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Supplemental Insurance vs Medicare Advantage: Which Is Right for You?

Discover the key differences between Medicare Advantage and Supplemental Insurance (Medigap). Learn how each option works and which might be best for your healthcare needs.

What Is The Difference Between Medicare Advantage and Supplemental Insurance?

Navigating your healthcare options for after retirement can feel overwhelming. While Medicare is available to most retirement age people, many quickly realize it won’t cover all the services they might need or provide them peace of mind during the retirement years by limiting their potential medical debt. Medicare Advantage and Medicare Supplemental Insurance plans offer additional coverage for those looking to extend their coverage and minimize out-of-pocket expenses.

Both options help fill the gaps left by Original Medicare, but they work differently. Everyone should understand their choices in order to make informed decisions about their healthcare. In this guide, we’ll explore the key differences between Medicare Advantage and Supplemental Insurance, covering their benefits, limitations, and how they might fit into a retiree’s overall health plan.

What Is Medicare Advantage?

Medicare Advantage, or Medicare Part C, is an insurance plan offered by private companies that partner with Medicare. These companies provide retirees with a more comprehensive coverage option, often bundling several types of care under one plan. All Medicare Advantage plans cover services that Original Medicare offers, but each plan varies in its additional benefits.

Coverage 

In addition to covering inpatient and outpatient care, many plans include extra benefits like prescription drug coverage, dental care, vision exams, and hearing aids. This comprehensive coverage makes Medicare Advantage appealing for retirees who want an all-in-one insurance plan that handles most, if not all, of their healthcare needs under one umbrella. However, specific coverage can vary depending on the insurance provider and selected plan, so retirees must carefully review each plan’s benefits.

Pros and Cons

The streamlined nature of Medicare Advantage plans appeals to retirees seeking simplicity. Here are some of the other advantages of this plan:

  • All-in-one plans: Medicare Advantage covers hospital visits, medical care, and prescriptions.
  • Potential cost savings: Many Medicare Advantage plans have lower premiums than Medigap plans and cap out-of-pocket expenses annually.
  • Extra benefits: Retirees may receive coverage for services like dental, vision, and wellness programs not covered by Original Medicare.


By consolidating healthcare coverage, Medicare Advantage can reduce the complexity of managing multiple insurance plans. But there are some downsides, as well:

  • Limited provider networks: Many Medicare Advantage plans have specific networks of doctors and hospitals, limiting the providers you can see.
  • Potential out-of-pocket costs: While some plans have low premiums, out-of-pocket costs like copayments, coinsurance, and deductibles can add up if frequent care is needed.


The restrictions on provider networks mean that members may not always have access to their preferred doctors, particularly if they travel or live in multiple locations throughout the year. The potential for unexpected out-of-pocket costs is especially challenging for retirees on a fixed income.

What Is Medicare Supplemental Insurance? 

Medicare Supplemental Insurance, or Medigap, covers any gaps left by Original Medicare. Private insurance companies work with the state and federal government to create Medigap plans that work with Medicare Parts A and B. These types of plans help pay for healthcare costs like copayments, coinsurance, and deductibles — offering peace of mind to retirees who want to avoid excessive medical debt caused by unexpected medical bills.

Coverage 

Medigap covers some out-of-pocket costs that Original Medicare doesn’t, such as coinsurance, copayments, and deductibles. This additional coverage is especially beneficial for retirees who require frequent medical services or hospitalizations, as it reduces the financial burden of ongoing care. There are several different Medigap plans, each offering varying levels of coverage.

Benefits Offered by Each Medigap Plan

Compare the benefits of each lettered plan to help you find one that meets your needs now and in the future. You might not be able to switch Medigap policies later.

Source: Medicare.gov

Benefits A B C D F G K L M N
Part A coinsurance & hospital costs
Part B copays/coinsurance
50%
75%
Blood (first 3 pints)
50%
75%
Part A hospice
50%
75%
Skilled nursing facility
X
X
50%
75%
Part A deductible
X
X
50%
75%
50%
Part B deductible
X
X
X
X
X
X
X
X
Part B excess charges
X
X
X
X
X
X
X
X
Foreign travel emergency
X
X
80%
80%
80%
80%
X
X
80%
80%
$7,060
$3,530

Out-of-pocket limit in 2024

Notes:

  • Plan F & Plan G also offer a high deductible plan in some states.
  • Plan K & Plan L show how much they’ll pay for approved services before you meet your out-of-pocket yearly limit and Part B deductible. After you meet these amounts, the plan will pay 100% of your costs for approved services.
  • Plan N pays 100% of the costs of Part B services, except for copays for some office visits and some emergency room visits.


If you live in Massachusetts, Minnesota, or Wisconsin, your state offers different standardized plans.

Choosing the right Medigap plan depends on each individual’s healthcare needs and budget. While some plans offer minimal coverage for basic costs, others provide extensive protection, ensuring members face fewer out-of-pocket expenses when receiving care.

