Medigap vs Medicare Advantage: Which Supplemental Plan Saves More?

Two Paths Through Medicare's Coverage Gaps

Original Medicare covers roughly 80% of approved medical costs. That remaining 20% — with no annual out-of-pocket cap — can translate to tens of thousands of dollars in a single hospitalization. About 68% of Medicare beneficiaries purchase supplemental coverage to close that gap, and they face a fundamental fork in the road: Medigap (also called Medicare Supplement Insurance) or Medicare Advantage (Part C). The choice reshapes every aspect of how you receive and pay for healthcare in retirement.

How Medigap Works

Medigap plans are sold by private insurers but standardized by the federal government. Each plan type — labeled A through N — offers an identical benefit package regardless of which insurer sells it. Plan G, the most popular option since Plan F was closed to new enrollees in 2020, covers the Medicare Part A deductible, coinsurance, hospital costs up to 365 days after Medicare benefits are exhausted, and foreign travel emergency care up to plan limits. The one thing Plan G does not cover is the Part B deductible ($257 in 2026).

Premiums vary significantly by insurer, age, and geography. A 65-year-old in a mid-cost state might pay $130–$200 per month for Plan G. That premium is predictable. Medigap does not restrict networks — any provider that accepts Medicare accepts Medigap. No referrals, no prior authorizations for most services.

Medigap Enrollment Window

The open enrollment period for Medigap runs for six months starting the month a person is both 65 and enrolled in Part B. During this window, insurers cannot use medical underwriting — they must sell any plan at standard rates regardless of health status. Miss this window and underwriting applies in most states, making coverage expensive or unavailable for people with pre-existing conditions.

How Medicare Advantage Works

Medicare Advantage plans are all-in-one alternatives to original Medicare. Insurers contract with CMS (the Centers for Medicare and Medicaid Services) to provide at least the same benefits as Parts A and B, and usually Part D drug coverage as well. Most plans charge $0 in additional monthly premiums beyond the standard Part B premium ($185 in 2026), which makes them visually attractive on a budget sheet.

The trade-off is structure. Nearly all Medicare Advantage plans use HMO or PPO networks. Seeing an out-of-network provider may cost significantly more or be covered only in emergencies. Plans set their own cost-sharing: copays per visit, coinsurance percentages, and annual out-of-pocket maximums. The maximum out-of-pocket for in-network services in 2026 is capped by CMS at $9,350 for in-network care, though many plans set lower limits.

Extra Benefits

Medicare Advantage plans often include dental, vision, hearing, gym memberships, and over-the-counter allowances not covered by original Medicare. These extras attract enrollment but vary widely in actual value. A dental benefit capped at $1,500 per year with high cost-sharing may cover little beyond cleanings.

Cost Comparison: A Side-by-Side View

Who Benefits Most From Each Option

Medigap suits people who value predictability above all else. A retiree with a chronic condition requiring specialist visits, frequent hospitalizations, or complex care will find the lack of network restrictions and near-zero out-of-pocket exposure worth the higher premiums. Frequent travelers benefit from the national and foreign coverage. Heavy users of healthcare almost always come out ahead financially with Medigap.

Medicare Advantage suits healthier retirees who rarely use specialist care, live in areas with robust plan networks, and want the low monthly premium. The math can favor Advantage plans in years when a person uses few services. The risk is a serious illness year when out-of-pocket costs approach the plan maximum.

The Break-Even Calculation

Numbers matter here. A Plan G premium of $1,800 per year covers nearly all cost-sharing. A $0-premium Advantage plan with a $9,350 out-of-pocket maximum means one serious health event more than wipes out five years of premium savings. That said, many healthy retirees never approach the maximum. The break-even point depends entirely on individual utilization.

Key Differences at a Glance

• Medigap requires separate Part D enrollment for drugs; Advantage typically bundles drugs
• Medigap premiums rise with age; Advantage plans can change benefits annually
• Switching from Advantage back to Medigap after the initial enrollment window may require underwriting
• Medigap covers care at any U.S. Medicare-accepting facility; Advantage networks may be regional
• Low-income beneficiaries may qualify for Medicare Savings Programs that affect both options differently

Plan Stability and Long-Term Considerations

Medigap plans are stable year to year in coverage terms, though premiums increase with age and inflation. Medicare Advantage plans change annually — networks shrink, cost-sharing rises, and extra benefits shift. CMS data shows that approximately 40% of Medicare Advantage enrollees experience at least one significant plan change per year. This instability forces annual re-evaluation during the open enrollment period (October 15 – December 7).

Making the Decision

• If managing a chronic disease: Medigap's unrestricted access to specialists is typically worth the premium
• If healthy and budget-constrained: Medicare Advantage's $0 premiums preserve cash flow
• If traveling frequently: Medigap's nationwide coverage eliminates network concerns
• If near low-income thresholds: Explore Medicare Savings Programs before choosing either
• If undecided: Use the Medicare Plan Finder at medicare.gov to compare specific plans in your ZIP code

This article is for informational purposes only and does not constitute financial advice.