Medigap Vs. Medicare Advantage

How does Medicare work?

Your Medicare information guide

"Is Original Medicare better than Medicare Advantage?"

"How do I choose a Medicare Supplement Plan?"

"Which Medicare plan is right for me?"

"Which is Better? Medigap or Medicare Advantage?"

"What if I Choose the Wrong Coverage Plan?

If you haven’t already, refer to my Medicare 101 guide, for a quick easy to read description of all of the different parts of Medicare. You can also review the in depth articles I wrote about Medicare Advantage plans and Medicare Supplement plans to learn more about each.

In this guide I will cover what things you should consider when selecting a Medicare plan. Touching on things that most people often overlook.

There are a lot of options when you’re signing up for Medicare. Selecting the right Medicare coverage is more than just looking for the lowest premium. I’ll talk about Medigap vs. Medicare Advantage, how to choose the right type of plan once you settle on one of the two, picking the right company, and why opting for more coverage may cost more money now, but save you money down the road!

This entire article is purely meant to be educational and does not constitute as advice given on my behalf. The only way to ensure you’re making the best choice when it comes to your needs is to speak with a professional such as a Medicare Broker.

Jump straight to:

Original Medicare vs Medicare Advantage

Original Medicare and Medicare Advantage have some similarities and some distinct differences. There are also pros and cons to both and I’ll talk about how to decide between the two.


  • Both cover inpatient and outpatient expenses
  • Both generally have co-pays, co-insurance, and deductibles
  • They both mimic coverage similar to an employer sponsored health plan
They essentially provide the same type of coverage which can make it hard for some people to decide. So understanding the differences, pros, and cons is very important when deciding between the two.


  • Original Medicare is administered by the Federal Government
  • Medicare Advantage plans are administered through private health organizations
  • Original Medicare has NO maximum out of pocket limit
  • Medicare Advantage does carry a maximum out of pocket limit
  • Original Medicare does not provide prescription drug coverage, routine vision, dental, or hearing
  • Medicare Advantage often times does
  • Original Medicare is accepted nationwide wherever Medicare is accepted
  • Medicare Advantage plans generally have a network

Pros of Original Medicare:

  • Nationwide coverage, you can go anywhere Medicare is accepted (over 800,000 providers)
  • Consistency of plan benefits
  • You can add a Medicare Supplement plan to cover your cost sharing
  • No need to assign a Primary Care Physician (PCP)
  • No need to obtain a referral to see a specialist

Cons of Original Medicare:

  • No drug coverage
  • No routine hearing, dental, or vision
  • No maximum out of pocket which could result in catastrophic spending

Pros of Medicare Advantage:

  • Often comes with a $0 or low monthly premium
  •  Maximum Out of Pocket (MOOP) limits prevent you from catastrophic spending
  • Usually includes prescription drug coverage, so no need for a stand alone Part D plan
  • Can provide additional benefits like routine hearing, dental, vision, and even free gym memberships

Cons of Medicare Advantage:

  • You are limited by the plans network
  • Plan benefits can change annually.
  • The provider can determine whether or not they want to continue providing Medicare Advantage plans as well. Meaning even if you love your plan, if that company decides they no longer want to cater to the Medicare market, you will be shopping for a new provider
  • You can not have a Medicare Supplement policy to help offset your cost sharing
  •  If you are unhappy with your plan for any reason, you are limited to when you can enroll, disenroll, or switch plans.
The Verdict:
You can not go wrong either way. My advice is that if you are going to go with Original Medicare make sure you pair it with a Medigap policy. If you go the Medicare Advantage route, make sure your prescription needs are covered and that your doctors of choice are in network. As you continue reading this guide I will go more in depth on how to choose the right carrier and plan once you’ve settle between signing up for Original Medicare, or a Medicare Advantage plan.

Medigap Vs. Medicare Advantage

If you have not read the above comparison between Original Medicare and Medicare Advantage I would encourage you to do so. All of the pros of Original Medicare apply to Medigap policies as well, but will not be repeated to avoid being redundant. Here are the similarities, pros, and cons as they apply to comparing Medigap vs Medicare Advantage.


  • You must pay your Part B premium regardless of whether you choose a Medicare Supplement plan, or Medicare Advantage Plan
  • Both are issued by a private institution
  • Both must meet strict guidelines set forth by Medicare
  • Both offer a more comprehensive solution over Original Medicare as a standalone coverage

Pros of Medicare Supplement plans:

  • Everything that I stated above about Original Medicare
  • They are accepted everywhere Original Medicare is (over 800,00 providers)
  • They offer a comprehensive solution to your cost sharing and greatly reduce your out of pocket medical expenses.

