Medicare beneficiaries may face the decision of which is better for their needs — Medigap or Medicare Advantage. Comparing the two options is a little like comparing apples to oranges.
In this guide, we compare the benefits offered by Medigap (Medicare Supplement Insurance) and the benefits that can be offered by Medicare Advantage plans (Medicare Part C). We’ll also compare costs and eligibility so that you can get a better idea of which type of Medicare plan may be right for your needs.
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Medicare Supplement Insurance plans can help provide coverage for some of the out-of-pocket costs that are tied to Original Medicare. These costs can include Medicare deductibles, coinsurance, copayments, excess charges and more.
Medicare Advantage plans provide the same benefits of Original Medicare (Part A hospital insurance and Part B medical insurance) combined into one single plan. Many Medicare Advantage plans may also offer additional coverage for things like dental, vision, hearing, prescription drugs and more.
To put it simply, Medigap plans are used in addition to Original Medicare and provides coverage for health care expenses. Medicare Advantage plans are used as an alternative to Original Medicare and provides coverage for health care services.
You can’t be enrolled in a Medigap plan and a Medicare Advantage plan at the same time. In fact, it’s illegal for an insurance company to sell you a Medigap plan if you are currently enrolled in a Medicare Advantage plan (unless your Medicare Advantage plan is set to expire before the Medigap plan takes effect).
So if you aren’t completely satisfied with Original Medicare and wish to get a little more from your health care coverage, you’ll be faced with choosing between Medigap or Medicare Advantage. So, which type of coverage is better for your needs?
Medicare Advantage plans tend to be less expensive on average than Medigap plans.
In 2018, beneficiaries paid an average of $35.55 per month for a Medicare Advantage plan.¹
The average cost of Medigap Plan F — which offers the most standardized Medigap benefits — was $143 per month in 2018.²
But it’s difficult to draw a cost comparison from premiums alone. The higher cost of Medigap plans can be offset by the money saved on deductibles, coinsurance and other out-of-pocket costs.
Medicare Advantage beneficiaries still pay many of these out-of-pocket costs, depending on their plan, but they may be lower than what Original Medicare includes. Some Medicare Advantage plans offer $0 monthly premiums, though $0 premium plans are not available in all locations.
Medigap plans do not cover prescription drugs or dental services, some of which might be covered by a Medicare Advantage plan.
Deciding which type of Medicare plan is right for you will depend on how you plan to use your Medicare benefits.
Medigap plans may be used anywhere that Original Medicare is accepted, which includes a wide range of hospitals, doctor’s offices and other health care providers nationwide. Your Medigap plan coverage travels with you wherever you go in the U.S., and in certain cases, even outside the country as well.
Medicare Advantage plans may be a little more restrictive in where they can be used. There are several different types of Medicare Advantage plans, and some plans may include a network of participating providers. You may not always receive coverage for services obtained outside of your plan network, and any covered services you receive out of network may come with higher out-of-pocket costs.
Some Medigap plans can also charge premiums based on your age, whereas Medicare Advantage plans do not.
A Medigap plan does not help you cover the cost of medications.
However, prescription drug coverage is one the more common extra benefits covered by some Medicare Advantage plans. Medicare Advantage plans that include prescription drug coverage are known as “MA-PD” plans, or “Medicare Advantage Prescription Drug” plans.
In 2016, over 13 million Medicare beneficiaries also had a Medigap plan.³
In 2018, over 20 million Medicare beneficiaries were enrolled in a Medicare Advantage plan, and the popularity of these plans continues to rise.⁴
Choosing between a Medigap or Medicare Advantage plan comes down to addressing your individual needs. You may find that it helps to discuss your unique Medicare coverage needs with an insurance agent who can answer all of your Medicare questions.
To get help comparing your Medicare Advantage plan options from a licensed insurance agent, call TTY Users: 711 24 hours a day, 7 days a week.
1 MedicareAdvantage.com’s internal analysis of CMS 2018 Medicare Advantage Landscape Source Files. May 2018.
2 Hoffower, Hillary. Medicare isn't enough for retirees — here's how much extra coverage costs in every state, ranked. (Jun. 17, 2018). Retrieved from /www.businessinsider.com/how-much-medigap-plans-cost-every-state-ranked-2018-6
3 AHIP. State of Medigap 2018 Trends in Enrollment and Demographics. (June 2018). Retrieved from https://www.ahip.org/wp-content/uploads/2018/06/State_of_Medigap18_FINAL.pdf.
4 Kaiser Family Foundation. Medicare Advantage 2019 Spotlight: First Look. (October 16, 2018). Retrieved from www.kff.org/report-section/medicare-advantage-2019-spotlight-first-look-data-note.
Christian Worstell is a licensed insurance agent and a Senior Staff Writer for MedicareAdvantage.com. He is passionate about helping people navigate the complexities of Medicare and understand their coverage options.
His work has been featured in outlets such as Vox, MSN, and The Washington Post, and he is a frequent contributor to health care and finance blogs.
Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism. He currently lives in Raleigh, NC.
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