The Difference Between Medicare Advantage and Medigap Insurance Plans

Two of the most commonly chosen options for individual Medicare benefits are Medicare Advantage and Medigap insurance plans. Medicare Supplement Insurance (also referred to as Medigap) is purchased to be the secondary payer for Original Medicare (Parts A and B), while Medicare Advantage plans are selected to provide an alternative to Original Medicare. Please note that Medigap and Medicare Advantage plans are offered by private insurance companies, but cannot be used together. This is why it’s important to understand the dynamics and differences in these plans before enrolling.

Individual circumstances and needs differ, and it may be difficult to determine which type of plan is most appropriate for your situation. While both options offer great value to beneficiaries, it’s likely that one plan type is more suitable than the other to meet your needs. The two plans vary in terms of benefits and costs and it’s common to have questions about how they compare. Identifying how you have traditionally accessed care and medical services is oftentimes the best influencer of your decision.

Let’s start by exploring those key differences between Medicare Advantage and Medigap insurance plans.

Medicare Advantage Plans

Medicare Advantage represents an alternative way to access Medicare benefits through a private insurance company that is approved by the Centers for Medicare and Medicaid Services (CMS). While providing the core benefits covered under Original Medicare (Medicare Part A and Part B), Medicare Advantage plans provide hospitalization and medical care coverage with additional benefits such as coverage for prescription drugs, dental, vision and hearing care.

Medical Advantage plans are structured into many different types of plans, which vary in terms of costs, formularies and networks. The categories include Preferred Provider Organizations (PPOs), Special Needs Plans (SNP), Health Maintenance Organizations (HMOs), Private Fee-for-Service (PFFS), and Medical Savings Accounts (MSA).

Medigap Insurance Plans

Medigap plans serve to complement, rather than replace Original Medicare plans. As the name suggests, Medicare Supplemental plans fill in coverage gaps by reducing beneficiary expenses for services and care covered by Original Medicare therefore lowering out-of-pocket costs. There are many Medicare Supplemental insurance plans available and plan rates vary by provider. We recommend checking with your local independent Medicare insurance agent for available plans in your area.

Having explained the two plans, we can now look into the differences between Medicare Advantage plans and Medigap.


Cost is one of the distinguishing differences between Medicare Advantage plans and Medigap. Medigap helps cover most of the out-of-pocket expenses after Original Medicare pays. These include expenses such as deductibles, coinsurance, copayment and health care costs when traveling out of the country. As a result, Medigap plans often have higher monthly premiums when compared to Medicare Advantage options. Those enrolled in Medicare Advantage plans tend to pay little to no monthly premiums, however, the out-of-pocket costs may be higher since beneficiaries will be responsible for coinsurance, deductibles and copayments.

Keep in mind that Medigap supplemental coverage applies only toward costs from care and services covered under Original Medicare, whereas Medicare Advantage plans tend to offer additional benefits (e.g. dental, hearing and vision) beyond the scope of Original Medicare.

Location and Choice of Physicians

Medicare Advantage requires that covered care be provided by doctors and physicians under the plan network. There is a tradeoff between in-network provider options and premium costs, and millions of individuals enrolled in Medicare Advantage plans are pleased with their medical professional choices. Plan options vary by regions covered, meaning you may be limited in your treatment options while traveling out-of-state, and will likely require a plan change if you move.

With Medigap plans, beneficiaries may choose their physicians and hospitals for care and have nationwide coverage. Since Medigap is a secondary payer and Medicare serves as your primary coverage, the only limitation is that your physician must accept Medicare.

Referrals and Prescription Drugs

With Medigap, you can see a specialist doctor without referrals in any setting, as long as he/she accepts Medicare payments. On the other hand, some Medicare Advantage plans require you to receive a referral to see a specialist under their network. It is important you determine if your plan requires referrals or not and how it works if you are required to get referrals for care. Lastly, as an added bonus, most Medicare Advantage plans include coverage for prescription drugs at no additional premium, while Original Medicare with a Medigap plan does not.

Now that you’ve got an understanding of Medigap and Medicare Advantage, you may want to explore more details. Each option offers different value – the trade-off on costs and benefits should be weighed carefully before enrolling in any plan. If you have additional questions or want to learn more about choosing a Medicare plan, call Medicare Portal today. Our team of experienced, local Medicare insurance agents are ready to assist you.

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