Medigap vs Medicare Advantage: What Are the Real Out-of-Pocket Differences?

When you turn 65, Medicare gives you choices — and the two biggest ones, Medigap (Medicare Supplement) and Medicare Advantage, could not be more different when it comes to what you actually pay out of pocket. One plan might look cheaper on a monthly premium, but cost you more when you need care. The other might cost more each month, but leave you with fewer surprises at the doctor’s office.

Understanding the real out-of-pocket differences between these two paths is one of the most important decisions you will make in retirement. Let’s walk through how each plan handles the costs that matter most.

How Do Medigap and Medicare Advantage Handle Premiums?

Medicare Advantage plans are known for low — sometimes zero — monthly premiums. According to the Kaiser Family Foundation, about 75% of Medicare Advantage enrollees in 2026 pay no premium beyond their standard Medicare Part B premium of $202.90 per month. The average supplemental premium across all Medicare Advantage enrollees is just $15 per month.

Medigap plans come with their own monthly premium on top of your Part B premium. Depending on the plan you choose and where you live, that premium can range from roughly $30 to $300 or more per month. Plan G, one of the most popular Medigap plans, typically costs more than a Medicare Advantage premium — but the tradeoff is in what you pay when you actually receive care.

The question is not which plan has the lower premium. The question is: what does the total cost look like across the whole year, especially if your health takes an unexpected turn?

What Out-of-Pocket Costs Do You Face at the Doctor or Hospital?

This is where the two plans diverge sharply.

Medicare Advantage plans use copays, coinsurance, and deductibles for most services. You might pay $20 to $50 for a primary care visit, $50 or more for a specialist, and significantly more for hospital stays. While Medicare Advantage plans are required to cap your annual out-of-pocket spending — the average in-network maximum is $5,421 in 2026, with an overall maximum of $9,250 — you could still face substantial costs before reaching that cap.

Medigap plans are designed to fill the gaps that Original Medicare leaves behind. With a Plan G, for example, after you pay your annual Part B deductible of $283 in 2026, your Medigap plan covers most or all of the remaining Part A and Part B cost-sharing. That means predictable, minimal out-of-pocket costs at the point of service. There are no copays for most doctor visits beyond what you have already covered through your premium.

The tradeoff is clear: Medicare Advantage offers a financial safety net through its out-of-pocket cap, but you pay copays and coinsurance along the way. Medigap offers predictable costs from the start, but you are paying more monthly to get there.

How Do Networks Affect Your Choice?

Medicare Advantage plans — especially HMOs, which cover about 61% of enrollees — typically require you to use doctors, hospitals, and specialists within the plan’s network. Going out of network usually means higher costs or no coverage at all. PPO plans offer some out-of-network flexibility, but at a higher price. According to KFF, Medicare Advantage enrollees have access to roughly half of the physicians available to traditional Medicare beneficiaries in their area.

Medigap does not restrict your provider choice. You can see any doctor or specialist in the country who accepts Medicare. No referrals are needed, and no prior authorization is required for most services. For retirees who travel, spend time in different states, or simply want to keep their current doctors, this flexibility is a significant advantage.

If you have a preferred physician or specialist, check whether they participate in Medicare Advantage networks before choosing that path. A lower premium does not help much if your doctor is not covered.

What About Prescription Drug Coverage?

Medicare Advantage plans usually bundle Part D prescription drug coverage into the plan. This is convenient and can reduce your overall costs if you take regular medications.

Medigap does not include prescription drug coverage. You will need to buy a standalone Part D plan. In 2026, the average premium for a standalone Part D plan is about $36 per month. This adds to your monthly costs but gives you flexibility to choose a Part D plan that best fits your specific medication needs.

If you take several prescriptions, compare the total monthly cost — Medigap premium plus Part D premium — against a Medicare Advantage plan that bundles both.

Do Medicare Advantage Plans Offer Extras That Medigap Does Not?

Yes, and this is one of Medicare Advantage’s strongest selling points. According to KFF, nearly all Medicare Advantage enrollees have access to benefits that Original Medicare does not cover, including:

• Dental coverage (98% of enrollees)
• Vision exams and eyeglasses (99% of enrollees)
• Hearing exams and aids (95% of enrollees)
• Fitness programs like SilverSneakers (91% of enrollees)

Some plans also offer over-the-counter health items, meal delivery after a hospital stay, transportation to appointments, and telehealth services.

Medigap does not include any of these extras. You would need to purchase separate dental, vision, and hearing coverage, which adds to your monthly expenses. For some retirees, the bundled extras in Medicare Advantage are worth more than the cost savings of Medigap.

What About Prior Authorization and Approval Requirements?

Medicare Advantage plans frequently require prior authorization — advance approval from your plan before certain services are covered. KFF reports that 99% of Medicare Advantage enrollees are in plans that require prior authorization for some services, including inpatient hospital stays (97%), skilled nursing facility stays (95%), and home health services (90%). While preventive services rarely require authorization (only 6% of enrollees), the process for other treatments can add delays and administrative burden.

Medigap does not impose prior authorization requirements. Because Medigap works alongside Original Medicare, you do not need approval from your plan before receiving covered services. For retirees who value simplicity and autonomy in their healthcare decisions, this is an important distinction.

Which Plan Is Right for You?

There is no single right answer. The best choice depends on your health needs, your budget, and what matters most to you:

• Choose Medicare Advantage if you want low or zero monthly premiums, appreciate extra benefits like dental and vision, and are comfortable staying within a provider network.
• Choose Medigap if you want predictable out-of-pocket costs, unrestricted provider access, no prior authorization requirements, and are willing to pay a higher monthly premium for that peace of mind.

Many retirees find that the real cost comparison is not about the monthly premium — it is about the total annual spend when you factor in copays, coinsurance, prescription drugs, and any extra coverage you may need.

The Bottom Line: Understanding the Full Picture

Medicare Advantage looks affordable on the surface, but the out-of-pocket costs add up when you need care — copays for visits, coinsurance for procedures, and potential costs for out-of-network services. Medigap costs more each month, but delivers predictable, minimal out-of-pocket expenses and the freedom to see any Medicare-accepting provider.

Before making your decision, take the time to compare not just premiums, but the total cost of coverage across a full year. Consider your current health, your prescription needs, and how important provider choice and simplicity are to you.

This article is for informational purposes only and does not constitute insurance advice. Medicare plan availability, costs, and benefits vary by location and plan. Contact a licensed agent to discuss options available in your area.

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Trek Insurance Solutions is a Third-Party Marketing Organization (TPMO). We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.