The True Cost of Medicare Advantage vs. Medigap Supplemental Plans

Medigap vs. Medicare Advantage: The Definitive Choice Guide

Choosing between Medicare Advantage (Part C) and a Medigap (Medicare Supplement) policy is one of the highest‑stakes financial decisions many Americans make in retirement. The choice affects monthly cash flow, annual out‑of‑pocket risk, provider access, and—critically—how predictable your healthcare spending will be over the rest of your life.

This guide is an exhaustive, data‑driven, practical look at the true costs and trade‑offs. You'll get:

A clear cost comparison framework (monthly premiums + real world out‑of‑pocket spending).
Side‑by‑side feature and network comparisons.
Three realistic cost scenarios with concrete math.
Enrollment rules, guaranteed‑issue traps, and state exceptions.
An ROI lens for retirees with different health profiles (low users, chronic care, high users).
Actionable shopping and switching strategies to reduce risk and cost.

Key takeaways up front

Medicare Advantage plans generally offer far lower monthly plan premiums but come with network limits, prior authorization rules, and greater exposure to variable cost sharing when you use care. (cms.gov)
Medigap (supplemental) plans cost more in monthly premiums but make your out‑of‑pocket spending far more predictable and usually protect you from catastrophic expenses. The most popular option for new buyers is Plan G. (medicare.gov)
Medicare Part B and Part A cost fundamentals still drive the baseline: for 2026 the standard Part B premium is $202.90/month and the Part A inpatient deductible is $1,736. Use these as baseline fixed costs when comparing plans. (cms.gov)

Table of contents

What Medicare Advantage and Medigap actually are (short primer)
Head‑to‑head feature and cost comparison (table + explanation)
Real world examples: three cost scenarios with math
Enrollment windows, guaranteed‑issue rights, and switching traps
How chronic conditions change the ROI of Medigap vs Advantage
Shopping strategy and checklist (how to pick the right option)
Red flags, negotiation tips, and dollar‑saving levers
Action plan: what to do next, depending on your profile
References and related reading

Table of Contents

What each product is (a concise primer)

Medicare Advantage (Part C)

A private‑market alternative to Original Medicare (Parts A & B). It typically “bundles” Part A, Part B, and usually Part D (prescription drug coverage) into one plan offered by commercial insurers. Plans vary widely (HMOs, PPOs, SNPs) and often include extra benefits (dental, vision, hearing, some wellness services). (kff.org)
Pros: very low or zero additional monthly premium beyond Part B for many enrollees; annual out‑of‑pocket maximum (a federal cap applies to Part A/B services). (kff.org)
Cons: network restrictions, prior authorization, plan‑level medical necessity rules, shifting formularies, and potential benefit reductions each plan year.

Medigap (Medicare Supplement)

A private policy that works with Original Medicare (Parts A & B) to fill “gaps” like coinsurance, copayments, and some deductibles. Medigap policies are standardized by letter (A‑N), so identical letter plans sold by different insurers must offer the same benefits; price and underwriting differ. Medigap does not include prescription drugs—Part D is purchased separately. (medicare.gov)
Pros: freedom to see any doctor who accepts Medicare; far fewer administrative hurdles (no prior authorization for Medicare‑covered services); predictable out‑of‑pocket costs if you choose a comprehensive plan. (medicare.gov)
Cons: higher monthly premiums; plan availability and pricing vary by state and age; underwriting (medical questions) can make late purchase expensive or impossible outside your guaranteed‑issue window.

Head‑to‑head: Features and cost drivers

What drives the “true cost”?

Fixed premiums you pay each month (Part B + MA premium or Part B + Medigap premium + Part D if needed). (cms.gov)
Variable out‑of‑pocket spending (deductibles, copays, coinsurance, prescription costs).
Catastrophic exposure (maximum annual out‑of‑pocket). Medicare Advantage has a federal cap for Part A/B services; Original Medicare has no cap unless you buy Medigap. (kff.org)
Network and utilization rules that affect how much you actually pay (in‑network vs out‑of‑network; prior auth denials causing delays or higher costs).
State‑level rules, underwriting, and guaranteed‑issue protections that influence future price and access.