Cons of Medicare Supplement Plans:

  • Everything that I stated above about Original Medicare
  • If you don’t sign up during your Medigap Open Enrollment period you will have to pass underwriting and answer health questions in order to qualify
  • Often times they are more expensive than Medicare Advantage plans
  • Does not include prescription drug coverage
  • Does not include routine dental, hearing, or vision.

Pros of Medicare Advantage:

  • Everything I stated above about Medicare Advantage
  • Often times it’s less expensive than a Medigap Policy
  • Offers additional benefits like prescription drug coverage, routine hearing, dental, and vision
  • Easier to qualify for if you don’t have a Guaranteed Issue Right for Medigap
  • There are Medicare Advantage plans called Special Needs Plans (SNP) that are designed to help a specific group of people that have a certain disease, or chronic illness

Cons of Medicare Advantage:

  • Everything I stated above about Medicare Advantage
  • Coverage is generally not as comprehensive as Original Medicare with a Medigap policy
  • Higher cost sharing, annual deductibles, co-payment, and co-insurance
The Verdict:

A Medicare Advantage plan is good for someone who:

  • Is in good health and doesn’t visit doctors often
  • Can not afford the upfront cost of a Medigap and Part D plan
  • Stays in one place that is within the plan’s network
  • Someone who qualifies for a Special Needs Plan (SNP)

A Medicare Advantage plan is not good for someone who:

  • Is a snowbird, or travels often
  • Someone in poor health that utilizes medical services often
  • Someone who doesn’t want to have to keep up with constant plan changes

A Medicare Supplement plan is good for someone who:

  • Has a lot of out of pocket medical expenses throughout the year
  • Wants a plan that stays consistent where they can “set it and forget it”
  • Someone who lives in more than one place or travels often
  • Someone who wants a policy that grows with them in the event their health needs change

Other considerations:

If you don’t sign up for a Medigap policy when you’re first eligible you may not qualify later if you don’t have a Guaranteed Issue Right

 It’s unfortunate, but health situations change. The insurance that’s right for you today, may not be right for you tomorrow. We buy insurance to protect against the unknown. You don’t buy car insurance after you get into an accident and you shouldn’t wait to buy adequate health insurance until you’re already ill.

Part D Prescription Drug Coverage

This happens to be one of the most overlooked considerations. It’s also one that could be a very expensive mistake. Whether you go with a Medicare Advantage plan or Original Medicare with a Medigap policy chances are you’ll want to enroll in a Prescription Drug policy. Again, you may not be taking any medications now, but that doesn’t mean you won’t need any tomorrow. And if you don’t check the plans formulary, network, or do an estimated annual cost comparison between plans, it could cost you a small fortune.

We’re going to kill two birds with one stone and go straight into the Price vs. Cost comparison using Part D coverage as the example which will help clarify what I’m talking about.

Price vs. Cost

Price Vs. Cost. Paying the lowest monthly premium is enticing. This is called the price. The cost however is the long term spending that comes after.

Here’s an example of why both Part D Prescription Drug Coverage is important, and price vs. cost must always be considered:

I’m using real plans and real prices for this example. Let’s say you’re taking two fairly common prescription drugs: Simvastatin and Hydrocodone. Your annual drug cost with no coverage is $5,353. You don’t want to be responsible for paying that out of pocket, so you decide to enroll in a Part D Prescription Drug plan. You choose Company B because it’s price is appealing at $14.50/mo which is half of what Company Y is charging. Before doing this, you did not check the formulary, or pharmacy network and by year end you save some money, but still ended up being responsible for $4,112 out of pocket. Had you purchased the plan that was twice as much the price would have been close to double, or $27.90($160.80  more per year) and your out of pocket cost for your covered drugs would have been $767 ($3,345 less per year).

This is why Price vs. Cost is very important, although often overlooked. The same concept applies to choosing a Medigap policy, or Medicare Advantage plan with drug coverage. Or when you’re deciding whether or not to enroll in a Prescription Drug Plan because you don’t take medication. Is it worth incurring a $2500 out of pocket expense mid year, should you end up needing prescription drugs? Just so you can save $168 worth of premium that you would have paid over the course of the first 6 months that you weren’t taking prescription drugs? How about not enrolling in Medicare Part B to save $134 a month, but then paying a late penalty fee? Let’s look at another example:

At 65 years of age you no longer have employer related health coverage. You decide to postpone enrolling in Medicare Part B because you’re healthy. The monthly price for the Part B premium is $134. Three years go by and you decide to enroll in Part B due to some health problems you start developing. Because you did not qualify for a Special Enrollment Period (SEP) you are assessed a Late Enrollment Penalty. The penalty works out to $40/mo. You continue to carry Part B for the next 20 years before passing. You saved $4,824 by delaying your enrollment ($134/mo x 36 mo). However, because of your delay, it cost an additional $9,600 in late fees ($40/mo  240 mo) over the lifetime of the policy.

