What's the Difference Between Original Medicare, Medicare Advantage, and Medigap?

Original Medicare consists of Part A (hospital insurance) and Part B (medical insurance). It is managed directly by the federal government and accepted by any provider in the country who accepts Medicare — which is the vast majority of doctors and hospitals. There are no network restrictions.

The trade-off is that Original Medicare alone leaves significant financial exposure. There is no annual out-of-pocket maximum, and the 20% coinsurance under Part B has no cap. A serious illness or hospitalization can result in thousands of dollars in uncovered costs without additional coverage.

Medigap, also called Medicare Supplement insurance, is sold by private insurance companies to cover the cost-sharing gaps that Original Medicare leaves behind. Plans are standardized by letter — Plan G, Plan N, and others — so the benefits for each letter are identical regardless of which insurer sells the plan. The only difference between companies offering the same plan letter is the premium.

Medigap plans work exclusively with Original Medicare. They do not add dental, vision, or drug coverage. To have prescription drug coverage with a Medigap plan, you need a separate Part D plan. The advantage of Medigap is predictability — with the right plan, your out-of-pocket costs can be extremely limited and easy to budget.

Medicare Advantage (Part C) is offered by private insurers approved by Medicare. When you enroll in a Medicare Advantage plan, the plan takes over your Medicare benefits instead of the government paying directly. These plans are required to cover everything Original Medicare covers, and most also include prescription drug coverage and additional benefits like dental, vision, and fitness programs.

Medicare Advantage plans typically operate within defined networks of providers and may require referrals for specialists or prior authorization for certain services. They come with annual out-of-pocket maximums, which can provide a financial safety net. Costs and benefits vary significantly by plan and location.

The choice between Medicare Advantage and Original Medicare with Medigap is one of the most important decisions you'll make in retirement. It depends on your health, your doctors, the medications you take, your budget, and your tolerance for uncertainty in annual costs.

There is no single right answer — but there is a right answer for your specific situation. We help clients work through this comparison every day, looking at real plan options in their area and matching them to their actual needs. It costs you nothing to sit down with us.