Medigap is an unfamiliar and confusing topic for many of us who are approaching retirement age—but the Medigap decisions we make now could dramatically affect our health-care costs for the rest of our lives.

What is Medigap exactly? Medicare does not cover all health-care costs. Enrollees face co-pays, co-insurance, deductibles and a host of other out-of-pocket costs. Enrolling in a Medigap plan, in addition to Original Medicare, can fill many of those coverage gaps, greatly reducing out-of-pocket health-care costs in exchange for a monthly premium.

Unlike Medicare Advantage plans, which replace Original Medicare and have HMO-like provider networks, Medigap plans are used in conjunction with Original Medicare—in fact, they’re sometimes called Medicare Supplement plans. You cannot enroll in both a Medigap plan and a Medicare Advantage plan.

Problem: There are a number of Medigap policies available, and the rules and benefits for each can cause confusion. