Supplement Insurance plan outside of your Medigap Open Enrollment period, but if you do so, insurance companies can take your health history into account when determining if you qualify for a policy and how much you might be charged in premiums. This process is called medical underwriting. After your Medigap Open Enrollment period, you are only protected from the underwriting process if you have a guaranteed issue right or trial right.

Medicare Advantage plans are guaranteed issue, which means there is no medical underwriting involved. Having a pre-existing condition will not affect your ability to enroll in a Medicare Advantage plan or lead to higher plan premiums (unless you have End Stage Renal Disease, in which case you will want to consider finding a Medicare Advantage plan that is designed specifically for that condition).

Popularity of Medicare Advantage and Medicare Supplement Insurance

As of December 2016, 13.1 million Medicare beneficiaries are enrolled in a Medigap plan.2 

In 2018, the number of Medicare beneficiaries enrolled in a Medicare Advantage plan rose to more than 20 million people, which is approximately 34 percent of all Medicare beneficiaries.1

Potential features of Medigap plans vs. Medicare Advantage plans

Use the chart below to quickly and easily compare some of the key features that can differentiate Medicare Supplement Insurance plans vs. Medicare Advantage plans. 

Medicare Supplement plans vs. Medicare Advantage plans
Category Medicare Advantage Medicare Supplement Insurance
Availability 2,734 different plans available nationwide in 20171 10 standardized plans available in most states, though not all 10 are sold in every state
Eligibility Open to almost any person who is enrolled in Original Medicare, regardless of age Typically limited to people over age 65, though younger people can be eligible to apply for a plan depending on where they live
Enrollment Initial Enrollment Period, Medicare Open Enrollment Period and Special Enrollment Periods. No medical underwriting required Medigap Open Enrollment Period and Special Enrollment Periods. Medical underwriting may be utilized if not applying for a policy during your Medigap Open Enrollment period.
Popularity Over 20 million Medicare beneficiaries (34%) in 20181 13.1 million Medicare beneficiaries in December 20162
Coverage of Medicare out-of-pocket costs No coverage of Original Medicare out-of-pocket costs Coverage for Medicare Part A and B deductibles, copayments and coinsurance
Additional health benefits not found in Original Medicare Can offer additional benefits, such as dental, vision, hearing and prescription drug coverage, among other perks No additional benefits to what Medicare offers, except for qualified emergency care received outside of the U.S.

To learn more about Medicare Advantage plans and to find out about the plan options where you live, call  TTY Users: 711 24 hours a day, 7 days a week, to speak to a licensed insurance agent.

 

1 Kaiser Family Foundation. Medicare Advantage 2019 Spotlight: First Look. (Oct. 16, 2018.) Retrieved from www.kff.org/report-section/medicare-advantage-2019-spotlight-first-look-data-note.

2 AHIP Center for Policy and Research. State of Medigap 2018: Trends in Enrollment and Demographics. (June 2018). Retrieved from www.ahip.org/wp-content/uploads/2018/06/State_of_Medigap18_FINAL.pdf.

Copyright © 2018 TZ Insurance Solutions LLC. All rights reserved.

MedicareAdvantage.com is a website owned and operated by TZ Insurance Solutions LLC. TZ Insurance Solutions LLC and TruBridge, Inc. represent Medicare Advantage Organizations and Prescription Drug Plans having Medicare contracts; enrollment in any plan depends upon contract renewal.

Plan availability varies by region and state. For a complete list of available plans, please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.

Medicare has neither reviewed nor endorsed this information.