Quick comparison table (core facts)

Topic	Medicare Advantage (Part C)	Medigap (Supplement to Original Medicare)
Monthly premium (plan only)	Often very low or $0 beyond Part B; CMS projected average $14/month in 2026. (cms.gov)	Higher: depends on plan (Plan G averages ~$150–$200/month in recent data). (medicaresupplement.com)
Part B premium	You still pay Part B ($202.90/month in 2026). (cms.gov)	You still pay Part B ($202.90/month in 2026). (cms.gov)
Out‑of‑pocket max (Part A/B)	Federal cap applies (2025 caps around $9,350 in‑network; plan limits vary). Many plans have lower limits. (kff.org)	Original Medicare has no OOP cap—Medigap pays most Medicare cost‑sharing, making effective OOP small depending on plan. (medicare.gov)
Provider access	Network restrictions common; out‑of‑network costs may be much higher or not covered. (kff.org)	Any provider that accepts Medicare; full freedom of choice. (medicare.gov)
Prior authorization	Common — can delay or deny care.	Not required for Medicare‑covered services.
Prescription drugs	Usually included (MA‑PD) but formularies change; Part D still needed if not included. (kff.org)	Not included — you must buy Part D separately. (medicare.gov)
Best for	People wanting low monthly plan premiums, limited provider needs, and predictable cap on catastrophic costs — comfortable with network care. (kff.org)	People prioritizing provider freedom, predictable annual healthcare spending, or those with heavy/utilization needs (hospitalizations, imaging, elective specialists). (medicare.gov)

Real world cost examples — three scenarios (concrete math)

All examples use 2026 federal Part B premium of $202.90/month = $2,434.80/year. (cms.gov)
Where plan‑level figures are used (MA average premium, Medigap Plan G), I cite recent CMS and market data; these are illustrative — use your local quotes for precise decisions. (cms.gov)

Assumptions:

Medicare Advantage average additional premium = $14/month (CMS estimate for 2026). Many beneficiaries pay $0 beyond Part B, but CMS’s enrollment‑weighted average is $14. (cms.gov)
Medigap Plan G average premium ≈ $156/month (market average in 2025 data). Plan G does NOT pay the Part B deductible; in 2026 the Part B deductible is $283. (medicaresupplement.com)
Part D (prescription) assumed roughly $35–$46/month depending on choice; we’ll include a lightweight estimate when relevant (Part D costs are highly plan‑dependent).

Scenario A — Low‑use retiree (healthy, 1–2 doctor visits/year, few meds)

Medicare Advantage:
- Part B: $2,434.80/year. (cms.gov)
- MA plan premium: $168/year ($14 × 12). (cms.gov)
- Out‑of‑pocket for visits/annual preventive care: assume $100/year.
- Total annual cost ≈ $2,702.80 (plus any Part D premium ~$138–$414/year if needed).
Medigap (Plan G) + Part D:
- Part B: $2,434.80/year.
- Plan G premium: $1,872/year ($156 × 12). (medicaresupplement.com)
- Part B deductible (Plan G does NOT cover): $283/year. (cms.gov)
- Total annual cost ≈ $4,589.80 (plus Part D if purchased separately).
Winner for low user: Medicare Advantage likely—lower annual cost and minimal risk if you rarely use services.

Scenario B — Moderate user (multiple specialists, 10–15 visits/year, some imaging, 2–4 drugs)

Medicare Advantage:
- Part B: $2,434.80.
- MA premium: $168.
- Typical cost sharing (copays, coinsurance for imaging, procedures): estimate $1,200/year (depends heavily on plan).
- Total ≈ $3,803 (plus Part D).
Medigap Plan G:
- Part B: $2,434.80.
- Plan G premium: $1,872.
- Part B deductible: $283.
- Out‑of‑pocket: very low after Plan G — maybe $0–$200 depending on services.
- Total ≈ $4,589.80.
Winner for moderate user: Could be either. Medicare Advantage is often lower if your utilization stays moderate and you remain in network. Medigap becomes more attractive as utilization and complexity increase because it limits variable cost and administrative friction.

