Medicare offers multiple supplemental coverage options after you enroll in Parts A and B. You can choose either a Medigap plan or a Medicare Advantage plan to help with cost-sharing, since Original Medicare doesn’t cover 100% of your healthcare expenses.
The federal government standardizes Medigap plans. The only differences for a specific plan type are the insurance carrier and premium rate. Plan G and Plan N are among the most popular choices.
Medicare Advantage plans work differently—each plan sets its own coverage, network, and costs. This article outlines the key differences between these options to help you determine which approach best suits your situation.
How Medigap Plans Work
Medigap plans pay secondary to Medicare and cover some of the gaps in Original Medicare that you’d otherwise pay out-of-pocket. These gaps include copays, deductibles, and coinsurance.
For example, Part B requires you to pay an annual deductible before coverage begins. After that, Part B pays 80% of approved outpatient services. You’re responsible for the remaining 20% with no limit on what that amount could be.
Medigap plans follow Medicare’s network. Any healthcare provider that accepts Medicare must also accept your Medigap plan.
Insurance carriers can offer up to ten standardized Medigap plans: A, B, C, D, F, G, K, L, M, and N. Each plan provides identical coverage regardless of which carrier you choose. Coverage levels differ between plan types, so you’ll need to balance how much coverage you want against your budget.
Note: Plan F is no longer available to those who became Medicare-eligible after January 1, 2020. This makes Plan G the most comprehensive option for new Medicare beneficiaries.
Plan G Coverage
Plan G covers nearly all out-of-pocket costs under Original Medicare. The only expense you pay is the annual Part B deductible. Once you meet that deductible, Plan G covers all Medicare-approved services at 100%.
Plan G premiums are typically lower than the now-phased-out Plan F because you pay the Part B deductible yourself.
Plan N Coverage
Plan N offers less coverage than Plan G but still handles most out-of-pocket costs. With Plan N, you pay:
- The annual Part B deductible
- Copays for doctor visits (up to $20)
- Copays for emergency room visits (up to $50, waived if admitted)
- Potential excess charges
Excess charges occur when you visit a provider who accepts Medicare but not Medicare’s approved rate (Medicare Assignment). These providers can charge up to 15% above Medicare’s approved amount. You can avoid excess charges by confirming your providers accept Medicare Assignment.
Plan N premiums are generally lower than Plan G because you have more out-of-pocket costs.
Comparing Plan G and Plan N Costs
Medigap premiums vary based on your age, location, gender, and tobacco use. You’ll see different rates from different carriers.
Plan G makes sense if you:
- Want predictable costs after the Part B deductible
- See providers frequently
- Prefer comprehensive coverage
Plan N makes sense if you:
- Want lower monthly premiums
- Don’t mind small copays
- Can verify providers accept Medicare Assignment
Medicare Advantage Plans
Medicare Advantage is an alternative to Medigap. Instead of supplementing Original Medicare, you receive your Part A, Part B, and Part D benefits through a private insurance carrier.
Medicare Advantage plans often have $0 or low monthly premiums. However, the plan structure differs significantly from Medigap:
- You must use a network of doctors and hospitals
- The insurance carrier determines your cost-sharing amounts
- Coverage rules and networks can change annually
- Many plans include dental, vision, and hearing benefits
These additional benefits aren’t guaranteed and can be modified or removed each year.
Understanding Part D Coverage
If you choose a Medigap plan, you’ll need to enroll in a separate Part D plan for prescription drug coverage. Medigap plans don’t include prescription benefits.
Medicare Advantage plans typically include Part D coverage, so you don’t need a separate prescription plan.
You face a penalty if you don’t enroll in Part D (or an Advantage plan with drug coverage) when you first become eligible. Enroll during your Initial Enrollment Period to avoid this penalty.
Choosing Your Coverage
You have multiple options to manage Medicare out-of-pocket costs. The right choice depends on your healthcare needs, budget, and preferences.
Medigap plans offer:
- Freedom to see any Medicare provider
- Standardized coverage
- Predictable costs
- No network restrictions
Medicare Advantage plans offer:
- Lower or $0 premiums
- Possible extra benefits (dental, vision, hearing)
- Network-based care
- All-in-one coverage, including prescriptions
Consider both immediate costs and long-term factors. Your health status, travel habits, and preferred providers all matter when making this decision.
Conclusion
Review your current healthcare expenses and provider preferences before choosing. Calculate how much you spent on copays, deductibles, and out-of-pocket costs in the past year.
If you value provider flexibility and predictable costs, Medigap plans typically work better. If you want lower premiums and don’t mind network restrictions, Medicare Advantage may be more suitable.
You can switch between Medigap and Medicare Advantage during specific enrollment periods. However, switching from Medicare Advantage to Medigap later may require medical underwriting in most states.
Compare plan options in your area using Medicare.gov or speak with a licensed insurance agent who specializes in Medicare. They can provide specific premium quotes and help you understand which option aligns with your healthcare needs and budget.
