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Medigap or Medicare Advantage: What's Best for Me?

One of the most expensive things for retirees to have to deal with is healthcare. Healthcare is not cheap. In fact, it seems to get more expensive every year. medigap or medicare advantage whats best for me

Yet, in retirement, most of us are saddled with the less than 70% income we were making before retirement. So, how does one still afford healthcare in retirement?

The good thing is, you have options. Granted your options may not be 100% coverage, but some of the coverage is better than none of it. The not-so-good thing is trying to make the best decision for your healthcare in retirement. 

Like, should you purchase Medigap or Medicare Advantage? That is a tough question for many, so we’ll try to provide you with enough information to make an informed decision.

Are you over the age of 60? Did you know that healthcare is likely your biggest unknown expense in retirement? Check out our simple 3-step Medicare guide that could save you thousands in surprise medical bills or penalties.

About Medicare

Before we talk about Medicare Advantage and Medigap, it’s important to note they both stem from Medicare benefits. There are nuances around Medicare itself that are with sharing. 

Not everyone in retirement automatically qualifies for Medicare (that’s been around since 1965), and you don’t automatically receive it just because you’re a certain age. In fact, there is a penalty to pay if you miss the enrollment deadline to sign up for regular Medicare. The thing is, unlike open season for private and government health care plans, everyone’s enrollment is not the same for Medicare. 

There is a seven-month window for enrolling in Medicare Part A. This covers hospital stays, and Medicare Part B covers doctor’s visits (3 months before the month you turn 65 and three months after you turn 65). If you are currently receiving social security benefits, you will automatically be enrolled.

Another nuance is that if you are still working at the age of 65 and have your employer’s health insurance, you can opt to stay with your employer’s insurance until that coverage ends. However, if your employer has less than 30 employees, you would need to get something in writing.

Also, Medicare Part D is optional after receiving Medicare insurance. Medicare D covers prescription drug insurance. Not enrolling in Medicare Part D when you first enroll in Medicare, will cause you to be penalized later when you want it. See all the plans covered by Medicare.

What is Medicare Advantage?

Medicare Advantage, also known as Medicare Part C, is an alternative plan to the regular Medicare plan. Medicare Advantage is a more complete package that includes Plans A and B and expenses for vision, dental, hearing, and wellness programs. 

That gives the average retiree much more coverage than they would have with regular Medicare. Medicare Advantage is only offered by private insurance companies but funded by the government. 

Medicare Advantage plans can also be tailored to cover costs related to chronic illness or conditions. If tailored right, it can also cover transportation to the doctor’s office, over-the-counter medications, and adult day care services.

Benefits of Medicare Advantage

  • Single insurance plan
  • Available from private insurance companies
  • Usually, no premium or a very low premium
  • Covers hospitals and doctors
  • Often includes prescription drugs
  • Offer additional coverage outside of regular Medicare, like vision, dental, hearing, and wellness.
  • Limited discrimination for pre-existing conditions

Disadvantages of Medicare Advantage

  • Functions as an HMO in that it limits its members to only doctors in their networks
  • Seeing doctors not in the network may result in additional costs
  • Some plans require prior authorization or referral
  • Plan may not cover care given outside of the network’s geographical area
  • You have to be eligible to apply for the plan
  • Renewed yearly
  • Managed care
  • Higher out-of-pocket costs for medicare care
  • Less flexibility with coverage options

What is Medigap?

Medigap is supplemental insurance to the regular Medicare plan. Regular Medicare doesn’t cover all of your expenses, so supplemental insurance is often needed to help fill in the gaps or pay for some of the out-of-pocket expenses like deductibles, copayments, coinsurance, and healthcare costs when you travel out of the country. Medigap policies come in various plans: C, D, F, G, K, L, M and N, each with a different standardized coverage set.

Plan F is the most popular plan because it gives the most comprehensive coverage. Medigap supplemental insurance is not connected with the government.

Benefits of Medigap

  • Covers any hospital or doctor in the U.S. that accepts Medicare
  • Comprehensive medical coverage
  • Coverage can never be canceled
  • No prior authorization or referral is needed

Disadvantages of Medigap

  • Coverage is only available in the U.S.
  • May require a separate plan for prescription drugs
  • You have to be eligible to apply for the plan
  • Higher monthly premiums

If you’re still not sure which plan is best for you, here are some simple questions you can ask yourself:

Do you know when to enroll in Medicare and what your options are? Check out our simple 3-step Medicare guide that could save you thousands in surprise medical bills or penalties.

Do you prefer a plan that’s a package deal or in pieces?

If you prefer to have everything you need under one roof, so you won’t have to go looking around for it, you’re a package deal person. Having everything packaged in one place is easy to access and likely much more affordable. 

When everything is together under one umbrella, it’s also easier to manage. That’s the benefit of the package deal, as with Medicare Advantage.

Unlike Medicare Advantage, Medigap requires you to pay for additional coverage along the way. It is not a package deal. When you’re forced to pay for the important things you need separately, those costs can add up. On the other side of that, a la carte’ allows you to personalize your plan to have the exact coverage you need. 

Do you prefer paying on the front end or the backend?

Expect to pay larger monthly premiums with a Medigap plan. The good thing about that is you will be paying less when you go for a doctor’s visit. 

