You've just enrolled in Medicare Parts A and B, and you're feeling good about finally having coverage. Then you learn about the gaps: the 20% coinsurance on Part B services, the Part A hospital deductible, the lack of an out-of-pocket maximum. Suddenly, Medicare doesn't feel quite as comprehensive as you'd hoped.
This is where Medigap comes in. Also known as Medicare Supplement Insurance, Medigap policies are designed to cover the costs that Original Medicare doesn't. But with 10 standardized plan options, choosing the right one can feel overwhelming.
Here's what matters: the Medigap plan you choose will significantly impact both your monthly budget and your financial exposure to healthcare costs throughout retirement. The key is finding the balance between premium costs and coverage that fits your health, finances, and peace of mind.
What Medigap Does (and Doesn't) Cover
Medigap policies are sold by private insurance companies but are standardized by the federal government. This means a Plan G from one insurer covers the same things as Plan G from another insurer. The only differences are price and customer service.
What Medigap covers: Depending on the plan, Medigap can cover Medicare Part A deductibles, Part B deductibles, Part B coinsurance (typically 20%), skilled nursing facility coinsurance, Part B excess charges, and foreign travel emergency care.
What Medigap doesn't cover: Medigap does not cover prescription drugs (you need Part D for that), long-term care, vision, dental, hearing aids, or private-duty nursing. It also won't cover services that Original Medicare doesn't cover.
The key advantage: With comprehensive Medigap coverage, you can see any doctor who accepts Medicare (no networks), and your out-of-pocket costs for Medicare-covered services become highly predictable.
The Medigap Plans: Understanding Your Options
There are 10 standardized Medigap plans: A, B, C, D, F, G, K, L, M, and N. Plans C and F are no longer available to people who became eligible for Medicare after January 1, 2020, leaving Plan G as the most comprehensive option for new Medicare beneficiaries.
Plan G: The Most Comprehensive Choice
Plan G covers nearly everything except the Medicare Part B annual deductible ($240 in 2025). After you meet that deductible, Plan G covers:
- Part A hospital deductible ($1,632 per benefit period)
- Part A hospice care coinsurance
- Part B coinsurance or copayment (typically 20% of costs)
- First three pints of blood
- Part A skilled nursing facility coinsurance
- Part B excess charges (if a doctor charges more than the Medicare-approved amount)
- Foreign travel emergency care (up to plan limits)
Who should consider Plan G: If you want comprehensive coverage, minimal out-of-pocket costs, and the freedom to see any doctor without worrying about large medical bills, Plan G is typically the best value.
Typical premium range: $150-$300 per month depending on your location, age, and insurer.
Plan N: Lower Premiums, Small Copays
Plan N offers similar coverage to Plan G but with a few key differences:
- You pay the Part B deductible ($240 annually)
- You pay up to $20 copay for doctor visits
- You pay up to $50 copay for emergency room visits (waived if admitted)
- You don't have coverage for Part B excess charges
Who should consider Plan N: If you're comfortable with small, predictable copays in exchange for lower monthly premiums (typically $20-$50 less than Plan G), and you're willing to accept the risk of Part B excess charges, Plan N can provide excellent value.
The trade-off: Plan N works well if you don't visit doctors frequently. If you see specialists regularly, those $20 copays can add up, potentially negating the premium savings.
High Deductible Plan G
This is a version of Plan G with a high deductible ($2,800 in 2025). You pay all Medicare-covered costs up to the deductible, then the plan covers everything Plan G covers.
Who should consider High Deductible Plan G: If you're healthy, rarely use medical services, and want catastrophic protection with very low monthly premiums (typically $40-$80 per month), this plan offers excellent value.
The risk: In a year with significant medical needs, you'll pay the full $2,800 deductible plus your premiums. This works best for those who can comfortably afford the deductible if needed.
Plans K and L: Partial Coverage Options
These plans cover a percentage of costs rather than full coverage. Plan K covers 50% of most costs; Plan L covers 75%. Both have out-of-pocket maximums ($7,060 for Plan K, $3,530 for Plan L in 2025).
Who should consider Plans K and L: These plans have low premiums but require significant cost-sharing. They're less common because most people prefer the predictability of Plans G or N.
Plans A, B, D, and M: Less Common Options
These plans offer various combinations of coverage but are generally less popular because they either provide less comprehensive coverage than Plan G or only marginally lower premiums that don't justify the coverage gaps.
