Medicare Advantage vs. Medicare Supplement Insurance Plans

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When you have Original Medicare (Part A and Part B), many of your healthcare costs are covered, including hospital stays, doctor bills, and medical equipment. But what about your out-of-pocket costs, copayments, and deductibles?

You can replace your original Medicare plan with either a Medicare Advantage plan, also called Medicare Part C, or supplement your Original Medicare plan with a Medicare supplement plan, known as Medigap.

Both Medicare Advantage plans and Medicare Supplement plans come with the added benefit of providing a limit (cap) on your potential out-of-pocket costs. Learn more about Medicare Advantage and Medigap and how they differ.

Comparing Medicare Advantage vs. Medigap

Although both Medicare Advantage and Medigap are designed to enhance your Medicare coverage, there are distinct differences between these plans.

Plan Features	Medicare Advantage (Part C)	Medicare Supplement (Medigap)
Coverage	Everything in Medicare Part A and Part B, plus plan-specific extras. Many also include Part D coverage	Out-of-pocket costs not covered by Original Medicare
Enrollment	Sign up between 3 months before you enroll in Medicare and 3 months after, plus during Medicare Annual Enrollment or Special Enrollment Periods	Enrollment begins the month you have Medicare Part B and lasts six months. You must be 65 or older. If you delay buying a Medigap plan past this period, you may face higher costs or be denied coverage
Provider Network	Yes. Using in-network providers usually means lower costs.	No. Medigap typically is accepted everywhere that Medicare is
Referrals	You may need a referral to see a specialist, depending on your plan	Only covers out-of-pocket expenses, so no referral is required
Costs	Monthly premiums start at $0; out-of-pocket costs are capped at $8,850	Monthly premiums vary by plan, insurance company, and state
Prescription Drug Coverage	Most plans bundle Part D prescription coverage as well	Doesn’t include drug coverage, so you’ll need to enroll in Part D separately for prescription coverage
Additional Programs/ Services	Many plans also include dental, vision, and other services	Typically do not offer vision, dental, prescriptions, or long-term care, but some supplements offer discounted services such as a nursing hotline or fitness programs
Acceptance	Some plans may restrict acceptance to certain states or coverage areas	Plans vary by state, and you can’t be excluded based on pre-existing conditions

Medicare Advantage Plans (Part C)

What Is It? 

Medicare Part C, also called a Medicare Advantage Plan, is Medicare replacement coverage offered by private companies that contract with Medicare to provide not just Part A and Part B benefits, but also services not paid by original Medicare. Medicare Part A covers inpatient hospital stays, hospice care, skilled nursing facilities, and some home healthcare services; Medicare Part B covers outpatient care, doctors’ services, preventive services, and medical supplies. Medicare Part C covers both. Many Medicare Advantage plans also include prescription drug coverage (Part D). 

Medicare Advantage Plans are available through health maintenance organizations (HMOs), private fee-for-service plans (PFFS), Medicare medical savings account plans (MSA), and preferred provider organizations (PPO). 

Who Is Eligible?

If you qualify for Medicare, then you’re eligible for Medicare Advantage. You’ll need to have Medicare Part A and Part B to be eligible for Medicare Part C. You’ll also need to live in the coverage area of the plan you choose. 

Pros and Cons 

Pros	Cons
Most plans include Part D drug coverage	May need a referral to see a specialist
Yearly out-of-pocket expenses are capped, unlike with Original Medicare	May be restricted to in-network providers
Plans may cover additional services that Original Medicare does not, such as vision and dental	Premiums, deductibles, and coinsurance can vary; you may need to pay an additional premium on top of your Part B premium

Medicare Advantage plans tend to be affordable. You might have a $0 premium, depending on your county and state. Plus, these plans may cover vision or dental (but always ask specifically before purchasing), and usually prescription drugs, too. The specifics of each plan depend on the insurance company and what it offers.

Since these plans have a maximum out-of-pocket limit, you may be able to keep more of your money in your pocket. The downside is that you may be restricted in terms of which providers you can see, and visiting a specialist could require a referral, which may make it more difficult to see the doctors you want.

