Medicare beneficiaries often ask: what is the difference between Medigap and supplemental insurance? Both options help cover healthcare costs that Original Medicare doesn’t pay for.
We at Dave Silver Insurance see this confusion regularly among our clients. Understanding these two coverage types will help you make the right choice for your healthcare needs.
How Does Medigap Insurance Work?
Medigap insurance provides private coverage that pays for specific gaps in Original Medicare Parts A and B. When you receive healthcare services, Original Medicare pays its portion first, then your Medigap policy automatically covers its share of costs like deductibles, copayments, and coinsurance. This process happens without separate claims submissions from you.
Standardized Coverage Across All Insurers
The Centers for Medicare & Medicaid Services standardizes Medigap plans with letters A through N. Plan G from one insurance company offers identical benefits to Plan G from another company. Plan G has become the most popular choice among Medigap policyholders. Plans C and F are no longer available to new Medicare beneficiaries as of 2020, which pushes most people toward Plans G and N. Plan G covers everything except the Medicare Part B annual deductible, while Plan N requires small copayments for doctor visits and emergency room visits.
Open Enrollment Provides Maximum Protection
Your six-month Medigap Open Enrollment Period starts the first day of the month you turn 65 and enroll in Medicare Part B. Insurance companies cannot deny you coverage or charge higher premiums based on your health conditions during this window. Miss this period, and you face medical underwriting that can result in coverage denial or significantly higher costs. Beneficiaries who wait often pay substantially more in premiums.
Eligibility Requirements You Must Meet
You must have both Medicare Parts A and B to purchase any Medigap policy. You cannot combine Medigap with Medicare Advantage plans since they serve different functions in the Medicare system. These requirements help determine which supplemental insurance options work best for your specific Medicare coverage situation.
What Supplemental Options Exist Beyond Medigap?
Supplemental insurance encompasses a broader category of coverage that includes Medigap but extends far beyond these standardized plans. Medicare Advantage plans represent the largest alternative, covering 31 million beneficiaries in 2024 according to the Kaiser Family Foundation. These plans replace Original Medicare entirely and often include prescription drug coverage, dental, vision, and hearing benefits that Medigap cannot provide.
Employer-sponsored retiree health plans cover approximately 6.7 million Medicare beneficiaries and offer various levels of supplemental protection. Hospital indemnity insurance supplements your existing health insurance coverage by helping pay expenses for hospital stays, while critical illness insurance provides lump-sum payments for specific diagnoses like cancer or heart attacks.
Coverage Differences That Matter Most
The fundamental difference lies in how these plans work with your existing Medicare coverage. Medigap works alongside Original Medicare and automatically pays your share of approved costs with any doctor who accepts Medicare. Medicare Advantage plans replace Original Medicare completely, restrict you to specific provider networks, and require prior authorizations for many services.
The average Medicare Advantage plan has an out-of-pocket maximum of $5,915 in 2024, while Medigap Plans G and N can limit your annual costs to just the Part B deductible plus monthly premiums. Employer plans vary wildly in their coverage levels and can change or disappear when companies restructure their benefits.
Specific Coverage Gaps These Plans Address
Original Medicare leaves significant gaps that different supplemental options address differently. Medicare covers zero dollars for dental care, vision services, or hearing aids (creating annual out-of-pocket costs that average $1,986 for dental alone according to the National Association of Dental Plans). Medicare Advantage plans include these benefits in 84% of available plans for 2024, but with strict annual limits often between $1,000 to $2,500 per year.
Long-term care represents another major gap, with average costs that exceed $108,000 annually according to Genworth Financial. Supplemental long-term care insurance specifically targets this exposure, while Medigap provides no long-term care benefits whatsoever.
These coverage variations directly impact your monthly premiums and annual healthcare expenses, which we’ll examine in detail next.
How Much Will Each Option Cost You?
Premium Differences Between Plan Types
Medigap Plan G averages $164 monthly nationwide, with premiums that range from $140 to $236. Medicare Advantage plans average just $17 monthly in 2025, but this low premium hides substantial costs. The average Medicare Advantage enrollee faces an out-of-pocket maximum of $5,915 annually, while Medigap Plan G limits your costs to the $240 Part B deductible plus monthly premiums.
A KFF study found 23% of Medicare Advantage beneficiaries spent over 10% of their income on healthcare costs, compared to only 17% of Medigap policyholders. Hospital indemnity policies add $50 to $200 monthly but only pay fixed amounts per day, which creates gaps when actual costs exceed these limits.
Network Restrictions Create Real Financial Risk
Medicare Advantage plans restrict you to specific provider networks and often require referrals and prior authorizations that can delay critical care. Original Medicare with Medigap works with any doctor who accepts Medicare nationwide and provides complete provider freedom. Medicare Advantage out-of-network costs can exceed $15,000 annually if you need specialized care, while Medigap provides the same coverage whether you visit a doctor in Florida or Alaska.
Clients who switched from Medicare Advantage to Medigap specifically wanted to regain provider flexibility after they faced network limitations during serious health issues.
Premium Structures Reveal True Costs
Medigap premiums stay predictable with guaranteed renewable policies, while Medicare Advantage plans can change networks, benefits, and costs annually. Community-rated Medigap premiums in nine states protect you from age-based increases, while Medicare Advantage plans often raise costs as you age and develop health conditions.
Long-term care insurance premiums average $3,500 annually for comprehensive coverage according to the American Association for Long-Term Care Insurance (but provide protection against costs that can reach $108,000 per year). These premium structures directly affect your total healthcare expenses over time.
Final Thoughts
The core difference between Medigap and supplemental insurance lies in standardization and scope. Medigap offers federally standardized plans that work exclusively with Original Medicare and provides predictable coverage with nationwide provider access. Supplemental insurance encompasses a broader category that includes Medicare Advantage, employer plans, and specialty policies addressing specific gaps like dental or long-term care.
Your choice depends on three key factors: provider flexibility needs, budget constraints, and health status. Medigap Plan G costs $164 monthly but eliminates most out-of-pocket expenses, while Medicare Advantage averages $17 monthly but restricts networks and can cost up to $5,915 annually in maximum expenses (with 23% of beneficiaries spending over 10% of their income on healthcare). The timing matters significantly since you face coverage denial or substantially higher premiums through medical underwriting if you miss your Medigap Open Enrollment Period.
We at Dave Silver Insurance provide personalized Medicare guidance to help you navigate these complex decisions. Our team helps you evaluate your travel patterns, preferred doctors, and risk tolerance for unexpected medical bills. Contact us for individualized recommendations based on your unique health and financial needs.