Two designs that fail in opposite directions
Original Medicare pays most of the cost of hospital and physician care and leaves the rest to you, with no annual limit of its own. There are two ways to deal with that remainder, and they are structurally opposite.
The Medigap route keeps Original Medicare and adds a supplement policy that pays the deductibles and coinsurance Medicare leaves behind. Plan G, the most commonly bought design for people newly eligible, covers everything except the annual Part B deductible — $257 in 2025. You also buy a standalone Part D plan, because supplements do not cover prescriptions. Your annual cost is therefore almost entirely fixed: three premiums and one deductible, whether you see a doctor twice or two hundred times.
The Medicare Advantage route replaces Original Medicare with a private plan that must cover at least what Medicare covers, usually bundles drug coverage, often charges no premium beyond Part B, and frequently adds dental, vision and other extras. In exchange it charges copays and coinsurance at the point of service, restricts you to a network, and may require prior authorisation. Its protection is an annual in-network out-of-pocket maximum, which caps the medical cost sharing but not your drug costs.
So the comparison is not which is cheaper — it is which is cheaper at your level of use, and how much you would lose in the year that goes wrong. A retiree who sees a doctor twice and takes one generic will find the Advantage route dramatically cheaper. The same retiree after a cardiac event, three admissions and a course of chemotherapy will find the Medigap route dramatically cheaper. Both statements are true at once, and this calculator's job is to find where they cross.
Why one line is flat and the other bends
Write the two annual totals as functions of one variable — the copays and coinsurance x you incur during the year.
The Medigap total is a constant: 12 × (Part B premium + supplement premium + Part D premium) + the Part B deductible. It does not contain x at all. That is exactly what the supplement premium buys, and it is why a Medigap holder can plan a year's healthcare budget to the dollar in January.
The Advantage total is 12 × (Part B premium + plan premium) + min(x, M), where M is the out-of-pocket maximum. It starts lower, rises at 45 degrees as you use care, and then flattens permanently once you hit the maximum. A flat line and a bent line cross at most once, so there is exactly one break-even level of copays, and it is found by subtracting the Advantage plan's fixed cost from the Medigap total.
Two consequences follow directly. First, the break-even only exists if it is at most the out-of-pocket maximum. If the premium gap between the two routes is larger than the entire maximum, the Advantage plan is cheaper at every level of use and no crossing happens — the calculator reports a blank rather than inventing one.
Second, the worst case is simply the two lines evaluated at the far right. Medigap's worst case is the same number as its best case. Advantage's worst case is its fixed cost plus the whole maximum. The difference between those two is the quantity that should drive the decision, because it is the amount you are being paid to carry, and you carry it again every single year — a five-year run of bad health means five out-of-pocket maximums, not one.
Worked example: Plan G plus Part D against a zero-premium Advantage plan
You are choosing between a Plan G supplement at $165 a month with a $45 standalone Part D plan, and a Medicare Advantage plan with no premium beyond Part B, a $5,000 in-network out-of-pocket maximum and bundled drug coverage. The Part B premium is $185. You expect about $1,800 of copays under the Advantage plan.
- Part B, both routes. $185 × 12 = $2,220.
- Medigap route. $2,220 + ($165 × 12 = $1,980) + ($45 × 12 = $540) + $257 Part B deductible = $4,997.
- Advantage fixed cost. $2,220 + $0 = $2,220.
- Advantage cost sharing. min($1,800, $5,000) = $1,800.
- Advantage route. $2,220 + $1,800 = $4,020.
- Difference at expected use. $4,997 − $4,020 = $977 in favour of Advantage.
- Break-even copays. $4,997 − $2,220 = $2,777. Below that level of copays Advantage is cheaper; above it Medigap is.
- Worst case, Medigap. Still $4,997, because a supplement leaves nothing more to pay.
- Worst case, Advantage. $2,220 + $5,000 = $7,220.
- Risk carried. $7,220 − $4,997 = $2,223 a year.
Read those last three lines together. The Advantage plan saves $977 in the year you expect, and costs $2,223 more in the year you fear — so the trade is roughly 2.3 dollars of downside for every dollar of expected saving, before considering that the bad year is also the year you most want an unrestricted choice of hospital. Whether that is a good trade depends on how likely the bad year is and how much a $2,223 swing matters to your budget, but stating it in those terms is a great deal more useful than asking which plan is cheaper.
The decision is not only arithmetic
Three non-price factors regularly outweigh the numbers above, and one of them is close to irreversible.
Medigap underwriting. You have a guaranteed right to buy any Medigap policy sold in your state, at the best available rate and regardless of health, during the six-month window that begins when you are 65 or older and enrolled in Part B. Outside that window, most states allow carriers to medically underwrite and decline you. That asymmetry matters enormously: choosing Advantage at 65 is easy to do and may be hard to undo, because the route back to a supplement can be closed by a diagnosis you have not had yet. A few states impose continuous or annual guaranteed-issue rules; check your own before assuming either way.
