When to Choose Medicare Advantage Over a Medigap Supplement Plan

older couple smiling at each other under an umbrella
Image Source / Image Source / Getty Images

No one wants to be caught in a storm of out of pocket costs. Instead, we want our health care to be covered under one umbrella. Simple, neat, and easy. 

What do you do when your insurance plan won't cover all the services you need? This is a problem many Americans face when they become eligible for Medicare. You may want to consider a strategy for extra coverage if and when you need it.

That could mean deciding between a Medicare Advantage plan and a Medigap supplement plan.

Your Three Medicare Choices

Original Medicare is the least expensive Medicare option. The problem is it leaves a significant gap in coverage for many services that seniors need as they age, including coverage of corrective lenses (contact lenses or eyeglasses), dentures, and hearing aids. You can choose to pay those expenses out of pocket or you can seek other coverage to keep your costs down.

To that end, you could either purchase a Medigap supplement plan to use with your Original Medicare coverage, or you could choose another type of Medicare plan altogether, a Medicare Advantage plan

Essentially, you have three choices*:

  • Original Medicare (Parts A and B) alone 
  • Original Medicare with a Medigap plan
  • A Medicare Advantage plan (Part C)

* You can add Part D prescription coverage to any of these scenarios.

Before you make a decision, know what the pros and cons are for each of these options.

Advantages of Picking a Medicare Advantage Plan

Medicare Advantage plans are Part C of Medicare. You have the option of choosing either Original Medicare or a Medicare Advantage plan, not both. In 2017, 19 million Americans, 33 percent of those on Medicare, have chosen Medicare Advantage plans. Here are the reasons why.

  • More covered services. Medicare Advantage plans at a minimum cover everything that Original Medicare offers. This is a requirement set by the government. Depending on the specific Medicare Advantage plan you choose, you may also be able to add coverage for services not covered by Original Medicare.
  • More comprehensive plans. If you need prescription drug coverage, you would have to purchase a Part D plan in addition to Original Medicare. Many Medicare Advantage plans include Part D coverage. This makes things simpler for you by your only having to sign up for a single plan. It also decreases the number of premiums you will pay each month.

Disadvantages of Picking a Medicare Advantage Plan

As appealing as a Medicare Advantage plan may seem, it does have its downside. Consider these before you make your choice.

  • A smaller network of providers. You will have a narrower network of providers to choose from than under Original Medicare. This is because not all Medicare providers participate in Medicare Advantage plans. This could make it more difficult to access care in certain situations.
  • Run by private insurance companies. Premium costs will vary based on how extensive a plan you choose and the company from which you purchase your coverage. This will mean you will have to do research and shop around to get the best deal. The government does not regulate how much an insurance company can charge you for premiums or other out of pocket costs.

What Is a Medigap Supplemental Insurance Plan?

If you choose to stay with Original Medicare, you could purchase a Medigap supplement plan to help pay down your Medicare bills. To be clear, Medigap plans do not cover medical services. What they do is decrease the costs that Original Medicare leaves on the table, costs like deductibles, coinsurance, and copayments.

You cannot have a Medigap supplement plan with a Medicare Advantage plan. You have to make a choice - is it more important to have more medical coverage or less expensive deductibles and copays?

Medigap plans are labeled A through N. They pay toward your out of pocket expenses, specifically deductibles, coinsurance, copayments and even costs towards foreign travel. Note that E, H, I, and J plans are no longer offered.

Similar to Medicare Advantage plans, Medigap plans are offered by private insurance companies but federal guidelines outline what they must cover. Every lettered plan will have the same coverage, i.e. an F plan is an F plan wherever you buy it. You will need to shop around for the best rates.

(Dis)Advantages of Medigap Supplement Insurance Plans

Medigap plans offer you flexibility. You could choose a smaller or more extensive plan based on your needs while continuing to have access to a wide network of Medicare providers that you would not have access to under Medicare Advantage.

The question to ask yourself is whether or not the cost of monthly premiums is worth the amount you will save in Original Medicare costs.

The tricky part about Medigap plans is that they can cost you more if you have a pre-existing condition. Timing is everything, and if you miss the narrow Medicare Open Enrollment Period, the insurance company has the upper hand on how much it can charge you. To get a rate that is not affected by pre-existing conditions, you need to sign up in the narrow one-time window that starts when you first sign up for Part B and ends six months later.

*** Be sure not to confuse supplement insurance with secondary insurance. The terms sound similar. Secondary insurance means you have another health plan in place that will pay for health care services, i.e., an employer-sponsored health plan, retirement benefits, or VA benefits. A Medigap plan does not add additional health services or coverage.

A Word From Verywell

Everyone has different needs. Only you know how much you physically need and what you will be able to afford. Think carefully about what choice makes the most sense for your situation. You have to decide if you will save more money by choosing a Medicare Advantage plan which offers more services or a Medigap supplement plan which decreases Original Medicare's out of pocket expenses.

Was this page helpful?

Article Sources

Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial policy to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.