When you sign up for Medicare, you face an important choice. Do you go with Original Medicare paired with extra insurance called Medigap? Or do you choose a Medicare Advantage plan? Both can work well. Understanding how each one functions will help you decide which suits your situation better.
How Medigap Works with Original Medicare
In Original Medicare, you generally pay some of the costs for approved services. Medicare Supplement Insurance, or Medigap, is extra insurance you can buy from a private company. It helps pay your out-of-pocket costs that Original Medicare doesn't cover.
Think of it as a two-part payment system. If you are in Original Medicare and have a Medigap policy, then Medicare and your Medigap policy will each pay its share of covered health care costs. For Part B services, you usually pay a share of the Medicare-approved amount after you meet your deductible. This share is called your coinsurance. A Medigap policy can cover this coinsurance and other out-of-pocket costs.
With Original Medicare, you generally can see any doctor or hospital in the United States that accepts Medicare. Medigap helps with certain out-of-pocket costs that Original Medicare leaves you to pay. All Medigap plans of the same letter offer the same basic benefits, no matter where you live. The premiums you pay each month can vary by insurance company and location.
You pay two monthly premiums. One goes to Medicare for Part B. The other goes to your Medigap insurance company.
How Medicare Advantage Bundles Everything Together
A Medicare Advantage plan is a Medicare-approved plan from a private company. It bundles your Part A, Part B, and usually Part D (prescription drug coverage) into one plan. Most plans include extra benefits like vision, hearing, dental, and more.
Unlike Original Medicare, Medicare Advantage works differently. These plans may have different cost-sharing and rules for receiving services. They also include a limit on out-of-pocket costs. This means you don't need to buy supplemental coverage like Medigap. Once you reach your plan's yearly out-of-pocket limit for covered Medicare services, you pay nothing for those covered services for the rest of the year.
A Medicare Advantage plan can charge different out-of-pocket costs. It can also have different rules for how you get services. For example, you may need a referral to see a specialist. You may also have to use doctors, facilities, or suppliers that belong to the plan's network.
You continue to pay your Medicare Part B premium. Some Medicare Advantage plans also charge their own monthly premium. You may also pay deductibles or copays that your plan charges for covered services.
Key Differences: Provider Choice and Networks
With Medigap and Original Medicare, you have maximum flexibility. You generally can see any doctor or hospital that accepts Medicare anywhere in the United States.
With Medicare Advantage, your network matters. You typically get better coverage when you use doctors and hospitals in the plan's network. Using out-of-network providers usually costs more. It may not be covered at all for non-emergency care.
If keeping particular doctors is important to you, compare provider access carefully when considering the two options.
Cost Structure: What You Actually Pay
Both options involve costs, but they work in different ways.
With Medigap and Original Medicare: Original Medicare has no yearly limit on what you pay out-of-pocket for Part A and Part B services. A Medigap policy helps cover some or all of those out-of-pocket costs. The amount depends on which Medigap letter plan you choose. Some plans cover more, and some cover less. Your total cost depends on your health needs and which Medigap plan and carrier you choose.
With Medicare Advantage: Plans have varying yearly out-of-pocket limits for covered Medicare services. Once you reach your plan's limit, you pay nothing for covered Medicare services subject to that out-of-pocket limit for the rest of the calendar year. Prescription drug costs follow separate Part D rules. They are not included in that out-of-pocket maximum.
Comparing actual quotes from plans available in your area is the only way to know what you'll actually pay.
Enrollment Timing and Your Windows to Act
When you enroll matters for both paths, and the rules are different.
Medigap timing: You get a 6-month Medigap Open Enrollment Period. It starts the first month you have Medicare Part B and you're 65 or older. During this time, you can enroll in any Medigap policy. The insurance company can't deny you coverage due to pre-existing health problems. Your Medigap Open Enrollment Period is a one-time enrollment. It doesn't repeat every year. This enrollment period is important because your Medigap protections may be different after it ends. After this period, you may not be able to buy a Medigap policy, or it may cost more.
Medicare Advantage timing: The Open Enrollment Period runs from October 15 through December 7 each year. During this time, you can join, drop, or switch to another Medicare Advantage plan. You can also add or drop drug coverage. You can switch from Original Medicare to a Medicare Advantage plan. You can also switch from a Medicare Advantage plan to Original Medicare. Changes you make during Open Enrollment take effect January 1 of next year.
Switching Between Plans
Switching between the two approaches involves additional enrollment rules.
If you have Medigap and later decide to try Medicare Advantage, you can make that move during Open Enrollment. Open Enrollment runs from October 15 through December 7. However, if you drop your Medigap policy to join a Medicare Advantage plan, you may not be able to get the same policy back. In some cases, you may not be able to get any Medigap policy. Pay careful attention to the timing.
If you're in Medicare Advantage and later want to switch to Medigap and Original Medicare, you may have certain protections. These protections depend on your specific situation and the reason you're leaving the Medicare Advantage plan.
If you have a guaranteed-issue right, the insurance company must sell you a Medigap policy without medical underwriting. This means they won't review your health history or deny you based on pre-existing health problems. The time available to apply for a Medigap policy depends on the specific guaranteed-issue right you have.
However, guaranteed-issue rights apply only in certain situations. Outside of a protected right, a Medigap insurer may use medical underwriting. They may review your health history. They may deny your application based on your health status.
Prescription Drug Coverage
Prescription drug coverage can be included alongside either approach, but the setup differs.
With Original Medicare, you can add Medicare drug coverage (Part D). Your Part D plan handles drug costs separately from your medical coverage.
With Medicare Advantage, most plans bundle in prescription drug coverage as part of the all-in-one plan. However, not every Medicare Advantage plan includes Part D, so check your specific plan's details.
Plan Availability Varies by Location
Medicare Advantage plan options and provider networks can differ significantly depending on where you live. In Colorado, the plans available to you, the networks they offer, and the providers you can see may not be the same as what's offered in neighboring counties or states. Some areas may have many Medicare Advantage plans with broad networks. Other areas may have fewer options or more limited networks.
Medigap policy availability and premiums can vary by insurance company and location. Compare the Medicare Advantage and Medigap options available where you live.
Things to Consider with Medigap and Original Medicare
This approach may suit your situation if you:
- Want maximum choice in doctors and hospitals
- Prefer predictability in how costs work
- Have longstanding relationships with specific providers you want to keep
- Are comfortable paying a separate Medigap premium for broader provider flexibility
Things to Consider with Medicare Advantage
This approach may suit your situation if you:
- Are comfortable with or prefer using a provider network
- Want or value extra benefits like dental, vision, or hearing
- Prefer having your Medicare benefits administered through one plan
- Want a yearly cap on out-of-pocket costs for covered Medicare services
Both approaches provide solid coverage. The key is understanding the trade-offs and what matters most in how you use healthcare.