Scenario C — High user / chronic conditions (multiple hospitalizations, surgeries, frequent specialists)

Medicare Advantage:
- Part B: $2,434.80.
- MA premium: $168.
- Potential out‑of‑pocket costs could run into thousands depending on copays and hospital days; worst case up to the plan’s in‑network OOP maximum (federal cap applies). Using a mid‑range heavy use estimate: $6,000/year.
- Total ≈ $8,602.80.
Medigap Plan G:
- Part B: $2,434.80.
- Plan G premium: $1,872.
- Part B deductible: $283.
- Most Medicare cost‑sharing covered — total ≈ $4,589.80.
Winner for high user: Medigap is often substantially cheaper and less risky because it prevents catastrophic spending and administrative denials.

Caveats: These examples are illustrative. Local MA plans may have $0 premiums but higher per‑service copays; Medigap pricing varies by state, issuer, and rating method (community vs issue vs attained age). Always compare your local MA options and Medigap quotes.

Enrollment windows, guaranteed‑issue rights, and switching traps

Why this matters: once you skip your Medigap open enrollment window, insurers can underwrite you (ask health questions) and refuse coverage or charge higher premiums. That can permanently change your cost trajectory. (medicare.gov)

Key facts:

Medigap Open Enrollment Period: 6 months starting the month you turn 65 and are enrolled in Part B. During this period, you have guaranteed access to any Medigap plan sold in your state regardless of health status. After that, guaranteed access evaporates in most states. (medicare.gov)
Guaranteed issue rights: Certain life events (e.g., losing employer coverage, certain plan cancellations, moving out of your MA plan’s service area) can give you a limited guaranteed‑issue window to buy Medigap without underwriting. Timing rules can be strict (e.g., apply 60 days before coverage ends and up to 63 days after). Keep documentation. (medicare.gov)
Medigap cannot be sold to someone already in Medicare Advantage (you must switch back to Original Medicare first). If you switch from MA back to Original Medicare outside guaranteed conditions, Medigap insurers may deny you. (medicare.gov)

State exceptions:

A few states (NY, CT, MA; Minnesota delayed start of new law) have stronger consumer protections making Medigap more accessible. Check your state rules and SHIP (State Health Insurance Assistance Program). (aarp.org)

Practical switching tip: If you enroll in Medicare Advantage early but want Medigap later, plan carefully—losing MA coverage or proving guaranteed‑issue conditions is possible but can be administratively challenging. Always save letters and denial notices.

How chronic conditions change the ROI

If you have chronic conditions (diabetes with complications, heart failure, COPD, frequent oncology needs), the ROI math shifts strongly toward Medigap. Why:

Frequent hospitalizations and specialist care multiply out‑of‑pocket copays; Medigap converts variable per‑service costs into a predictable monthly premium, often lowering total annual spending for heavy users. (medicare.gov)
Medicare Advantage plans can require prior authorizations for procedures and therapies; denials or delays harm health and increase administrative burden for patients with complex care. Medigap + Original Medicare avoids those plan‑level prior authorization roadblocks for Medicare‑covered services.
If you travel frequently or split time between homes in different counties/states, Medigap’s unrestricted provider access often matters.

Use ROI thinking:

Compute annualized total cost under each option for your expected utilization (like the three scenarios above). Include both obvious and likely unexpected events (1–2 hospitalizations per 3 years for many retirees).
Consider non‑monetary ROI: peace of mind, lower administrative burden, continuity with specialists, fewer surprise denials.

How to shop: a practical checklist

Start with Part B: always include the Part B premium in your base calculation ($202.90/month in 2026). (cms.gov)
Get local quotes:
- For MA: list 3–5 plans in your ZIP code and compare total expected cost (premium + expected copays + likely out‑of‑network risk + Part D). (kff.org)
- For Medigap: get quotes for Plan G, Plan N, and any lower‑cost K/L if available. Ask whether the offered price is community, issue‑age, or attained‑age rated. (medicaresupplement.com)
Add Part D: Medigap requires a standalone Part D plan if you want drug coverage—compare formularies and total annual drug costs. MA often bundles Part D but watch for formulary changes. (kff.org)
Model three year scenarios: healthy, average, and catastrophic. Include inflation of premiums (Medigap premiums historically increase with age and claims). Remember MA benefits and premiums can change annually. (cms.gov)
Check provider networks: call your top 3 providers and confirm they accept the MA plan or accept Medicare (for Medigap). For Medigap, verify hospitals frequently used accept Medicare assignment.
Review prior authorization and step therapy rules for the MA plans especially if you use high‑cost or specialty drugs.
Confirm guaranteed‑issue rights and your Medigap open enrollment status if you consider Medigap later. Keep records.

