2026 Medicare Outlook: More Disruption

"On the supplement side, we're seeing steady growth as more people look for the predictability and flexibility that Medigap plans offer," Sherman said.

What it means: Medicare Advantage plans also have their defenders, and they may make a comeback in 2026.

But anyone who helps clients plan for retirement should be able to talk about why a client might prefer a Medigap policy over a Medicare Advantage plan, or vice versa.

Medicare plan basics: The Medicare Advantage program was born in the early 2000s. It gives health insurers a chance to sell federally regulated managed care plans that fill in many of the gaps in "Original Medicare" coverage.

Medicare Advantage coverage looks to the enrollees like a comprehensive alternative to Original Medicare coverage.

Medicare Advantage plans hold down claim costs by encouraging enrollees to use in-network providers and by using prior authorization programs and other efforts to manage use of care.

Consumers can sign up for Medicare Advantage plans in any year during an annual enrollment period that runs from Oct. 15 through Dec. 7.

Modern Medicare supplement insurance policies, which are also known as Medigap policies, are based on a federal regulatory framework that was created in 1990. States regulate Medigap product sales and can adjust the marketing and underwriting rules.

Medigap issuers do not impose any more restrictions on use of care or providers than the Original Medicare program itself imposes. The issuers simply fill most of the gaps in Original Medicare coverage.

Traditionally, premiums for Medigap coverage have been higher than the enrollees' share of Medicare Advantage plan premiums. In many states, consumers have an easy time signing up for Medigap coverage without going through medical underwriting only during a six-month period around the day they turn 65.

Medicare Advantage plans cover about 36 million of Medicare's 69 million enrollees.

Medigap policies insure only about 13.5 million people, according to Mark Farrah Associates.

In the past five years, low out-of-pocket premiums and access to annual enrollment periods have helped Medicare Advantage plan issuers increase enrollment rapidly.

The number of users of Medigap policies has been holding steady.

Medicare Advantage vs. Medigap: In 2025, some doctors and hospitals rebelled against aggressive Medicare Advantage plan care management strategies and stopped taking new Medicare Advantage plan patients.

Sherman said clients over 65 should think about plan providers' approach to care management when deciding between Medicare Advantage plans and Medigap policies in 2026.

Medigap policies will be the best option for clients who want to have the ability to see any doctor who takes Medicare, Sherman said.