Networks and prior authorisation. Original Medicare with a supplement is accepted by any provider who accepts Medicare, which is most of them, anywhere in the country. An Advantage plan has a network, usually regional, and services often require prior authorisation. If you spend months away from home, want access to a specific cancer centre, or split the year between two states, that constraint can matter more than any premium.
The extras. Dental, vision, hearing, over-the-counter allowances and gym memberships are real, and their advertised value is usually higher than their realised value. Dental benefits in particular often carry an annual maximum well below the cost of significant work. Credit only what you would otherwise have bought, which for most people is a small figure and for some is genuinely worth several hundred dollars.
Two costs sit outside this comparison entirely and apply to both routes. Higher-income beneficiaries pay an income-related surcharge on Part B and Part D — size it with the Medicare IRMAA calculator. And drug costs are capped separately under Part D on either route, so model them with the Part D drug cost calculator rather than folding them into the copay figure here.
Annual cost of each route at different levels of use
| Copays incurred | Medigap route | Advantage route | Cheaper route |
|---|---|---|---|
| $0 | $4,997 | $2,220 | Advantage by $2,777 |
| $1,000 | $4,997 | $3,220 | Advantage by $1,777 |
| $1,800 | $4,997 | $4,020 | Advantage by $977 |
| $2,777 | $4,997 | $4,997 | The two are equal |
| $4,000 | $4,997 | $6,220 | Medigap by $1,223 |
| $5,000 or more | $4,997 | $7,220 | Medigap by $2,223 |
The Medigap column never changes. The Advantage column rises dollar for dollar with copays until the $5,000 maximum stops it, after which it is also flat — which is why the last row covers every worse year as well.
What the comparison leaves out
- Medigap premiums rise with age on most rating structures. Attained-age policies increase as you get older on top of general rate increases; issue-age and community-rated policies do not, though all three rise with medical inflation. A comparison run at 65 understates the Medigap route's cost at 80 unless you hold a community-rated policy.
- Out-of-network care is not counted. Many Advantage plans cover out-of-network care at higher cost sharing with a separate, higher combined maximum, and HMO-style plans may not cover it at all outside emergencies. The maximum entered here is the in-network one.
- Drug costs are excluded from the Advantage out-of-pocket maximum. They are capped separately under Part D on both routes. Do not include prescription copays in the expected-copays field or you will overstate the Advantage plan's exposure.
- Plans change every year. Advantage benefits, networks, formularies and maximums are set annually, and a plan that was ideal this year may not be next year. The Medigap route's terms are fixed by the standardised plan letter and do not change.
- It compares one Medigap letter. Plan G leaves you the Part B deductible; Plan N adds small copays for office and emergency visits in exchange for a lower premium; Plan F covers everything but is closed to anyone newly eligible for Medicare on or after 1 January 2020. Set the deductible field to match the plan you are actually quoting.
- It assumes you keep the same route all year. Switching mid-year is possible in limited windows, and the Medigap side of any switch may require underwriting.
The one-way door is the part to think hardest about
You may move from a Medigap policy to a Medicare Advantage plan at essentially any annual enrollment opportunity, with no health questions. Moving the other way is different: outside your six-month Medigap open enrollment window and a short list of guaranteed-issue situations, insurers in most states may ask health questions and decline you. That makes the choice at 65 asymmetric in a way price alone does not capture. If you are genuinely undecided, the option that keeps both doors open is to start with a supplement, because the door to Advantage stays open permanently and the door back to a supplement may not.
Fitting this into the whole retirement health budget
Whichever route you choose, the Part B premium is payable, an income surcharge may be added to it, and a late enrollment penalty may be added on top of that. None of those three depend on the Medigap-versus-Advantage decision, which is why the calculator puts the Part B premium in both totals and then largely ignores it — it cancels out of the difference.
What does not cancel out is the shape of the risk. A supplement converts an uncertain annual cost into a known one and charges a premium for the conversion. An Advantage plan keeps the uncertainty and pays you to hold it. Which suits you depends less on your health today than on your capacity to absorb a bad year without disrupting the rest of the plan — and on how many bad years in a row you could absorb, since each one resets.
Two other pages complete the picture. The Medicare late enrollment penalty calculator quantifies the permanent premium increase that follows a delayed enrollment, and the retirement healthcare cost calculator assembles premiums, cost sharing and drug costs into a multi-year projection. Neither Medicare route pays for extended custodial care, which remains the largest uninsured liability of later life — the long-term care cost projection calculator sizes it.