Pros and Cons

 Here’s why many people choose to go with Medigap:

  • Wider provider choice: Medigap allows members to visit any doctor or specialist who already accepts Medicare, giving them greater flexibility in choosing their healthcare providers.
  • Coverage for out-of-pocket costs: Medigap significantly reduces or eliminates coinsurance, copayments, and deductibles, saving members money in the long run.


While Medigap offers peace of mind, it’s not perfect for every person. Here are some of the cons. 

  • Higher premiums: Medigap plans tend to have higher monthly premiums than Medicare Advantage plans, making them less affordable for some.
  • No extra benefits: Unlike Medicare Advantage, Medigap does not usually offer additional services like dental, vision, or prescription drugs, requiring retirees to purchase separate policies for those needs or go without them.


Though Medigap offers robust coverage for out-of-pocket costs, its higher premiums may deter those who are tightening their budget after retirement.

Differences Between Medicare Advantage and Supplemental Insurance

When comparing Medicare Advantage and Supplemental Insurance (Medigap), there are significant differences in cost, provider flexibility, and coverage for services like dental, vision, and prescription drugs.

  1. Cost: Medicare Advantage often has lower monthly premiums compared to Medigap. However, Medicare Advantage plans typically include out-of-pocket costs like copayments, deductibles, and coinsurance, which can add up, especially for retirees needing frequent care. Conversely, Medigap has higher premiums but covers many out-of-pocket expenses, providing more predictable healthcare costs over time.
  2. Provider flexibility: Medigap offers greater flexibility in choosing healthcare providers, allowing retirees to see any doctor or specialist who accepts Medicare, regardless of network restrictions. Medicare Advantage, however, generally requires enrollees to use in-network providers and may require referrals for specialists, limiting flexibility for retirees who travel frequently or live in multiple locations.
  3. Coverage: Medicare Advantage often includes coverage for services Medigap does not, such as dental, vision, and prescription drugs. However, the extent of these benefits varies by plan and provider. Medigap plans do not typically cover dental, vision, or prescription drugs, so retirees may need to purchase separate plans for these services.


Choosing the right option  to complement your regular Medicare insurance can help keep you healthier without worrying about medical debt in retirement. But choosing the right plan for your life can be easier said than done.

How to Decide Between Medicare Advantage and Medigap

Deciding between Medicare Advantage and Medigap largely depends on your financial situation and medical needs.

Medicare Advantage might be a better option for Seniors who don’t expect to see out-of-network providers or need extensive medical care. Its lower premiums and additional benefits, like dental, vision, and prescription drug coverage make it appealing. People who don’t mind limited provider networks and would rather have a bundled insurance option may find Medicare Advantage a cost-effective solution.

On the other hand, Medigap may be better for retirees who anticipate needing extensive medical care or value flexibility in choosing healthcare providers. With Medigap, you’ll have fewer out-of-pocket expenses and won’t be restricted by network limitations, which can be especially important if you travel often or prefer seeing specific doctors. While premiums are higher, the predictability of healthcare costs can provide greater financial peace of mind.

Ultimately, the choice comes down to balancing your medical needs with what you can comfortably afford and considering any specific benefits, such as prescription drug coverage, that are important for your healthcare situation.

FAQs About Medicare Advantage & Supplemental Insurance

No, you cannot have Medicare Advantage and Supplemental Insurance (Medigap). If you choose a Medicare Advantage plan, you cannot purchase a Medigap policy, as Medigap is only compatible with Original Medicare.

You can switch from Medicare Advantage to Medigap, but only during specific enrollment periods, such as the Medicare Advantage Open Enrollment or Annual Election Period. Switching to Medigap may also require medical underwriting unless you have guaranteed issue rights.

Many Medicare Advantage plans cover most prescription drugs (Part D), but you should verify if your specific plan includes this benefit. Medigap, on the other hand, does not cover prescription drugs, so if you have Medigap, you must enroll in a separate Part D plan for drug coverage.

Medicare Advantage plans only allow you to see providers in a limited network, so you’ll have to pay out-of-pocket costs when visiting doctors or providers out-of-network. In contrast, Medigap works with any healthcare provider that accepts Medicare, which providers more widely accept.  

You can change your Medicare Advantage plan during the Annual Election Period (October 15 – December 7) or the Medicare Advantage Open Enrollment Period (January 1 – March 31).

Medigap covers out-of-pocket expenses that Medicare Advantage plans may not fully cover, such as coinsurance, copayments, and deductibles. Medigap offers more comprehensive coverage for these costs, but Medicare Advantage plans may include additional benefits like vision, dental, or hearing coverage.

You can be denied Medigap coverage or charged higher premiums if you apply outside your Medigap Open Enrollment Period and do not have guaranteed issue rights. However, you cannot be denied coverage due to pre-existing conditions during open enrollment.

Medicare Advantage plans often offer lower monthly premiums, sometimes as low as $0, but they may come with higher out-of-pocket costs when you need healthcare services. Medigap plans have higher premiums but lower out-of-pocket expenses.

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For in-depth guidance on navigating your healthcare options, visit My Guide To Retirement and explore resources to make informed decisions about your healthcare coverage.

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