Medicare Supplement vs. Advantage: Cost Comparison
Medigap and Medicare Advantage take opposite approaches to cost. Medigap charges a higher, predictable monthly premium and then covers most of what Original Medicare leaves you owing, so surprise bills are rare. Medicare Advantage often has a low or $0 premium but you pay copays and coinsurance as you use care, up to an annual out-of-pocket limit. The cheaper option depends on how much care you actually use.
When people compare Medicare Supplement (Medigap) and Medicare Advantage, the conversation usually comes down to money—but the two work in almost opposite ways. This page focuses specifically on the cost structure of each, not the broader coverage and network differences.
Medigap front-loads your costs into a higher monthly premium and then keeps your costs at the doctor and hospital very low. Medicare Advantage keeps your premium low—often $0 on top of your Part B premium—and instead charges you as you use services, with an annual cap that limits your worst-case year.
For a fuller side-by-side of how the two plan types differ overall, see our broader Medicare Advantage vs. Medigap comparison. Here, we zoom in on what each one actually costs.
Side-by-Side Comparison
| Cost factor | Medicare Supplement (Medigap) | Medicare Advantage |
|---|---|---|
| Monthly premium | Higher, predictable premium (plus Part B) | Often low or $0 premium (plus Part B) Winner |
| Cost Depends | Pay more up front, little at point of care | Pay less up front, more as you use care |
| Out-of-pocket exposure | Minimal with comprehensive plans like Plan G Winner | Copays/coinsurance up to an annual OOP limit |
| Annual out-of-pocket limit Depends | Not needed—gaps are already covered | Caps your worst-case year on medical costs |
| Drug costs | Add a separate Part D plan (extra premium) | Usually included; subject to the $2,000 cap Winner |
| Dental/vision/hearing extras | Not included—pay separately | Often bundled in at no extra premium Winner |
| Total-cost predictability | Very predictable year to year Winner | Varies with how much care you use |
| Best for Depends | People who want budget certainty | People who want low fixed costs and extras |
How Medigap Costs Work
With a Medigap policy you pay your standard Part B premium plus a separate Medigap premium that is typically higher than a Medicare Advantage premium. In exchange, the policy pays most or all of the deductibles, copays, and coinsurance that Original Medicare would otherwise leave you owing.
A comprehensive plan such as Plan G covers nearly all of those gaps, so after your premium you generally face only the annual Part B deductible. That means your medical costs are highly predictable—you largely know your yearly spending up front.
Because Original Medicare itself has no out-of-pocket maximum, the Medigap premium is essentially the price of converting an open-ended risk into a fixed, predictable cost.
How Medicare Advantage Costs Work
Medicare Advantage flips the model. Many plans charge little or no premium beyond your Part B premium, so your fixed monthly cost is low. Instead, you pay copays and coinsurance each time you use care—a copay for a doctor visit, a share of hospital costs, and so on.
To protect you, every Medicare Advantage plan has an annual out-of-pocket maximum for covered medical services. Once you hit that limit, the plan pays 100% of covered medical costs for the rest of the year, capping your worst-case scenario.
In a healthy, low-utilization year, this can be far cheaper than Medigap. In a heavy-utilization year, your spending can climb toward that annual cap before leveling off.
Drug Costs and Extra Benefits
Drug coverage affects the total picture. Medigap does not include drugs, so you add a standalone Part D plan with its own premium. Most Medicare Advantage plans include drug coverage at no extra premium. Either way, covered drug spending is capped at $2,000 per year and insulin is capped at $35 per month.
Extras such as dental, vision, and hearing are typically bundled into Medicare Advantage plans at no additional premium, whereas Medigap members pay for those services or buy separate coverage.
When tallying true cost, count the Part D premium and any dental or vision spending alongside the medical premium—not just the headline plan premium.
Predictability vs. Lower Fixed Cost
The core cost trade-off is predictability versus low fixed spending. Medigap costs more each month but makes your yearly total easy to forecast, which appeals to people who want to budget with confidence and avoid surprise bills.
Medicare Advantage minimizes your fixed monthly cost and adds extras, but your actual yearly total depends on how much care you use, bounded by the annual out-of-pocket limit.
Neither is universally cheaper. The deciding factor is your expected health care usage and how much value you place on a predictable budget—worth modeling against the specific plans available in your ZIP code.
Which Option Is Right for You?
Best for
Lean Medigap on cost if:
- You want a predictable, fixed yearly budget
- You expect significant or frequent health care use
- You strongly dislike surprise medical bills
- You are comfortable paying a higher premium for certainty
Best for
Lean Medicare Advantage on cost if:
- You want the lowest possible monthly premium
- You are generally healthy and use little care
- You value bundled drug, dental, and vision benefits
- You accept variable costs capped by an annual limit
Frequently Asked Questions
Is Medicare Advantage really cheaper than Medigap?
It can be in a low-use year because of the low or $0 premium, but in a high-use year your copays and coinsurance can climb toward the annual out-of-pocket limit. Medigap costs more monthly but keeps your total cost predictable.
Does Medigap have an out-of-pocket maximum?
It does not need one. A comprehensive Medigap plan already covers most of the gaps in Original Medicare, which on its own has no out-of-pocket maximum, so your exposure is minimal after the premium.
Do I pay extra for drug coverage with each option?
With Medigap you add a separate Part D plan with its own premium. Most Medicare Advantage plans include drug coverage at no extra premium. In both cases, covered drug spending is capped at $2,000 per year.
How does the standard Part B premium factor in?
You pay the standard Part B premium of $202.90 in 2026 with either choice. Medigap and Medicare Advantage premiums are in addition to Part B, so always compare total cost rather than just the plan premium.
See Which Approach Costs You Less
We'll model Medigap and Medicare Advantage costs against your expected health care use at no charge.