Red flags and negotiation levers

Red flags (avoid if important to you)

MA plan with very narrow network that excludes your primary specialist or preferred hospital. (kff.org)
MA plan with many step‑therapy rules for medications you currently take. (kff.org)
Medigap insurer with high, rapidly rising renewal rates or solvency warnings—check state insurance department ratings and reviews. (medicare.gov)

Levers to lower costs

Shop multiple Medigap insurers at initial enrollment — same letters, different prices.
Choose Plan N or high‑deductible Plan G if you want lower premiums and accept some extra per‑visit costs.
For MA: choose plans that reduce your Part B premium payment or offer Part B premium reduction—a small subset reduce Part B costs for enrollees. (kff.org)
Use State Health Insurance Assistance Programs (SHIPs) for free, unbiased counseling.

Switching strategy and timeline

If you are approaching age 65: strongly consider starting Medicare with Original Medicare and buying Medigap during your 6‑month open enrollment window if you value provider freedom and have any chronic conditions. That is often the cheapest guaranteed way to lock in Medigap without medical underwriting. (medicare.gov)
If you are in MA and considering switching later: be mindful of guaranteed‑issue rights and the potential inability to buy Medigap after you disenroll from MA unless you meet specific exceptions. Save proof of coverage changes. (medicare.gov)
Annual review: whether you have MA or Medigap, do a yearly check during the Open Enrollment window (Oct 15–Dec 7) to confirm drug coverage, networks, and cost changes. (kff.org)

Quick decision guide (one‑page)

You are low‑use, on few meds, want low monthly cost and can live with network constraints → Medicare Advantage likely fits. (kff.org)
You want provider freedom, have chronic conditions, expect hospitalizations, or want predictable costs → Medigap (Plan G or similar) likely saves money over moderate‑to‑heavy use. (medicare.gov)
You’re under 65 and on Medicare for disability or ESRD → Medigap availability is state‑dependent and often limited—check state rules before assuming coverage. (medicare.gov)

Action plan: next 30 days (practical)

Get your 2026 Part B bill information and confirm whether IRMAA applies to you (higher earners pay more). (cms.gov)
Use the Medicare Plan Finder to pull local MA options and compare total cost estimates for your expected use. (kff.org)
Request 3 Medigap quotes for Plan G and Plan N (or state‑specific favorites) and ask insurers for renewal history and rating method. (medicaresupplement.com)
Call SHIP for free counseling and to verify guaranteed‑issue rights and timing in your state. (medicare.gov)
Document all communication and letters—you may need them for guaranteed‑issue protections later.

Final thoughts — balancing cost, risk, and freedom

There is no one‑size‑fits‑all winner. The “true cost” includes more than money: it includes continuity of care, administrative burden, and the peace of mind of predictable budgets. For many low‑use retirees the lower MA premiums make the choice easy. For those with chronic or unpredictable health needs, the insurance‑like protection of Medigap often provides superior value over the long run.

Which is right for you? Run the numbers for your personal utilization, get local quotes, and treat the Medigap initial window as a high‑value decision point—once it’s gone, your options can be materially different.

References (authoritative sources used)

CMS — 2026 Medicare Parts A & B Premiums and Deductibles (official CMS fact sheet). (cms.gov)
CMS — Medicare Advantage and Part D projections and 2026 plan premium estimates. (cms.gov)
KFF (Kaiser Family Foundation) — Medicare Advantage 2026/2025 plan data and out‑of‑pocket limit analysis. (kff.org)
Medicare.gov — Medigap enrollment rules, guaranteed issue rights, and buying guidance. (medicare.gov)
Market data on Medigap Plan G averages and plan cost comparisons (industry analysis). (medicaresupplement.com)

If you want, I can:

Build a personalized 3‑year cost model for you—enter ZIP code, age, typical number of visits, and a list of current medications and I’ll run MA vs Medigap scenarios with local plan numbers.
Or generate a printable checklist and script to call providers/insurers to verify network and prior authorization practices.