That is just the opposite with Medicare Advantage, where you pay very little in monthly premiums but will be expected to pay copayments and coinsurance, which can be unpredictable from month to month. 

That said, we can’t always control how often we need to visit the doctor’s office. The choice is yours. Do you prefer to pay more on the front end, as with the Medigap plan, or pay more on the backend, as with Medicare Advantage?

What are your provider needs?

You may want to consider the status of your current health care provider. If your provider is an in-network doctor, then it wouldn’t matter with either plan. It wouldn’t matter with Medigap because you can visit any doctor or hospital you want in the U.S., as long as they accept Medicare. Most places do. That is also good news if you travel a lot throughout the country. Should you ever need to make an emergency visit from where you are, you’ll be covered.

However, it’s not as simple with Medicare Advantage, where they’ll only cover you if you visit an in-network doctor or go to a hospital within their network. That limits your options. 

If you don’t travel much and are pretty sure your doctor will be in their network, that makes them a good choice. If you do choose Medicare Advantage and end up visiting a doctor or hospital not in the network, you will be responsible for any additional costs.

How do you feel about your long-term care needs?

Many people who select a Medigap plan do so when they first become eligible for Medicare. They do this because they get the best rates when they turn 65. If you wait until some time after that, it could result in higher rates or fewer coverage options based on your current age and medical conditions.  

With Medicare Advantage, there is more flexibility for change. Open enrollment takes place every year from October 15 through December 7, and you can change your plan without regard to your age or medical condition.

Differences Between Medicare and Medigap

The major difference between Medicare Advantage and Medigap is that they serve two different purposes. One plan (Medigap) serves as supplemental insurance, while the other (Medicare Advantage (takes the pace of regular Medicare). 

However, you are not allowed to have them both. You can only have one of them. So a decision still has to be made. Let’s look at the differences.


Medicare Advantage



There are opportunities for enrollment each year.

You can only enroll when you are first eligible for Medicare, with a few exceptions.


Have to use doctors in the plan’s network or pay more out of pocket.

Can use any doctor or visit any hospital that accepts Medicare.


Affordable (less than $30/month)

Nearly $200/month


Covers Medicare Parts A and B and extra benefits including vision, dental, hearing, and prescription drugs.

You already have Medicare Parts A & B for hospitals and doctors. May also cover some out-of-pocket expenses, like deductibles, copayments, coinsurance, and healthcare costs when you travel out of the country. Have to buy Medicare Part D for prescription drug coverage.  Supplemental allows for a choice from eight different plans. 

Out-of-Pocket Limit

Caps at $7,550 for in-network, and $11,300 for in-network and out-of-network combined.

Each plan has its own out-of-pocket limit.


A referral from your primary care physician may be required.

No referrals or authorizations are needed.


Who May Best Benefit From Medicare Advantage? 

Since regular Medicare does not provide routine coverage for dental, vision or hearing, those individuals have to purchase a stand-alone policy. Medicare Advantage offers them the option to bundle these services along with Medicare Part A and Part B. This way, they will have all the coverage they need. 

That is especially beneficial for anyone who does need assisted eyewear and who routinely needs dental work. Many Medicare Advantage plans also include prescription drug coverage, which is not included under regular Medicare.

Medicare Advantage is also a good plan for anyone who has a specific health condition that requires a lot of care. Medicare Advantage has a plan that can be tailored to your specific needs based on health conditions, like diabetes or kidney failure.

Medicare Advantage helps protect you against unexpected high medical expenses. Regular Medicare has no annual out-of-pocket limit, which means you could end up spending a lot out of pocket. 

Medicare Advantage plans have limits to what you can spend out of pocket, which saves you money. If your medical costs are usually pretty high throughout the year, this may be a good plan for you.

Who May Best Benefit From Medigap?

Medigap might be a good option for anyone who prefers a more predictable health care spending budget. Medigap provides a layer of protection against unexpected medical bills to help your budget stay on track. 

Medigap is also good if you spend a lot of time traveling throughout the country. Medigap can be used anywhere Medicare is accepted. Since Medicare is accepted by health care providers nearly everywhere you go throughout the U.S., so is Medigap.

Considering What’s Best For You

The best choice for someone else may not be the best choice for you. It’s important that everything discussed here is taken into consideration. Your insurance plan should be able to cover you based on your unique needs. You always want the most coverage, and whichever can provide you with that, is the best one for you.

One thing to add here is to not wait until the last minute to decide. This decision is too important for you to not be having conversations around it before you turn 65. 

Also, knowing what you want to do before turning 65 will keep you from having to pay penalties down the road. Take the time to fully research all of your options, then consider your specific needs and financial situation.

Are you already enrolled in Medicare and curious if you could save money with a different plan? Check out our simple 3-step Medicare guide that could save you thousands in surprise medical bills or penalties.

How We Can Help

Retirement brings with it so many important financial decisions to make. In the end, you want to ensure that you’re able to meet your financial needs on the income you’re bringing in during your retirement years. NextGen Wealth wants to help you do that. It is our responsibility to ensure that when you retire that you won’t outlive your money. 

Contact our office to get your free Retirement Checkup today. 

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About the Author

Aurtho Clint Haynes, CFPThis article was written by Clint Haynes, CFP®. Clint is a Certified Financial Planner® and Founder of NextGen Wealth. You can learn more about Clint by reading his full bio here.

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