The short answer: it depends on your health, your budget, and what you're willing to trade

Medicare and private insurance are not competing for the same job. Medicare is a federal program that covers hospital care, doctor visits, and some prescription drugs once you turn 65. Private insurance — either through an employer, the marketplace, or a supplement — fills gaps Medicare leaves open, or replaces Medicare entirely if you choose it. Neither is objectively "better." One will cost you less out of pocket for your specific situation; the other might cover a doctor you want to see. The choice comes down to what you actually use and what you can afford to pay upfront.

Most people over 65 stay on Medicare because it covers the big expenses — hospital stays, major surgery, dialysis. But Medicare has a deductible, a copay structure, and a coverage gap for drugs (the "donut hole"). A private supplement fills those gaps. A private plan instead of Medicare covers different things entirely and costs more upfront but might have lower copays. The real question is not which is better in theory, but which is cheaper for you in practice.

Key Takeaways

  • Medicare covers hospital, doctor, and some drug costs at age 65, but leaves gaps that cost you money at the pharmacy and the doctor's office.
  • Private supplements (Medigap) cover Medicare's copays and deductibles but cost extra each month and do not replace Medicare.
  • Private plans instead of Medicare (Medicare Advantage) have lower monthly premiums but higher copays per visit and may limit which doctors you can see.
  • Your choice depends on your health history, which doctors you use, and how much you spend on prescriptions — not on which plan sounds better in general.
  • You can switch between Medicare and private plans during Open Enrollment (October 15 to December 7 each year), so your choice now is not permanent.

What Medicare covers and what it leaves you paying for

Medicare Part A covers hospital stays, skilled nursing care after hospitalization, hospice, and some home health. You pay a deductible per hospital stay (the amount changes yearly) and then nothing for the first 60 days. After that, you pay a copay per day. Part B covers doctor visits, outpatient surgery, and some preventive care. You pay a monthly premium, an annual deductible, and then 20 percent of the cost of each service.

Part D covers prescription drugs. You pay a monthly premium, a deductible, and then copays that vary by drug tier. There is a coverage gap — once you and Medicare have spent a certain amount on drugs, you pay more out of pocket until you hit a catastrophic threshold. Then Medicare covers 95 percent. This gap can cost hundreds of dollars in a single month if you take expensive medications.

The result: Medicare covers the skeleton of your care, but the copays, deductibles, and drug gaps add up. A person on Medicare with multiple chronic conditions and several prescriptions might spend $3,000 to $5,000 per year out of pocket, depending on their health and their drugs. That is on top of the monthly premiums.

Medigap (private supplements): lower out-of-pocket costs, higher monthly premiums

A Medigap policy is private insurance sold by private companies that wraps around Medicare. It covers Medicare's copays, coinsurance, and deductibles — the gaps. You keep Medicare Part A and B. You add the Medigap policy. You pay both the Medicare premium and the Medigap premium.

There are ten standardized Medigap plans (labeled A through N). Plan G covers almost everything Medicare does not — copays, deductibles, and the drug gap. Plan N covers most of it but leaves some copays to you. A Plan G might cost $150 to $250 per month depending on your age and where you live. That is on top of your Medicare Part B premium (about $165 per month in 2024, though it varies by income).

The trade-off: you pay more upfront each month, but when you go to the doctor or the pharmacy, you pay little or nothing. If you are healthy and rarely see a doctor, you are paying for coverage you do not use. If you have diabetes, heart disease, or take multiple prescriptions, the Medigap premium pays for itself in the first few months.

Medicare Advantage (private plans instead of Medicare): lower premiums, higher per-visit costs

Medicare Advantage is a private plan that replaces Medicare Part A and B. You do not use Medicare directly; you use the private plan's network. The monthly premium is often lower than Medicare Part B alone — sometimes zero. But the copays are higher. A doctor visit might cost $30 to $50 instead of the 20 percent coinsurance Medicare charges. An emergency room visit might cost $250 to $500.

Medicare Advantage plans also have a network. You must use doctors and hospitals in the plan's network, or pay more (or nothing is covered, depending on the plan). If your cardiologist is not in the plan, you either switch doctors or pay out of network. This is the biggest hidden cost: losing access to a doctor you trust.

Medicare Advantage also includes Part D (drug coverage), so you do not buy it separately. The plan covers drugs, but the copays and the coverage gap still exist. Some plans have lower drug copays than others, so the plan you choose matters if you take expensive medications.

