Medicare Advantage vs. Medigap

Medicare Advantage vs. Medigap

Two of the most popular Medicare supplement options are Medicare Advantage and Medigap.

Stephanie Faris

Published March 17th, 2021

Updated April 24th, 2022

Table of Contents

Key Takeaways

  • Medicare will help take care of your medical bills in retirement, but it doesn’t cover everything.
  • A Medicare supplement or alternative can help cover the gap between what Medicare covers and your actual cost.
  • Two of the most popular Medicare options are Medigap and Medicare Advantage.

If you’re planning to rely on Medicare for your health insurance after retirement, it’s important to know it won’t cover everything. In addition to deductibles, you’ll also have to pay out of pocket for prescription medications. Medicare supplement plans and Medicare alternatives can help pay for those extras, giving you the full coverage you need.

Two of the most popular Medicare supplement options are Medicare Advantage and Medigap. They each have unique benefits, though. Here are a few considerations if you’re trying to determine whether a Medicare supplement or alternative is right for you.

Understanding Medicare Coverage

Once you’ve been approved for Medicare, you’ll receive coverage for most of your medical expenses. Medicare coverage includes Part A, which takes care of your preventive care and routine exams, and Part B, which covers hospitalization.

Medicare only covers about 80 percent of your medical costs, though. For that reason, most retirees seek out a Medicare supplement to pick up the other 20 percent. There are also Medicare alternatives, which are sold by private companies.

Medicare Plus Medigap Supplemental Insurance Policies

Medigap plans are designed to take care of anything original Medicare doesn’t handle. If you have Medigap, your claims will first run through Medicare, then be forwarded to Medigap to handle its portion of the bill.

Medicare Advantage Plans

Medicare Advantage plans replace Medicare as your source of insurance. With Medicare Advantage, you sign up with a private insurer that takes care of your insurance. You will have deductibles and co-pays with Medicare Advantage, but there will be an annual cap, so you’ll only ever pay up to that amount.

When to Sign Up for Medicare

Unless you have a qualifying disability, you’ll be eligible for Medicare when you reach 65 years of age. You may be signed up automatically, but if not, you can visit the Social Security website to sign up. Medicare Part A is free, but Medicare Part B comes with monthly premiums based on your monthly income. Those premium amounts change each year. For 2022, if you make $91,000 or less as a single-filer, you'll pay $170.10 each month for Part B.

Choosing Traditional Medicare Plus a Medigap Plan

If you want to buy Medicare supplemental insurance, it’s best to sign up when you first turn 65. The Medigap Open Enrollment Period starts during the month you turn 65, as long as you’re enrolled in Medicare Part B at that time. This period lasts only six months, during which time an insurer can’t deny you coverage or charge you excessive premiums due to pre-existing health conditions.

You can still sign up after that initial Open Enrollment Period, but there’s no guarantee you won’t be denied coverage. You may also end up paying more in premiums if you wait until later to enroll.

Choosing a Medicare Advantage Plan

Once you’re eligible for Medicare, you’ll probably find insurers come to you rather than the other way around. You may find yourself overwhelmed with mailers and phone calls from insurers that want your business. Popular plans include AARP Medicare Advantage, Aetna Medicare Advantage, Cigna-HealthSpring, and Humana. Price around in the months leading up to your 65th birthday and choose the one that gives you the best coverage for the money. has a plan finder that can be a big help.


There are some clear differences between Medicare Advantage and Medigap that could make one better than the other. Each person’s financial needs and health situations are different, so what works best for someone else might not be the best for you. Here are some considerations to help you decide.


When you’re doing a plan comparison, it can seem like Medicare Advantage is the cheaper route. But you’ll need to look at premiums, the amount you’ll have to pay in co-insurance and deductibles, and whether prescription drugs are covered with your Medicare Advantage plan. Look at what’s covered under Medigap and make sure you’re truly saving.

Doctor Selection

Cost isn’t the only consideration when you’re comparing supplements to Medicare plans. You’ll need to see which is better when it comes to access to the doctors you prefer in your own area.


One thing that may limit your options with Medicare insurance is out-of-area coverage. As great as some Medicare Advantage plans can be, they’re typically designed to cover a specific area. If you spend winters in Florida or take frequent vacations, Medigap could be a better option.

Your Current Health Condition

If you have pre-existing health conditions, deciding between Medicare Advantage versus Medigap could be all about timing. If you apply during the six-month Open Enrollment Period after you turn 65, Medigap can’t hike your rates or deny you due to those conditions. If you wait, though, you may want to compare the rates you’re offered through Medicare Advantage with what you can get through Medigap and choose the best offer.

Is it Possible to Switch Coverage?

Once you’ve reviewed Medicare Advantage and compared it to Medigap, you may want to switch. Since Medigap is more expensive, it’s not uncommon for retirees to switch to Medicare Advantage. If you want to move from Medigap to Medicare Advantage, you can only do so during the Open Enrollment Period, which runs from October 15th to Dec 7th each year.

Moving from Medicare Advantage to Medigap is a little more complicated. Your Medicare Advantage enrollment was through the private insurer, so you’ll have to drop that and sign up for original Medicare. Then you can start shopping for Medigap coverage. As with the move to Medicare Advantage, you’ll have to wait until the allowed enrollment period to drop Medicare Advantage, sign up for Medicare, and add on your Medigap supplement. It's important to note that if you have a Medicare Advantage plan, Medigap policies are not allowed to cover copayments, deductibles, and premiums.

If you opt for a Medicare Advantage plan, you may want to drop your Medigap plan. Medigap can’t cover your Medicare Advantage Plan copayments, deductibles, and premiums, so you won’t get the same benefits you’d get if you had original Medicare.

Final Thoughts

As you’re learning more about Medicare Part B coverage, it’s important to look at your options. Medicare will leave you with some out-of-pocket expenses, but paying extra premiums for a supplement could cost you more. We recommend working with a Certified Financial Planner® who can look at your finances and recommend the best option for your retirement budget.


Medicare Basics

Medicare Benefits

Medicare 2022

Applying for Medicare

Medicare Considerations

Medicare Taxes

Healthcare Considerations

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Stephanie Faris

Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a writer for a credit card processing service and has written about finance for numerous marketing firms and entrepreneurs. Her work has appeared on Money Under 30, The Motley Fool, MoneyGeek, E-commerce Insiders, and GoBankingRates.

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