When Original Medicare doesn’t offer the coverage you need, you may choose to buy additional health insurance through a private company. There are two main options to help supplement your Medicare benefits: Medicare Advantage and Medigap. While both options can offer more coverage than Original Medicare alone, they’re designed very differently. Medicare Advantage functions as an alternative to Original Medicare, while Medigap offers supplemental coverage for Original Medicare plans. Know the differences between Medicare Advantage and Medigap before you choose which option will best serve you.

Retired Couple considereing medicare advantage vs medigap
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What Is Medicare Advantage?

Medicare Advantage, also called Medicare Part C, is a type of Medicare health plan offered by private insurance companies. It provides an alternative to Original Medicare (Medicare Part A and Medicare Part B) for hospital insurance and medical insurance. Medicare Advantage plans have at least the same benefits as Original Medicare, but these types of plans typically offer more coverage. In addition to hospital and medical costs, many Medicare Advantage plans cover dental, vision, and hearing services. Most Medicare Advantage plans also include prescription drug coverage (Medicare Part D).

Medicare Advantage coverage is offered by Medicare-approved private insurance companies instead of being managed directly by the federal government. However, plans must follow Medicare’s coverage rules. Plans must also provide members with the same protections as Original Medicare. In most cases, Medicare Advantage enrollees will need to use health care providers that participate in the plan’s network and service area. Therefore, a Medicare Advantage plan typically offers a limited selection of physicians and facilities compared with Original Medicare.

Medicare Advantage plans range in cost and coverage levels, which lets you compare plans and select one that meets your specific needs. The availability of plans depends on your geographic location and the health insurance provider. The most common types of Medicare Advantage plans are health maintenance organization (HMO) plans and preferred provider organization (PPO) plans, followed by private fee-for-service (PFFS) plans and special needs plans (SNPs).

People who are eligible for Original Medicare (Medicare Parts A and B) are also eligible to enroll in a Medicare Advantage plan if they’re at least 65 years old or have a qualifying disability. Enrollees must also:

  • Live in an area where Medicare Advantage plans are sold
  • Be a U.S. citizen or permanent resident
  • Not have end-stage renal disease — although SNPs may still be an option
  • Not be enrolled in Medigap insurance

What Is Medigap?

Medigap, also known as Medicare Supplement Insurance, is designed to fill in “gaps” in Original Medicare. Like Medicare Advantage plans, Medigap policies are sold by private insurance companies. Unlike Medicare Advantage plans, however, a Medigap policy is not an alternative to Original Medicare (Medicare Parts A and B). Medigap only supplements Original Medicare benefits. You have to be enrolled in Original Medicare to have a Medigap policy. People who are eligible for Original Medicare are also generally eligible to enroll in a Medigap plan.

Some Medigap policies cover services that Original Medicare doesn’t cover, like medical care when traveling outside the United States. However, Medigap policies generally don’t cover extra benefits such as dental, vision, and hearing. Instead, a Medigap policy can help lower your share of costs when you have Original Medicare by paying some of the health care costs Original Medicare doesn’t cover. These may include copayments, coinsurance, and deductibles. Medigap policies also aren’t allowed to include prescription drug coverage. If you have Original Medicare and want prescription drug coverage, you need to enroll in a Medicare Prescription Drug Plan (Medicare Part D).

Medigap plans, like Medicare Advantage plans, vary by cost. There are 10 standardized plans, although not all plans are offered in every state. Plans are typically named by letters (Plans A-N). Price is the only difference between policies with the same letter sold by different companies. Medigap plans generally don’t have provider networks, and coverage is available anywhere that Medicare is accepted, unlike Medicare Advantage.

Choosing Between Medicare Advantage and Medigap

While Medicare Advantage and Medigap plans can each be beneficial, there are key differences between the two. Understanding these differences can help you choose the type of plan that works best for you.

There’s No “Right” Answer

Happy retired couple choosing medicare

When it comes to choosing between Medicare Advantage and Medigap, there’s no “right” answer. The option that will best serve you depends on several factors, including benefits, costs, and network preferences. A Medicare Advantage plan bundles your hospital insurance (Medicare Part A), medical insurance (Medicare Part B), and usually drug coverage (Medicare Part D) into one plan. Most Medicare Advantage Plans also offer extra benefits that Original Medicare doesn’t cover, like dental, hearing, and vision. A Medigap plan helps lower your share of costs for Original Medicare services but generally doesn’t include extra benefits.