How to pick the right coverage

Picking the right coverage an be difficult when it comes to health insurance. Health problems are not something you can predict. If you’re a healthy individual I’d recommend picking the best coverage you can afford.
Some general things to consider:
  • If I don’t enroll now, will I still be eligible later?
  • If I get sick in 6 months will I be adequately covered?
  • If I don’t enroll now will I pay a late enrollment penalty?

Things to consider if you already see the doctor pretty regularly or have a health condition:

  • How often do you go to the doctor?
  • What prescription drugs do you take?
  • What services do you often utilize through your health care provider?
 Then it’s time to consider the plan:
  • Are the doctors I want to use in the plan’s network?
  • How much are the co-pays?
  • What’s the deductible?
  • How much is the coinsurance?
  • What’s the maximum out of pocket limit?
  • What drugs are covered?
 Now you can evaluate this information and drill down the price vs. cost to make an informed decision.

How to choose the right company

Okay, so you’ve figured out what kind of plan you want and you’ve figured out what coverage suits your needs, but there are multiple companies that offer what you’re looking for.

“So now is it safe to assume I can choose the one that has the lowest price, right Sean?”

Nope! However I’ll keep this part very simple.

Here are the things to consider:

  • Medicare Advantage and Part D Drug plans have star ratings. You can look at these to determine the quality of the plan. The rating is out of 5 stars and can be found through Medicare’s online plan finder service, or provided by your Medicare Broker
  • For Medicare Supplement plans look at the rate increase history and the set increases by age. The increases vary widely between companies and also based on which plan you choose. For example Medigap Plan F tends to take larger increases than Medigap Plan G
  • Review the company’s A.M. Best rating to get an idea about the company’s financial outlook
  • Google the company’s name to look for news that may reveal any wide spread complaints, or indicate any troubles the company may be having. You can also ask your Medicare Broker about the company’s history and current events to reveal the same information

What if I don’t like my plan?

“Sean, I read your guide. I did all of the research that you suggested, but I am unhappy with the plan or provider I chose.”

While it is impossible to guarantee that you’re going to make the right decision, if you follow this guide you should at least be making the most informed decision. Still, even after all of the research, it is possible to find your self in a position where you wish you had made a different decision.

Here are some instances where you may switch outside of your enrollment periods:

Free Look Period

If you switch from one Medicare Supplement plan to another, the free look period gives you 30 days to decide whether or not you like your new plan. The 30 days begins when your new Medigap policy starts. Should you decide you are unhappy with the switch, you can return to your original plan and cancel the new one with no questions asked.

Trial Right

If you enrolled in a Medicare Advantage plan when you first became eligible for Medicare Part A at age 65 -OR- you dropped your existing Medicare Supplement plan to try Medicare Advantage for the first time, you have a 12 month period called a trial right. During this time if you’re unhappy with your Medicare Advantage plan you can switch back to Original Medicare with a Guaranteed Issue Right for a Medigap policy.

5-Star Special Enrollment Period

During this time period you will have an opportunity to enroll in a 5-star rated Medicare Advantage or Prescription Drug Plan. As long as one of these plans is available in your area, you may exercise your right to switch once per 5-Star Special Enrollment Period. This special enrollment period occurs from December 8th of the current year through November 30th of the following year.
With a Medicare Supplement plan you can cancel, or switch any time. If you are outside of your Medigap Open Enrollment Period you’ll have to answer health questions and pass underwriting to qualify.
To enroll in to, disenroll from, or switch a Medicare Advantage plan you’ll either have to qualify for a Special Enrollment Period (SEP), or wait for the Annual Election Period (AEP) or the Medicare Advantage Open Enrollment Period (MAOEP).
For more detailed information on how to enroll, disenroll, and switch Medicare plans, check out the article I wrote: “The Ultimate Guide to Medicare Enrollment”. I cover topics such as the new Medicare Advantage Open Enrollment Period, qualifying for a Special Enrollment Period (SEP), avoiding late fees and so much more. It’s an extremely detailed article on everything enrollment related.
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Sean Senseman

Sean Senseman

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