MML #058: Medicare Advantage vs. Medigap: The One Decision You Can't Easily Undo

Tom made what seemed like a smart financial decision when he enrolled in Medicare at 65. He chose a Medicare Advantage plan with a $0 monthly premium. Why pay $250/month for a Medigap policy when he could get coverage for free?

Three years later, Tom developed a heart condition that required seeing specialists at the Mayo Clinic. His Medicare Advantage plan didn't cover out-of-network care. He wanted to switch to Original Medicare with a Medigap supplement for the flexibility.

That's when he discovered that since he'd missed his initial Medigap enrollment window, insurance companies could now use medical underwriting. With his heart condition, he was either denied coverage entirely or quoted premiums exceeding $500 monthly—double what he would have paid at 65.

Tom was stuck.

But Wait—Why is a Financial Advisor Writing About Medicare?

You might wonder why a financial planner is diving into Medicare decisions. The reality is that insurance planning is one of the core competency areas established by the CFP Board, yet too many advisors skip right over it.

For retiring lawyers, Medicare is a major financial and lifestyle decision that directly impacts their retirement experience and budget. Getting it wrong can cost you thousands annually or lock you into coverage that doesn't serve your needs as we saw above in Tom’s case.

At First Light Wealth, we take a comprehensive approach to retirement planning. That means addressing the full picture—investments, taxes, Social Security, and yes, healthcare coverage. These decisions don't exist in isolation. Your Medicare choice affects your tax planning, your retirement budget, and your flexibility in how you spend your retirement years.

So let’s dive in.

First we’ll cover the Medicare decision that matters most for your long-term healthcare strategy, and there's no universal right answer. But the timing of when you make it can be critical.

The Two Paths

When you enroll in Medicare, you're choosing between two fundamentally different approaches:

Path 1: Medicare Advantage (Part C) Private insurance companies offer plans that replace Original Medicare entirely. You get Parts A (hospital), B (medical), and typically D (prescription drugs) bundled together through one insurer, delivered like an HMO or PPO.

Path 2: Original Medicare + Medigap You keep traditional Medicare Parts A and B, then buy a supplemental Medigap policy from a private insurer to fill coverage gaps, plus a separate Part D prescription plan.

Let me break down what each path actually looks like in practice.

Medicare Advantage: The Managed Care Approach

The appeal is obvious:

• Lower monthly premiums (many plans charge $0)
• Built-in maximum out-of-pocket limits
• Often includes dental, vision, and hearing benefits
• One card, one plan, simpler administration
• Prescription coverage usually included

The trade-offs:

• Network restrictions—you're limited to specific doctors and hospitals
• Prior authorization requirements for certain services
• Plans can change benefits and networks annually
• Less flexibility if you travel or maintain homes in multiple locations
• Copays for each service add up

Medicare Advantage works well for lawyers who are comfortable with managed care, stay primarily in one geographic area, want predictable lower monthly costs, and are generally healthy without frequent specialist needs.

Original Medicare + Medigap: The Flexibility Approach

The benefits:

• Complete freedom to see any doctor who accepts Medicare (which is most of them)
• No referrals needed for specialists
• No network restrictions—perfect for travel or multiple residences
• Coverage doesn't change annually
• More predictable costs once you know your premiums

The trade-offs:

• Higher monthly premiums (typically $150-$350+ depending on location and plan)
• Three separate pieces to coordinate (Medicare, Medigap, Part D)
• No built-in out-of-pocket maximum (though Medigap covers most costs)

This approach fits lawyers who travel frequently, want maximum provider flexibility, have complex health conditions requiring multiple specialists, or simply prefer comprehensive coverage and can afford higher monthly premiums for that peace of mind.

The Critical Window You Cannot Miss

Here's what Tom didn't understand, and what most people don't realize until it's too late:

You have a 6-month Medigap open enrollment period starting the first month you're both 65 or older AND enrolled in Medicare Part B.

During this window, insurance companies cannot:

• Deny you coverage based on health conditions
• Charge you more due to pre-existing conditions
• Make you wait for coverage of pre-existing conditions

If you miss this window, insurers in most states can use medical underwriting. If you've developed health issues—and many people do between 65 and 70—you might face coverage denial, significantly higher premiums, exclusions for pre-existing conditions, or waiting periods.

This is why the "I'll start with Medicare Advantage and switch to Medigap later if I don't like it" strategy is so dangerous. You might not be able to get Medigap coverage later. Or if you can, you'll pay substantially more for it.

The reverse works fine. You can always switch from Medigap to Medicare Advantage later without underwriting. Insurance companies can't deny you Medicare Advantage coverage based on health status.

My Recommendation

If you're uncertain which path is right for you, I strongly suggest starting with Medigap during your guaranteed issue period.

Yes, you'll pay higher premiums initially. But you're preserving your options. If you decide later that Medicare Advantage makes more sense for your situation, you can switch during any Annual Enrollment Period without medical underwriting.

Going the other direction—from Medicare Advantage to Medigap—gets complicated and potentially expensive or impossible.

The most popular Medigap plan is Plan G, which covers nearly everything except the Part B deductible ($283 in 2026). Plan N is worth considering if you're comfortable with small copays in exchange for lower premiums.

The Bottom Line

This isn't a decision you should make based solely on premium cost. Consider your health trajectory, travel habits, provider preferences, and risk tolerance.

But whatever you choose, make the decision during your initial enrollment window at 65. That's when you have the most flexibility and the lowest cost options available.

Don't be like Tom, locked into a plan that no longer serves him because he missed a window he didn't know existed.

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