Medigap or Medicare Advantage: Which Is Better?

Medicare is the federal health insurance program for individuals aged 65 or older, certain younger people with disabilities, and people with End-Stage Renal Disease. Original Medicare includes Part A (hospital insurance for inpatient stays, skilled nursing, hospice, and some home health services) and Part B (medical insurance for doctor visits, outpatient care, durable medical equipment, and preventive services). While Original Medicare covers many healthcare expenses, beneficiaries remain responsible for deductibles, copayments, and coinsurance. To address these out-of-pocket costs and other gaps, beneficiaries can choose between Medigap (Medicare Supplement Insurance) plans and Medicare Advantage (Part C) plans.

Medigap Plans Explained

Medigap, or Medicare Supplement Insurance, is a supplemental policy offered by private insurance companies. It works with Original Medicare (Parts A and B) to help cover costs like deductibles, copayments, and coinsurance that Original Medicare does not. Original Medicare pays its share first, then the Medigap policy pays its share, reducing a beneficiary’s out-of-pocket expenses.

Medigap plans are standardized across most states, identified by letters A through N. Each lettered plan offers the same core benefits regardless of the insurer, simplifying comparison based on price and customer service. However, plan availability may vary by state.

Medigap policies do not include prescription drug coverage; beneficiaries must enroll in a separate Medicare Part D Prescription Drug Plan. They also do not cover services like long-term care, vision, dental, or hearing care.

Due to federal law, Medigap Plans C and F, which covered the Medicare Part B deductible, are no longer available for purchase by individuals newly eligible for Medicare on or after January 1, 2020. Those eligible before this date can keep or enroll in these plans if available.

Medicare Advantage Plans Explained

Medicare Advantage, or Medicare Part C, allows beneficiaries to receive Medicare Part A and Part B benefits through private insurance companies. These Medicare-approved plans must provide all medically necessary services covered by Original Medicare.

Many Medicare Advantage plans also include additional benefits not covered by Original Medicare, such as prescription drug coverage (Part D), vision, dental, hearing services, and wellness programs. This bundles various types of coverage into one plan.

Several plan types exist, each with different structures and rules. Health Maintenance Organization (HMO) plans often require a primary care physician and referrals for specialists within the network. Preferred Provider Organization (PPO) plans offer more flexibility, allowing out-of-network care at a higher cost. Other types include Private Fee-for-Service (PFFS) plans and Special Needs Plans (SNPs) for specific conditions or dual eligibility.

Comparing Coverage Elements

The scope of coverage differs significantly between Medigap plans, which supplement Original Medicare, and Medicare Advantage plans. Understanding these differences is important for beneficiaries to select the option that best aligns with their anticipated healthcare needs. This section compares how hospital stays, doctor visits, prescription drugs, emergency care, and additional benefits are handled.

Hospital Stays (Part A)

Original Medicare imposes a deductible per benefit period for hospital stays, which is $1,676 in 2025. After the deductible, coinsurance applies for extended stays. Medigap plans cover these Part A deductibles and coinsurance amounts, offering financial predictability. Medicare Advantage plans integrate Part A coverage and typically charge daily copayments for hospital stays, with costs varying by plan.

Doctor Visits (Part B)

Original Medicare covers 80% of the Medicare-approved amount for doctor visits and outpatient care after the annual Part B deductible ($257 in 2025) is met. Medigap plans typically cover the remaining 20% coinsurance and, depending on the plan, may also cover the Part B deductible. Medicare Advantage plans generally require a copayment for each doctor visit or outpatient service, with specific amounts determined by the plan.

Prescription Drugs

Medigap plans do not include prescription drug coverage; beneficiaries must enroll in a separate Medicare Part D Prescription Drug Plan. Most Medicare Advantage plans, however, incorporate prescription drug coverage (MAPD plans) as part of their comprehensive benefits package. This integration simplifies drug coverage for many beneficiaries.

