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How are Medigap and Medicare Advantage different?

For starters, they’re both options for people with Medicare, but Medigap coverage supplements original Medicare, while Medicare Advantage is a private insurance alternative to federally run Medicare. They’re very different, and their unique types of coverage can’t be combined.

Only those enrolled in original Medicare, which includes Part A hospitalization and Part B doctor and outpatient care, can purchase Medigap, also called Medicare supplement insurance. People choose to purchase Medigap to pay for some of the health care costs that Medicare does not. While it’s not government run, federal rules standardize Medigap, also sold through private insurers, to cover out-of-pocket Medicare expenses, such as deductibles and copayments.

Medigap insurers can offer up to 10 different plans, each labeled with a letter. See the table below for details. Plans with the same letter include the same benefits, even if different insurance companies offer them, but the premiums can vary widely.

What Medigap plans cover in part or in whole:

  • 20 percent Part B coinsurance for physician visits and other outpatient services.
  • Part A daily coinsurance for days 61 to 90 in the hospital for each benefit period; $400 a day in 2023.
  • Part A daily coinsurance for up to 60 lifetime reserve days; $800 a day in 2023.
  • Up to 365 additional days in the hospital in your lifetime after Medicare benefits are used up.
  • First three pints of blood.
  • Coinsurance costs for hospice care.

Some Medigap plans also cover:

You can go to any doctor who accepts Medicare — Medigap will fill in the gaps. But Medigap doesn’t cover prescription drugs, so if you have traditional Medicare and want drug coverage, you’ll need to get a stand-alone Part D prescription drug policy.

How and when should I shop for a Medigap policy?

You can buy a Medigap policy anytime you have Medicare Part A and Part B. This insurance doesn’t have an open enrollment period during certain times of the year, like Medicare Advantage and Part D plans do.

But Medigap insurers can reject you or charge more if you have preexisting conditions unless you buy a policy during certain times, such as within six months of enrolling in Medicare Part B if you’re 65 or older. Medigap insurers must also offer you a policy regardless of preexisting conditions in other situations, such as if you were enrolled in a Medicare Advantage plan but moved outside of the plan’s service area.

Some states have extra protections. Contact your State Health Insurance Assistance Program (SHIP) to find out more about your state’s rules. When exploring your options, you can find out more about Medigap plans in your area from the Medigap plan finder or from your state insurance department.

How does Medicare Advantage differ from Medigap?

Medicare Advantage, also known as Medicare Part C, is an all-in-one, federally regulated alternative to original Medicare. Medicare must approve all private insurance companies that offer Medicare Advantage plans. These plans bundle Part A hospital coverage, Part B doctor and outpatient services, and often Part D prescription drug coverage into one package.

If you decide to get coverage through a Medicare Advantage plan, you’ll still have to enroll in Medicare Part A and Part B, including paying the premiums. This means premiums for Part A, if you don’t qualify for it for free, and Part B, which are $164.90 a month in 2023.

Then you can choose a Medicare Advantage plan and sign up with a private insurer. You may have to pay additional monthly premiums to the Medicare Advantage plan, which averaged $18 in 2023, but two-thirds of Medicare enrollees pay no separate premium.

What Medicare Advantage covers. The federal government requires Medicare Advantage plans to cover everything that Medicare Part A and Part B cover, but they may have different deductibles and copayments. Most Medicare Advantage plans include prescription drugs, too, and many help pay for services original Medicare doesn’t cover, such as routine dental, hearing and vision care.

Provider networks. Unlike original Medicare and Medigap, which cover all doctors and other providers who accept Medicare, most Medicare Advantage plans have a provider network and may charge more or may not cover doctors or facilities outside of a plan’s network.

Out-of-pocket maximums. All Medicare Advantage plans have federal rules that limit annual out-of-pocket costs for services covered under Medicare Part A and Part B. In 2023, this is $8,300 or less for in-network health services, and $12,450 or less for covered in-network and out-of-network services combined.

How and when should I shop for a Medicare Advantage plan?

You can compare premiums, copayments and coverage for Medicare Advantage plans in your area, including copays for your drugs, by using the Medicare Plan Finder. You usually need to contact the plan to find out if your doctors and hospitals are covered. You can then sign up through the Plan Finder or directly with the plan.

You can get a Medicare Advantage plan when you first enroll in Medicare or in other situations, such as within two months of losing employer coverage. Otherwise, you’ll have to wait until open enrollment from Oct. 15 to Dec. 7 for coverage starting Jan. 1. Preexisting conditions don’t affect eligibility for Medicare Advantage.

How do I choose between Medigap and Medicare Advantage?

When considering whether to buy a Medigap policy or enroll in a Medicare Advantage plan, decide whether you want to get your main coverage from the federal government through original Medicare, perhaps supplemented with a private Medigap policy, or from a private insurer through a Medicare Advantage plan.

If you choose original Medicare, you can use any doctor and facility that accepts Medicare. But you’ll have to buy separate Medigap and Part D drug coverage to fill in the gaps.

If you choose Medicare Advantage, you may have low or no premiums beyond your monthly Part B premiums. Out-of-pocket expenses will likely be different, especially as you use more medical services. 

With Medicare Advantage, you typically need to use a provider network. So if you go to an out-of-network doctor, your Medicare Advantage plan may not cover the visit or you’ll pay a higher copayment. Most Medicare Advantage plans include prescription drug coverage and may cover extra expenses.

Keep in mind

If you enroll in a Medicare Advantage plan, you cannot use a Medigap policy to cover your out-of-pocket expenses. So you’ll have to pay any deductible, copays or coinsurance yourself.

It’s illegal for an insurance company to sell you a Medigap policy if you’re enrolled in a Medicare Advantage plan.

Updated January 24, 2023

     

        


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