Medicare Advantage vs Medigap: Why I Recommend Medigap

How much does Medicare cost? 

Some clients have expressed surprise that Medicare isn’t free. The cost is a mix of premiums, deductibles, copays, and coinsurance. The mix changes depending on whether you choose Medigap or Medicare Advantage.  

Medicare has many nuances, but at a high level, Medicare has Parts A (hospital) and B (doctor/outpatient). You enroll in Parts A and B, and either stay with Original Medicare and add Medigap (a supplemental policy) plus Part D (prescriptions), or you choose a Medicare Advantage plan (Part C) that bundles most benefits under a private insurer. In 2025, Part D’s redesign adds a $2,000 annual cap on out-of-pocket prescription costs. 

Medicare doesn’t have a single price for all buyers.  Over a certain income threshold, what you pay depends on your income. IRMAA (Income-Related Monthly Adjustment Amount) is an income-based surcharge that increases your Part B and Part D premiums if your modified adjusted gross income (MAGI) is above certain thresholds. The Social Security Administration decides whether you owe IRMAA by looking at the Modified Adjusted Gross Income (MAGI) on your IRS tax return from two years prior, and the surcharge is assessed per person, so both spouses can owe it.  

• How it affects costs: IRMAA sits on top of the standard premiums and can meaningfully raise what you pay each month for Parts B and D. If your income has dropped since that look-back year (for example, due to retirement), we help clients file Form SSA-44 for a qualifying life-event to ask Social Security to reconsider the cost. 

• Cost benchmarking: At the highest IRMAA tier, a married couple enrolled in Medigap and Part D could see combined Medicare costs around the mid-$2,000s per month (about $30,000 annually), based on typical Medigap and Part D premiums. Over time, Medigap premiums tend to rise ~5–7% annually, while many Advantage plans advertise low plan premiums. 
• How we plan around it: We coordinate Roth conversions, withdrawal timing, RMDs, capital gains, and charitable strategies so you don’t accidentally tip into a higher IRMAA tier. We’ll model both paths—Medicare Advantage vs Medigap—with IRMAA layered in, so you see your true after-tax, after-premium cash flows. 
  
  

Which is the better fit: Medicare Advantage vs Medigap? 

Medicare Advantage (Part C) plans can offer low plan premiums and bundle Part A and Part B benefits—you still pay the standard Part B premium ($185 per person in 2025). Many include Part D drug coverage and set a yearly maximum out-of-pocket (MOOP) for covered services; for 2025, the in-network MOOP is often around $9,350 (depending on your plan and zip code). 

• Where you’ll feel the trade-offs: provider networks, plan rules like prior authorization, and the fact that benefits and networks can change each year. If you’re generally healthy, prefer lower premiums, and get most care locally, Advantage can work. 

Medigap + Original Medicare usually means you can see any doctor or hospital that accepts Medicare without networks or referrals, and your out-of-pocket expense is more predictable. You’ll pay the Part B premium, a Medigap premium, and a separate Part D premium, but in exchange you gain nationwide access and fewer administrative surprises. Some Medigap plans also include limited foreign emergency coverage. 

• In my experience, Medigap is often the better fit for retirees who can afford it because of its flexibility, lower administrative burdens, and risk reduction from pre-existing conditions.  

Our stance: Because our clients can afford Medigap + Part D coverage, we plan for the premiums up front and prioritize access and predictability rather than chasing the lowest sticker price. 

What do I need to do about Medicare at 65—and why? 

Whether you’ll enroll right away or you’re still covered by an employer plan or a retiree plan, you’ll want to make active Medicare choices at 65 to avoid penalties, coordinate coverage, and preserve your Medigap no-underwriting window. 

• Avoid lifetime penalties. Enroll (or formally delay with qualifying coverage) so you don’t trigger Part B and Part D late-enrollment surcharges that stick around for as long as you have those parts. 

• Protect your Medigap “no-underwriting” window. The first 6 months after Part B starts is your best chance to buy Medigap without medical underwriting in most states. Miss it and switching later can be harder or more expensive—especially after a diagnosis. 

