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Medigap vs Medicare Advantage: Which is the Best Medicare Supplement?

By: Kevin Nystrom

For many seniors considering health care, the pivotal question is in deciding between Medigap vs Medicare Advantage. Finding the best option depends on a variety of factors, but it also depends on how much effort you’re willing to expend in order to find the plan that’s best for you.

What is Medigap and Medicare Advantage?

Both are offered by private insurance companies, and both help to cover the gaps of regular Medicare. Medigap refers to a group of supplemental insurance plans that work in conjunction with your regular medicare benefits. In contrast, Medicare Advantage plans are separate from Medicare. In fact, if you purchase a Medicare Advantage plan, you are de-enrolled from Medicare. Following are some more key differences:

The benefits of Medigap plans are standardized by the federal government, meaning that plans sold by different insurance companies all offer the same benefits.

Medicare Advantage plans must provide at least the same coverage as Medicare A and B, but vary widely beyond this minimum set of benefits.

Medigap plans offer services from a large network of doctors and caregivers, while the services offered by Medicare Advantage plans are usually in a restricted network.

Medigap plans always require an additional monthly premium.

The premiums for Medicare Advantage plans are often less than those for Medigap plans, and in some cases there are no monthly premiums for Medicare Advantage plans.

As you’ve probably realized from reading that last bullet point, Medicare Advantage plans are usually cheaper than Medigap plans. So, if you’re willing to deal with the restricted network (i.e., you don’t plan on being a perpetual globetrotter) and your funds are limited, the Medicare Advantage plan may be the best choice for you. But, of course, there are other very important factors beyond monthly cost that you should be aware of.

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Making the choice of Medigap vs Medicare Advantage

Medicare Advantage can be cheaper, but not necessarily so. For instance, the premiums for those Advantage plans that require them will rise over time, while policy holders of Medigap plans can select options in which the premiums are locked. In addition, out-of-pocket costs for many services such as hospital stays are often much more expensive with Advantage plans than they are with Medigap plans.Seniors considering a Medicare Advantage plan should read the fine print of the policy benefits to determine that the coverage satisfies their needs. They should also contact their physicians to ensure that the plan they desire is accepted.

The key is doing the research. In addition to reading this article you may want to visit Senior65.com which does a good job of explaining how to set up Medicare and Medigap plans. Additional articles on this site that may be of interest are:

Introduction to Senior Health Insurance
4 Easy Steps to compare Medicare Supplemental Plans
Get the Best Price for your Medigap Plan

Researching Medicare options can be a lot of work, and for many seniors, the daunting task of verifying all of this information drives them to considering a Medigap plan. As mentioned before, the benefits of Medigap plans are standardized, so there is less variation to consider, and with the wider network of doctors. Click here to get a quick Medigap quote

So when comparing Medigap vs Medicare Advantage, figure out how comfortable you are evaluating the important details, and don’t rush into a decision! If you need help along the way contact our licensed agents at 800-930-7956.

Comments for Medigap vs Medicare Advantage: Which is the Best Medicare Supplement?

By Annabelle Fischer on June 17, 2011

Yikes - it is confusing.

Medigap sounds like I will not have to worry about paying money for my future health needs (but for me it will be a little more than $100 a month. And, I have to take out a separate policy for my prescriptions.
Will I make up for that in my coming days?

Medicare Advantage Plans - the price is right, but is the coverage?

Thanks, Annabelle

By Martin42342 on July 19, 2011

When it comes to Medicare supplemental insurance there are no discernible differences in offerings between companies for like plans. A particular plan letter from one company works identically to that same plan letter from any other Medicare supplemental insurance company..

By Johnny Quid on July 20, 2011

I’d prefer Medicare, of which 97% of the money goes directly to paying for the healthcare, as opposed to some business skimming money off of the top.
Sorry to say it, but healthcare insurance, along with education and the military, are the THREE things that the government can do better than private companies.

By jonathanmaccy on July 23, 2011

Medigap plans (or Medicare Supplement plans) supplement both Parts A and B. They usually cost on average $100, and now do not include drug coverage. (some of them used to). With supplement plans, you can go to any doctor and don’t need referrals or anything like that. The Medicare Advantage plans are a fancy name for the HMOs you see. They usually have very little if any, monthly premium. They can include drug coverage. If you don’t mind the HMO, then it’s the cheaper way to go. If you prefer freedom, than you’d probably like the Supplement plan better. With the supplement plan, your still going to have to decide on a drug plan.

By polin pod on July 23, 2011

Medicare is financed by payroll taxes imposed by the Federal Insurance Contributions Act (FICA) and the Self-Employment Contributions Act of 1954. In the case of employees, the tax is equal to 2.9%

By bokenn til on July 30, 2011

I have just done all the research for my mother in-law and we decided to go with the medicare advantage plan. The medigap plans were much more expensive. The main thing to look for in the medicare advantage plans is if your doctors take the plans (you need to call them). Also, if you are taking perscription medications - whether they are covered or not. We checked on every perscription before applying to be sure each was covered. Most of the Advantage Plans have a “gap” or “donut hole”. This means that you are responsible for paying the full price of the medications once the cost goes over a certain dollar amount (usually $2,510). Some of the new plans (Anthem BCBS) will cover select generics even during the gap - which is a very important thing if you take a lot of meds. Just check on each medication to be sure it is covered during the gap.

By toller maill on July 30, 2011

Greetings! This is my 1st comment here so I just wanted to give a quick shout out and say I really enjoy reading through your blog posts.

By Anthony Garcia on July 30, 2011

Medicare Advantage sucks. Medigap is better.

By Cindy Farley on October 06, 2011

I am concerned about yearly “out of pocket” expenses. Do either Supplemental or Advantage plans offer a maximum cap? I think that I read that Advantage plans do offer caps while there are no caps for Supplemental. Thank you.

By Bee Sky on November 21, 2011

My Mother is on a Medicare Advantage Plan and has been for several years. We have been perfectly happy and it has saved her so much money. Now one of her specialist is telling us we should change her, because if she had something serious we would have trouble getting her the care she needs with the HMO. So I’m checking into MediGap plans and of course i get the big sale pitch (scare tactics) from the companies selling the Medigap plans. Saying that the HMO’s only pay up to a certain amount, and then it comes back on you. Where the Medigap policies cover everything at no charge to you period. I’m just not sure if I’m getting the sales pitch or the real facts and haven’t been able to find anything online that answers the question.

By lucylee on December 23, 2011

My grandma just had open heart surgery with a medigap plan (new era). The bill came to $110,000 but she owed nothing! The plans work.

By Marilyn Mc on January 15, 2012

Medicare Advantage questions: Is it really a problem to get non-emergency care if you are traveling?
I hear that doctors may limit their number of Medicare patients. Is it generally easier to get in with a doctor as a new patient if the patient has a Medicare Advantage plan that the doctor accepts or if the patient has traditional Medicare with a Medicare Supplement policy? I’m trying to help my mom with her coverage decision.