Key Takeaways
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Medicare Advantage and Medigap serve different purposes, so choosing the right one depends on how you prefer to manage costs, coverage, and flexibility.
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While Medicare Advantage offers bundled plans with extra benefits, Medigap fills the gaps in Original Medicare, helping reduce out-of-pocket expenses.
Understanding the Core Differences Between Medicare Advantage and Medigap
Medicare can be confusing, especially when deciding between Medicare Advantage and Medigap. These two options cater to different healthcare needs and budgets, and selecting the wrong one could leave you with unexpected costs or limited choices. To help you make the best decision, let’s break down the seven key differences that matter most.
1. How They Work With Original Medicare
Medicare Advantage: A Standalone Alternative
Medicare Advantage (Part C) replaces Original Medicare (Parts A and B) by offering an all-in-one plan through private insurance companies. These plans often include prescription drug coverage (Part D) and extra benefits like vision, dental, and hearing coverage. Some plans may also include wellness perks such as fitness memberships, transportation assistance, or telehealth services.
Medigap: A Supplemental Safety Net
Medigap (Medicare Supplement Insurance) works alongside Original Medicare to help pay for out-of-pocket costs such as deductibles, copayments, and coinsurance. You still need Original Medicare, and Medigap won’t cover additional benefits like dental or vision care. However, the ability to reduce medical expenses can be particularly beneficial for those with ongoing health concerns.
2. Coverage and Benefits
Medicare Advantage: Expanded Benefits with Restrictions
Medicare Advantage plans may include extra benefits beyond Original Medicare, such as:
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Prescription drug coverage
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Vision, dental, and hearing services
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Wellness programs and fitness memberships
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Meal delivery and in-home care for eligible members
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Telehealth services for remote medical consultations
However, these additional benefits come with limitations, such as network restrictions and prior authorization requirements for certain procedures. Coverage for extra services can vary widely by plan and location.
Medigap: Focused on Cost Coverage
Medigap plans primarily help cover your out-of-pocket expenses under Original Medicare, such as:
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Part A hospital deductibles
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Part B coinsurance and copayments
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Skilled nursing facility coinsurance
Since Medigap doesn’t cover routine dental, vision, or hearing care, you may need separate insurance for those services. However, it provides greater predictability in healthcare expenses, which can be a priority for those on a fixed income.
3. Provider Flexibility and Network Restrictions
Medicare Advantage: Network-Based Coverage
Medicare Advantage plans typically use provider networks like HMOs or PPOs. You may need to choose doctors and hospitals within the plan’s network, and referrals could be required for specialists. Going out of network may result in higher costs or no coverage at all.
Some plans allow for out-of-network coverage at a higher cost, but it depends on the plan type. If you require specialized care not available within your network, you might face limited options.
Medigap: Nationwide Access
With Medigap, you can visit any doctor or hospital in the U.S. that accepts Medicare. There are no network restrictions, making it a great option if you travel frequently or want the freedom to see any provider without referrals.
This level of flexibility can be a significant advantage for individuals with chronic conditions who want to see top specialists regardless of location.
4. Costs and Out-of-Pocket Expenses
Medicare Advantage: Lower Premiums, Higher Out-of-Pocket Costs
Medicare Advantage plans often have lower monthly premiums compared to Medigap, but they come with:
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Annual deductibles
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Copayments and coinsurance for services
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Out-of-pocket maximums, which can be high
You may pay less upfront but more when receiving healthcare services. If you need frequent medical care, these costs can add up quickly.
Medigap: Higher Premiums, Lower Out-of-Pocket Costs
Medigap plans typically have higher monthly premiums but cover many of the out-of-pocket costs Original Medicare leaves behind. If you have frequent medical needs, this could result in lower overall costs throughout the year.
With Medigap, you may have little to no out-of-pocket expenses beyond your premium, making it easier to budget your healthcare costs.
5. Prescription Drug Coverage
Medicare Advantage: Often Included
Most Medicare Advantage plans include prescription drug coverage (Part D), meaning you don’t need a separate plan. However, drug formularies (lists of covered medications) vary, and switching plans could mean changes in your medication costs.
Medigap: Requires a Separate Part D Plan
Medigap does not include prescription drug coverage. If you choose Medigap, you’ll need to enroll in a standalone Medicare Part D plan to get prescription drug benefits.
While this means an additional monthly premium, it also allows you to select the Part D plan that best fits your medication needs rather than being limited to what an Advantage plan offers.
6. Enrollment and Switching Rules
Medicare Advantage: Annual Open Enrollment Opportunities
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You can enroll during your Initial Enrollment Period (IEP) when you first become eligible for Medicare.
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The Annual Enrollment Period (AEP) from October 15 to December 7 allows changes to your plan each year.
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The Medicare Advantage Open Enrollment Period (January 1 – March 31) lets you switch to another Advantage plan or return to Original Medicare.
Medigap: Limited Enrollment Period with Guaranteed Issue Rights
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You have a 6-month Medigap Open Enrollment Period starting the month you turn 65 and enroll in Part B.
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Outside of this period, you may be required to pass medical underwriting, meaning insurers can deny coverage or charge higher premiums based on health conditions.
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Some special enrollment rights apply in certain situations, such as losing other coverage.
7. Travel Coverage and Out-of-State Benefits
Medicare Advantage: Limited Coverage Outside Your Service Area
Medicare Advantage plans usually cover emergency care outside your home state but may not provide routine services nationwide. If you move or travel frequently, coverage limitations can be a concern.
Medigap: Nationwide and Some International Coverage
Medigap policies work anywhere in the U.S. where Medicare is accepted. Some plans also offer limited coverage for foreign travel emergencies, making them a better fit if you frequently travel abroad.
Find the Right Plan with a Licensed Agent
Comparing Medicare options can be overwhelming, but you don’t have to do it alone. Speaking with a licensed agent listed on this website can help you understand your choices and find a plan that fits your healthcare and budget needs.
