The core difference: how each plan pays your medical bills

Medicare Advantage (Part C) is an alternative to Original Medicare run by private insurance companies. It bundles your hospital, doctor, and prescription drug coverage into one plan. You pay a monthly premium to the insurance company, not to Medicare, and you use their network of doctors and hospitals.

Medigap (Medicare Supplement) is insurance sold by private companies that pays the costs Original Medicare does not cover — copayments, coinsurance, and deductibles. You keep Original Medicare (Parts A and B) and buy Medigap on top of it. You can see any doctor who accepts Medicare.

The practical difference: with Advantage, the insurance company controls which doctors you can see and what they will pay. With Medigap, Medicare controls coverage and you pick your own doctors. Both cost money out of your pocket each month.

Key Takeaways

  • Medicare Advantage requires you to use in-network doctors and hospitals, while Medigap lets you see any doctor who accepts Medicare.
  • Medicare Advantage includes prescription drug coverage (Part D) automatically; with Medigap you must buy Part D separately if you want it.
  • Medicare Advantage plans have out-of-pocket maximums that cap your yearly costs; Medigap plans do not, though your premiums are usually higher.
  • Medigap plans are standardized by the federal government, so Plan G from one company covers the same things as Plan G from another; Advantage plans vary widely by company and region.
  • You can switch between Medigap plans any time during the year, but Advantage plans have an annual enrollment period and switching costs you a month of premiums.

How costs work: premiums, deductibles, and out-of-pocket limits

With Medicare Advantage, you pay a monthly premium (often $0 to $50, though it varies by plan and region) plus copayments when you see a doctor or fill a prescription. You also have an annual deductible — usually $0 to $500 — before the plan starts paying. The important protection is an out-of-pocket maximum: once you spend a set amount in a year (typically $5,000 to $7,000), the plan pays 100% of covered costs for the rest of that year.

With Medigap, you pay a monthly premium (typically $100 to $300 depending on your age and the plan letter) plus whatever Original Medicare requires you to pay. Original Medicare has a Part B deductible ($240 in 2024, though this changes yearly) and charges 20% coinsurance for most services after that. Medigap plans cover these gaps, but they do not have an out-of-pocket maximum — you could theoretically spend unlimited amounts if you use a lot of care, though your monthly premium is your main predictable cost.

The trade-off: Advantage plans cap your yearly spending but require you to use their network. Medigap plans do not cap spending but give you freedom to see any doctor and predictable monthly costs.

Network restrictions and doctor choice

Medicare Advantage plans operate like HMOs or PPOs. Most are HMO plans, which means you must see doctors in their network and usually need a referral to see a specialist. If you see an out-of-network doctor (except in emergencies), you pay the full bill yourself. Some Advantage plans are PPO plans, which let you see out-of-network doctors but charge you more.

Medigap has no network. You can see any doctor, specialist, or hospital that accepts Medicare — which is nearly all of them. You do not need referrals. This matters most if you have a doctor you want to keep or if you travel and need care in different states.

If your current doctors are in an Advantage plan's network and you rarely travel, the network restriction may not affect you. If you have established relationships with specific doctors or move between states, Medigap's freedom is worth the higher premium.

Prescription drug coverage

Medicare Advantage plans include prescription drug coverage (Part D) as part of the plan. You pay copayments for drugs, and the plan covers them according to its formulary — a list of approved medications. If your drug is not on the formulary, you may have to pay out of pocket or switch to a covered alternative.

If you choose Medigap, you must buy Part D coverage separately from a private insurance company. You can pick any Part D plan offered in your area. The advantage is that you are not locked into one company's drug list — you can switch Part D plans every year during the annual enrollment period without losing your Medigap coverage.

If you do not take many prescription drugs, Medigap plus a basic Part D plan may cost less than Advantage. If you take expensive or specialty drugs, compare the formularies carefully before choosing.

Standardized plans and how to compare them

Medigap plans are labeled A through N (the federal government sets what each letter covers, so Plan G is identical across all insurance companies). This makes comparison straightforward: you can call three companies, ask for Plan G quotes, and pick the cheapest one. The coverage is the same.

Medicare Advantage plans are not standardized. Two "Silver" plans from different companies in the same county can have different copayments, different networks, and different drug formularies. You must read each plan's details or call the company to compare them. This takes more work but allows plans to compete on specific features.

The federal government publishes a comparison tool at Medicare.gov where you can enter your zip code and see all Advantage and Medigap plans available to you, along with their premiums and coverage details. This is the fastest way to see your actual options.

When you can switch and what it costs

Medigap plans can be switched at any time during the year. If you want to move from Plan G to Plan N in March, you can. You lose one month of premiums from your old plan, but there is no penalty or waiting period. This flexibility is valuable if your health needs change or if a cheaper plan becomes available.

Medicare Advantage plans have an Annual Enrollment Period from October 15 to December 7 each year. You can switch to a different Advantage plan or to Original Medicare plus Medigap during this window. If you switch outside this period, you must wait until the next October unless you may have access to for a Special Enrollment Period (for example, if you move or lose employer coverage).

Switching from Advantage to Medigap outside the enrollment period can be costly: insurance companies can deny you coverage or charge higher premiums based on your health history. The safest time to switch is during the Annual Enrollment Period or within 63 days of losing Advantage coverage.

Which plan makes sense for different situations

Choose Medicare Advantage if: You are healthy and do not see doctors often; you want predictable yearly costs with an out-of-pocket maximum; you are comfortable using a specific network of doctors; you want prescription drug coverage included; or you have a limited budget for monthly premiums.

Choose Medigap if: You have established relationships with specific doctors outside a particular network; you travel frequently and want coverage anywhere in the US; you take expensive medications and want access to any pharmacy; you want the freedom to see specialists without referrals; or you prefer predictable monthly costs over yearly spending limits.

Your choice also depends on what is available in your area. Some regions have many Advantage plans to choose from; others have only a few. Some have Medigap plans at affordable prices; others do not. Check Medicare.gov to see what is actually offered where you live before deciding.

Frequently Asked Questions

Can I have both Medicare Advantage and Medigap at the same time?

No. You choose one or the other. If you have Advantage and buy Medigap, Medicare will not pay the Medigap premium and the Medigap company will likely refuse to cover you. If you have Medigap and switch to Advantage, your Medigap coverage ends.

What happens to my Medicare Advantage plan if I move to a different state?

Your plan ends on the last day of the month you move. You have 60 days to pick a new plan in your new state. If you do not, you lose coverage. With Medigap, your plan usually continues even if you move, though you should contact your insurance company to confirm.

Do I still pay Medicare premiums if I have Medicare Advantage?

Yes. You pay the Part B premium to Medicare (currently $164.90 per month for most people in 2024, though this changes yearly) plus the Advantage plan premium to the insurance company. Some Advantage plans have $0 premiums, so you only pay Medicare's Part B premium.

Can I switch from Medicare Advantage to Medigap in the middle of the year?

Only during the Annual Enrollment Period (October 15 to December 7) or if you may have access to for a Special Enrollment Period. If you switch outside these windows, Medigap companies can deny you or charge more based on your health. The safest approach is to wait for October.

Which plan is cheaper overall?

It depends on your health and how much care you use. Advantage plans have lower monthly premiums but higher copayments per visit. Medigap has higher monthly premiums but lower costs per visit. If you see doctors frequently, Medigap often costs less overall. If you rarely see doctors, Advantage is usually cheaper. Compare actual plans in your area using Medicare.gov.