The trade-off: you save money upfront if you are healthy and do not mind switching doctors. If you have a chronic condition and see the same specialists regularly, you might pay more in copays than you would on Medicare with a Medigap supplement.

How to compare costs for your specific situation

The only honest way to choose is to add up what you would actually pay under each option. Start with your current doctors and prescriptions. Call your doctors' offices and ask: do they accept Medicare? Do they accept this specific Medicare Advantage plan? What is the copay under Medicare versus this plan?

For prescriptions, use the Medicare Plan Finder tool on Medicare.gov. Enter your drugs and dosages. The tool shows you the annual cost (premium plus copays) for each Part D plan and each Medicare Advantage plan in your area. Do the same for a Medigap plan: add the Medigap premium to your Medicare Part B premium, then subtract what the Medigap covers (usually all copays and deductibles). Compare the total annual cost.

This takes an hour, but it is the only way to know. A plan that looks cheap in a brochure might cost you thousands more if your doctor is out of network or your drugs are not covered well. A plan that looks expensive might save you money if you take three prescriptions and see a specialist monthly.

When private insurance costs less than Medicare

Private insurance (either Medigap or Medicare Advantage) costs less than Medicare alone in these situations: you take multiple prescription drugs and hit the coverage gap regularly; you see the same doctors and specialists frequently; you have a chronic condition that requires ongoing care; or you are willing to pay a higher monthly premium to avoid copays at every visit.

Medicare Advantage costs less if you are healthy, rarely see a doctor, and do not mind using a network. It also costs less if the plan's drug coverage matches your prescriptions well. Some plans have $0 copays for certain drugs or doctor visits, which can save thousands per year.

Medicare with Medigap costs more upfront but less at the point of care. It makes sense if you want to keep your current doctors (Medigap has no network) and you use healthcare regularly.

What happens if you choose wrong, and when you can switch

Your choice is not permanent. You have an Open Enrollment period every year from October 15 to December 7. During this window, you can switch from Medicare to a Medicare Advantage plan, from Medicare Advantage back to Medicare, or from one Medigap plan to another. Changes take effect January 1.

If you miss Open Enrollment, you are locked into your plan until the next year — with one exception. If you move out of your Medicare Advantage plan's service area, you can switch. If your plan is discontinued, you can switch. Otherwise, you wait.

This means you can try a Medicare Advantage plan for a year. If your copays are higher than you expected or your doctor left the network, you can switch back to Medicare with a Medigap supplement in the next Open Enrollment. The same goes the other way: if Medigap premiums rise too high, you can try Medicare Advantage.

Frequently Asked Questions

Can I have both Medicare and a private plan at the same time?

Yes, if it is a Medigap supplement. You keep Medicare Part A and B and add the Medigap policy. You cannot have Medicare and a Medicare Advantage plan at the same time — you choose one or the other. You also cannot have two Medigap plans or two Medicare Advantage plans.

Do private plans cover things Medicare does not?

Medicare Advantage plans sometimes cover dental, vision, or hearing aids — things Original Medicare does not. But coverage varies by plan and by location. Check the specific plan's summary before you choose. Medigap does not add new coverage; it only covers Medicare's copays and deductibles.

What if my doctor does not accept Medicare?

Very few doctors refuse Medicare entirely, but some do. If your doctor does not accept Medicare, you cannot use Medicare or a Medigap supplement — you would need a Medicare Advantage plan that includes that doctor, or private insurance outside Medicare. Ask your doctor which plans they accept before you choose.

Will my premiums go up every year?

Yes. Medicare Part B premiums, Medigap premiums, and Medicare Advantage premiums all increase yearly. The amount varies. Medigap premiums sometimes jump when you turn 75 or 80. Medicare Advantage premiums can change if the plan changes its coverage or network. Budget for increases of 3 to 8 percent per year, though some years are higher.

Is there a penalty if I do not choose a plan by 65?

Yes. If you do not enroll in Part B when you are first may be able to access, you pay a penalty (about 10 percent of the Part B premium) for each year you delayed, for the rest of your life. The same applies to Part D: if you go without drug coverage for more than 63 days, you pay a penalty when you finally enroll. Enroll during your initial enrollment window, which is three months before, during, and three months after the month you turn 65.