Costs

Although some Medicare Advantage plans offer premiums as low as $0 monthly, the tradeoff is that you may be on the hook for a higher deductible. Medicare Advantage Plans are best suited to individuals who are on a limited budget or those who would rather have a smaller premium in return for higher out-of-pocket costs.

Medicare Supplement Plans (Medigap)

What Is It? 

Medicare supplement insurance plans are a different option for additional Medicare coverage. When you keep your Original Medicare insurance and pay your Part B premium, a Medicare supplement insurance plan is designed to cover the “gaps” in traditional Medicare costs, such as copayments and deductibles. Some plans even pay the Medicare Part A deductible.

There are ten different types of Medigap plans. Each plan type covers costs in different ways and amounts, which allows you to choose the plan that best suits your needs.

Who Is Eligible?

You’re eligible for a Medigap plan once you’re 65, as long as you have Medicare Part A and Part B. You can’t buy a Medigap plan if you have a Medicare Advantage plan. Medigap plans are guaranteed renewable each year.

Pros and Cons

Pros	Cons
You can see any doctor who accepts Medicare assignments (typically no network restrictions)	May be expensive; you’ll need to pay premiums, and costs can vary
All plans cover up to 365 additional days of hospital costs	Does not cover prescription drugs (Part D)
All plans cover at least 50% of your Part B coinsurance	If you miss your six-month window, your costs may be higher or you may not be able to enroll in a Medigap plan at all

As long as you purchase your Medicare supplement plan during the six-month period that begins the month you turn 65, the day you start Medicare Part B, you cannot be turned down for a Medigap plan. But that time period is special; after it expires, you may be turned down or your premiums may be more expensive.

When shopping for a Medigap plan, you can choose from ten standard options (although some, like plans C and F, are unavailable if you’re new to Medicare). The plans with the most coverage are the most expensive, but the variety of choices means you control your costs. These plan benefits are also standardized by law, regardless of your insurer, across most states.

Once you have a Medicare supplement plan, it renews every year as long as you pay your premiums. Plus, your policy goes where you go, which is especially important for seniors who travel, such as snowbirds and RVers.

Costs

When you enroll in a Medigap policy, you’ll need to pay the issuing company a premium for your coverage. This premium is in addition to the Part B premium you’ll need to pay monthly.

You may have to pay higher costs if you enroll outside of the six-month enrollment period. But you may be able to lower your premiums by taking advantage of any discounts offered by the insurance company, such as for automatic payments or multiple policies.

Can You Change Medicare Plans?

If you sign up for a Medicare Advantage plan or a Medicare supplement plan and later change your mind, you may be able to switch—but there are some rules.

Changing your Medicare supplement plan: If you have a Medigap plan that doesn’t meet your needs, whether it’s too expensive or it’s missing benefits you want, you can drop it by contacting your insurance company. If you want to switch to a different Medigap plan, you’ll need to contact your insurer to see whether it’s an option. You might not be able to change policies, or it may be more expensive.

Changing your Medicare Advantage plan: If you have a Medicare Advantage plan and want to switch to Original Medicare, you can do so during Open Enrollment, which is usually Oct. 15 to Dec. 7. If you want to change Medicare Advantage plans, you can do that during the Medicare Advantage Open Enrollment period, which is usually Jan. 1 to March 31.  You can also change plans during a Special Enrollment Period, which allows you to make changes after certain life events such as moving or losing health insurance.

How to Choose the Right Plan for You

Consider your health history, budget, preferred benefits, network options, and medication needs when choosing the best Medicare plan for you. Original Medicare with a Supplement plan can help with copayments and deductibles, but it doesn’t include coverage for services like long-term care, hearing aids, vision and dental care, or prescription medications.

Medicare Advantage plans provide coverage for things a supplement plan does not, but you are limited to using healthcare providers in your plan’s network and you must get a referral to see a specialist.

Bottom Line

Original Medicare, Medicare Advantage, Medicare supplement plans—you have many choices available to you when it comes to choosing health care coverage when you qualify for Medicare. 

Explore your options with our Medicare buying guides, and we’ll help you enroll in the plan that best suits your needs.