Emergency and Urgent Care

Original Medicare covers emergency and urgent care anywhere in the U.S. Some Medigap plans offer limited coverage for foreign travel emergencies, typically covering 80% of eligible expenses after a deductible, up to a lifetime maximum. Medicare Advantage plans must also cover emergency and urgent care within the U.S., even outside the plan’s service area. For international travel, Medicare Advantage plans may offer some emergency and urgent care coverage, but this varies by plan, and routine care is generally not covered outside the plan’s service area.

Additional Benefits

Medigap plans focus solely on covering gaps in Original Medicare’s coverage for medically necessary services. They do not offer extra benefits like routine dental, vision, hearing care, or wellness programs. Medicare Advantage plans often include a wide array of supplemental benefits, such as routine dental exams, cleanings, vision exams, eyeglasses, hearing aids, and fitness memberships. These added benefits can enhance a beneficiary’s overall health and well-being.

Comparing Cost Structures

The financial structures of Medigap and Medicare Advantage plans present distinct cost considerations for beneficiaries. Understanding how premiums, deductibles, copayments, coinsurance, and out-of-pocket maximums apply to each option is important for budgeting healthcare expenses.

Monthly Premiums

With Medigap, beneficiaries pay a separate monthly premium for their policy in addition to their Medicare Part B premium ($185.00 per month in 2025). Medigap premiums vary widely by plan type, insurer, age, and location. Many Medicare Advantage plans have a $0 monthly premium beyond the required Part B premium, though some may charge an additional premium.

Deductibles

With Original Medicare supplemented by Medigap, beneficiaries typically pay the Medicare Part A and Part B deductibles, unless their Medigap plan covers them. Medigap Plans C and F, which covered the Part B deductible, are no longer available to new enrollees. Other Medigap plans, like Plan G, cover everything Original Medicare covers except the Part B deductible. Medicare Advantage plans often have their own deductibles, which can apply to medical services or prescription drugs, with amounts set by the individual plan.

Copayments and Coinsurance

For beneficiaries with Medigap, the policy typically covers the 20% coinsurance for Part B services after the deductible is met, and can cover daily copayments for extended hospital stays. This often minimizes or eliminates out-of-pocket costs for covered services. Medicare Advantage plans generally involve specific copayments for various services, such as doctor visits, specialist visits, and hospital stays, contributing to annual out-of-pocket expenses.

Out-of-Pocket Maximums

Medicare Advantage plans have an annual out-of-pocket maximum for services covered under Parts A and B. Once this limit is reached (e.g., $9,350 for in-network services in 2025), the plan pays 100% of covered services for the remainder of the year. While Medigap significantly reduces out-of-pocket costs, Original Medicare and Medigap combined do not have an annual out-of-pocket maximum.

Prescription Drug Costs

For those with Medigap, Part D plans have their own premiums, deductibles, and cost-sharing phases. In 2025, the annual out-of-pocket costs for Part D covered drugs will be capped at $2,000. For Medicare Advantage plans that include Part D, these drug costs are integrated into the plan’s overall structure, including separate drug deductibles, copayments, and the same $2,000 out-of-pocket cap for covered prescription drugs in 2025.

Provider Networks and Flexibility

The choice of healthcare providers and flexibility to seek care are key distinctions between Medigap and Medicare Advantage plans.

With Original Medicare, supplemented by a Medigap policy, beneficiaries can see any doctor, hospital, or healthcare provider nationwide that accepts Medicare. There are typically no network restrictions, and referrals are not required for specialists. This open access is advantageous for those who travel frequently within the U.S. or prefer a wider selection of providers.

Medicare Advantage plans typically operate within specific provider networks. Health Maintenance Organization (HMO) plans usually require care from in-network providers, except for emergencies, and often require referrals for specialists. Preferred Provider Organization (PPO) plans offer more flexibility, allowing out-of-network care at a higher cost, though referrals are generally not required.

For travel, Original Medicare and Medigap offer broad access across the U.S., and some Medigap plans provide limited foreign travel emergency coverage. Medicare Advantage plans generally cover emergency and urgent care both within the U.S. and potentially internationally. However, routine care may not be covered outside the plan’s specific service area, which can limit coverage or incur higher costs for beneficiaries traveling for extended periods.