Medigap vs. Medicare Advantage: Understanding the Trade-Off
The fundamental choice for Medicare beneficiaries is between Original Medicare + Medigap or Medicare Advantage. Here's how they differ:
Medigap Advantages
- Provider freedom: See any doctor who accepts Medicare, anywhere in the country, no referrals needed
- Predictable costs: Comprehensive coverage means minimal out-of-pocket expenses
- No network restrictions: No concern about in-network vs. out-of-network providers
- Stable coverage: Your coverage doesn't change annually
Medigap Disadvantages
- Higher monthly premiums: Medigap premiums plus Part B and Part D premiums can total $300-$500+ per month
- No extra benefits: Medigap doesn't include vision, dental, or hearing coverage
- Medical underwriting outside enrollment windows: Miss your enrollment period and you may be denied or charged more due to pre-existing conditions
When Medigap Makes More Sense
Medigap typically works better for those who:
- Have complex health conditions requiring multiple specialists
- Travel frequently or split time between multiple states
- Want maximum flexibility in choosing healthcare providers
- Prefer predictable costs over variable copays
- Value peace of mind from comprehensive coverage
The Critical Enrollment Window
Medigap Open Enrollment Period: You have a six-month window starting the month you're 65 or older and enrolled in Medicare Part B. During this period, insurance companies must sell you any Medigap policy they offer, regardless of your health status, and they can't charge you more due to pre-existing conditions.
Why timing matters: Outside this window, you can be denied coverage or charged significantly higher premiums based on your health. If you start with Medicare Advantage and later want to switch to Medigap, you'll face medical underwriting in most states.
Guaranteed issue rights: Certain situations (like losing employer coverage or moving out of a Medicare Advantage plan's service area) give you guaranteed issue rights to buy Medigap without medical underwriting, but these are specific and limited.
How to Choose the Right Medigap Plan
Step 1: Assess Your Healthcare Needs
- Do you see specialists frequently?
- Do you have chronic conditions requiring regular care?
- How important is provider flexibility to you?
- Do you travel frequently or split time between states?
Step 2: Evaluate Your Budget
- Can you comfortably afford $200-$300+ per month in premiums?
- Would you rather pay higher premiums for predictability or lower premiums with some cost-sharing?
- Do you have emergency savings to cover a high deductible if choosing High Deductible Plan G?
Step 3: Compare Premiums from Multiple Insurers
Medigap plans are standardized, so Plan G from Company A covers the same things as Plan G from Company B. The only differences are price and customer service.
Shopping strategy: Get quotes from at least three insurers. Premium differences for identical coverage can be substantial, sometimes $50-$100 per month.
Pricing methods: Insurers use three pricing methods:
- Community-rated: Everyone pays the same premium regardless of age
- Issue-age-rated: Premium based on your age when you buy, doesn't increase due to age
- Attained-age-rated: Premium increases as you get older (most common)
Understanding the pricing method helps predict future premium increases.
Step 4: Consider the Plan G vs. Plan N Decision
For most people, the choice comes down to Plan G or Plan N.
Choose Plan G if:
- You want maximum coverage with minimal hassle
- You see doctors frequently and don't want to track copays
- You want protection against Part B excess charges
- Peace of mind from comprehensive coverage is worth higher premiums
Choose Plan N if:
- You're comfortable with small copays per visit
- You don't visit doctors frequently
- You want to save $20-$50 per month in premiums
- Most doctors in your area accept Medicare assignment (no excess charges)
Common Mistakes to Avoid
Choosing based on premium alone: The cheapest plan today might have the steepest premium increases tomorrow. Research the insurer's rate history and financial strength.
Waiting to enroll: If you delay enrolling in Medigap past your Open Enrollment Period, you risk being denied or facing much higher premiums.
Not comparing annually: While you can't switch Medigap plans without medical underwriting (in most states), you can switch to the same plan with a different insurer. Shopping annually can identify lower-cost options for identical coverage.
Overlooking customer service: When you have a serious health issue, responsive customer service matters. Research insurers' reputations and complaint ratios with your state insurance department.
Next Steps
Choosing a Medigap plan is one of the most important Medicare decisions you'll make. The right plan provides financial protection and confidence throughout retirement, while the wrong plan can mean unexpected costs or coverage limitations.
If you're approaching your Medigap enrollment window and want help evaluating your options, a comprehensive analysis of your health needs, budget, and provider preferences can identify the plan that best fits your situation and potentially save thousands in unnecessary premiums over your retirement.
This content is for educational purposes only and should not be construed as specific insurance or legal advice. Medigap coverage decisions should be made in consultation with licensed insurance professionals who understand your individual circumstances. Medigap plans and costs vary by state and insurer.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a registered investment advisor and separate entity from LPL Financial.
Chesapeake Financial Planners | 2402 Scotlon Ct, Forest Hill, MD 21050 | (410) 652-7868 | www.chesapeakefp.com
