Navigating health care choices at age 65 means understanding how to manage costs. One concern if you’re considering original Medicare (Part A and Part B) is everything it doesn’t cover. This is the precise role of a Medicare Supplement Insurance plan, commonly known as Medigap. This article will help you better understand the benefits and limitations of Medigap plans, as well as how they compare to other coverage options so you can determine if having a Medicare supplement plan is right for you.
About Medigap (Medicare supplement plans)
Original Medicare usually covers about 80% of your approved medical expenses. The remaining 20% is your responsibility and includes copayments, coinsurance, and deductibles. A Medigap policy, sold by private insurance companies, is designed to fill this financial gap by paying some or all of these out-of-pocket costs.
Medigap is secondary coverage. It works alongside (but does not replace) original Medicare. After a provider bills Medicare, the Medigap policy automatically covers all or part of the remaining balance for the patient’s share of Medicare-approved services. How much of that remaining balance it covers depends on the plan you choose.
All Medigap plans are standardized by the government and identified by letters (such as A, B, G, N, etc.). This standardization is important: A Plan G policy from one insurer offers the same core benefits as a Plan G from any other insurer, although the monthly premiums may differ.
Benefits of having a Medigap plan
For many people, a Medicare supplement plan provides critical benefits, including financial security and increased access to health care. Here are some of the main benefits of having a Medigap plan:
- Predictable out-of-pocket costs: This is Medigap’s most significant advantage. Once you’ve paid your monthly premium and the small annual Medicare Part B deductible that most people pay, your out-of-pocket costs for Medicare-approved services can be reduced or eliminated with specific Medigap offerings. This option provides a straightforward, predictable monthly cost and alleviates the worry of unexpected, large medical bills due to serious illness or accidents.
- Unrestricted provider choice: Medigap plans provide maximum flexibility. Since the policy follows original Medicare, you can see any doctor, specialist, or hospital across the country that accepts Medicare. There are no restrictive local networks (like those for Medicare Advantage plans), no provider directories to check, and usually no need for referrals to see a specialist. This freedom is invaluable for people who travel often or split their time between states.
- Coverage for foreign travel: Some popular Medigap plans, including Plans F, G, and N, provide coverage for emergency medical care if needed while traveling outside of the United States. Although limited, this is a crucial benefit that original Medicare does not offer.
Limitations of Medicare supplement plans
It’s also important to recognize Medigap’s limitations:
- Higher monthly premiums: The comprehensive coverage and flexibility of Medigap lead to higher monthly premiums compared to most Medicare Advantage plans, many of which have low or $0 premiums. This higher fixed cost should be considered in your long-term budget.
- No prescription drug coverage: Medigap policies don’t cover prescription drugs. If you choose this option, you should buy a stand-alone Medicare Part D prescription drug plan to cover medication costs (and ultimately avoid paying potential late-enrollment penalties).
- No routine extra benefits: Routine dental, vision, and hearing care are not included in Medigap. These benefits are often bundled into Medicare Advantage plans. To get this care through Medigap, you would need to buy separate, stand-alone coverage, which would increase your total monthly cost.
How Medicare Advantage differs and why some people choose it instead
When making your decision, remember you cannot have both Medigap and a Medicare Advantage (MA) plan. MA plans are private insurance policies that replace your original Medicare coverage, bundling Part A, Part B, and often Part D (prescription drugs) into a single plan.
| Feature | Original Medicare + Medigap | Medicare Advantage (Part C) |
|---|---|---|
| Structure | Two separate policies (original Medicare + Medigap) | Private plan replaces original Medicare (bundles services) |
| Monthly cost | Higher fixed premiums (Medigap + Part B + Part D) | Often, a low or $0 plan premium (you still pay the Part B premium) |
| Out-of-pocket costs | Very low, predictable costs (minimal or no copays) | Lower premiums, but you pay copays/coinsurance for care |
| Network | National access to any provider accepting Medicare | Local network of doctors/hospitals (like HMO/PPO) |
| Prescription drugs | Requires a separate Part D plan | Usually included in the plan |
| Extra benefits | Must buy separate plans for dental/vision/hearing or pay out of pocket | Often includes bundled dental, vision, hearing, and fitness programs |
| Guaranteed renewability | Plans are renewable for life as long as you pay your premiums | Plans change annually and must be renewed each year |
The value proposition
Imagine two individuals, both turning 65 and enrolled in Medicare Part B.
Alice is a healthy retiree who splits her time between her home in Florida and her children’s homes in Colorado. She anticipates few doctor visits and wants the freedom to see specialists nationwide without referrals. She’s a frequent international traveler and wants the peace of mind that comes with knowing her out-of-pocket costs will be near zero if she gets seriously ill. For Alice, the higher monthly premium of a Medigap plan is a worthwhile investment for maximum freedom and predictability.
Robert, conversely, is on a fixed income and rarely leaves his state. He is generally healthy but needs routine care for his vision and hearing. He is budget-conscious and is willing to pay copayments when he sees a doctor in exchange for a low or $0 monthly premium. He is comfortable using the network of hospitals and doctors near his home. For Robert, a Medicare Advantage plan offers the right balance of bundled benefits and low fixed costs.
The choice is ultimately personal, driven by your expected health needs, budget, and preference for flexibility:
- If you prioritize maximum budget certainty, travel often nationally or abroad, want access to all providers without needing referrals, or expect significant medical usage, Medigap might be the right choice.
- If you prioritize a low monthly premium despite potentially higher out-of-pocket costs when using services, want to have dental and vision benefits, and are comfortable with a local network of providers, Medicare Advantage may be better.
Medicare supplement plan enrollment timing and why it matters
Timing is an important factor when securing a Medigap plan. Your Medigap open enrollment period (OEP) is a one-time, six-month window that starts on the first day of the month in which you turn 65 or older and are enrolled in Medicare Part B.
You have the right to purchase any Medicare supplement plan available in your state during your guaranteed-issue OEP. Insurance companies can’t force medical underwriting and use it to deny coverage or charge you higher premiums due to preexisting health conditions.
If you miss this six-month window, you might need to go through medical underwriting to get a policy. This means an insurance company can ask detailed health questions, review your medical history, and potentially deny coverage or charge a much higher premium.
Getting a policy during your first OEP is the best way to secure your long-term access to comprehensive coverage.
There are limited situations, like losing an employer-sponsored plan, that let you enroll in a Medicare supplement plan outside your OEP without medical underwriting. Still, these are rare and must be used promptly.
Questions to help you decide if Medigap fits your needs
Use this checklist to evaluate your personal factors and help guide your decision-making.
| Question to consider | Why this question matters |
|---|---|
| How important is having a fixed, predictable monthly budget? | Predictability: Medigap’s higher fixed premium offers the lowest chance of unexpected, high bills compared to MA plans, which have copays that accumulate over time. |
| How often do you travel? | Access: Medigap provides nationwide coverage with any provider that accepts Medicare, whereas MA plans usually depend on a more limited local network. |
| What is your expected health care usage in the next few years? | Cost tolerance: If you anticipate frequent doctor visits or potential major procedures, Medigap’s minimal copayments could save you more annually than the savings you’d get from a low MA premium. |
| Can you afford the combined monthly cost of Medigap and a separate Part D plan? | Total budget: Make sure the total cost of all three premiums (Part B, Medigap, and Part D) is financially manageable before choosing the Medigap option. |
By considering this information alongside your personal factors, including your budget, health status, and preference for provider flexibility, you can make a confident decision about the best path for your retirement health care needs.