• Prevent coverage gaps. Confirm you have creditable drug coverage at 65 (Part D or employer) and that Medicare is properly coordinated with any employer plan so claims aren’t denied. 

• Bonus planning note. If you use an HSA, timing matters: once you enroll in any part of Medicare, new HSA contributions must stop. 

Our process: At 64, we sit down with a Medicare specialist to map your enrollments and coverage. The goal is simple: avoid penalties, keep underwriting on your side, and fit premiums and out-of-pocket costs into your personalized retirement plan. 

How does provider access work? 

Original Medicare with Medigap generally allows you to see any provider that accepts Medicare. Some physicians limit new Medicare patients, so it’s still smart to confirm before you schedule.  

Most Advantage plans require approvals for certain tests, therapies, or stays. Some practices choose not to participate in certain Advantage networks, which is why a doctor who accepts Medicare might still be out-of-network on a given Advantage plan. Approvals move through a mix of insurer portals, phone calls, and even faxed forms at many practices. Denials can often be appealed, but the process takes time and energy. 

Advantage plans require that the doctor and facility are in that plan’s network. While not common, there are stories of people who confirmed a doctor or surgeon is in network and later learned the anesthesiologist or facility isn’t; and a surprise bill follows. 

Can I start with Medicare Advantage and switch to Medigap later?  

Wanting to save money in their younger, healthier years, some people may choose Medicare Advantage, with the idea of switching to Medigap later, when they need more care. They may discover, however, that if they want to switch from Medicare Advantage to Medigap after a diagnosis or when a specialist sits outside the network; that’s exactly when underwriting risk is highest. It’s best to switch before there’s a diagnosis, not after. Of course, predicting the future isn’t easy! 

If Medigap appeals to you, your strongest window is the first six months after your Part B starts. That’s when you can buy Medigap without medical underwriting in most states. After that window, moving from an Advantage plan to Medigap can involve underwriting, when you could be denied or rated up.  

How does Sachetta help you choose? 

This is where our healthcare planning helps to minimize retirement costs. At age 64, we bring a trusted Medicare specialist into your planning process. Together, we map your doctors, medications, travel patterns, and budget; confirm whether networks or prior authorizations could block care you value; and project lifetime costs under Medicare Advantage vs Medigap. Then we make the decision together, folding premiums and expected out-of-pocket costs into your broader retirement income plan, so the coverage you pick supports your lifestyle. We’ll also review your coverage each year so plan or network changes don’t catch you off guard. 

Two brief client stories 

Anne & Luis (snowbirds): I’ve worked with Anne and Luis for years; they split their time between Massachusetts and Florida. When we reviewed coverage, their first question wasn’t about premiums, it was, “Can we keep Luis’ cardiologist at Mass General and still see someone near the condo in Naples?” They travel to see grandkids and don’t want to deal with network limits, referrals, or prior authorizations on the road. We chose Medigap + Part D so any doctor who accepts Medicare is an option and their annual costs are easier to predict. 

Brian (healthy, stays local): Brian is 66, still consulting part-time, and likes to keep things simple. His care is local and routine, so Medicare Advantage is a viable option for him. But, he doesn’t want his future options to depend on plan networks or underwriting if his health changes. We ran the numbers, and he chose Medigap + Part D. He’s willing to pay the Medigap premiums now so he won’t limit his care options if his health needs escalate or change suddenly. 

What’s my next step? 

If you’re aged 63-65, or are considering retirement, let’s talk. We’ll meet with a Medicare specialist to model how Medicare Advantage vs Medigap plays out for your travel, doctors, prescriptions, and cash flow so your coverage supports, not surprises, your long-term plan.  

Medicare Advantage vs Medigap 

About the Author:

Joseph Sachetta, CFP®, CPA/PFS, MBA, MST, For over 40 years, Joe has worked in finance and accounting. He is a Certified Financial Planner, and a Certified Public Accountant. Joe’s passion lies with helping his clients strike a balance between living for today and saving for tomorrow.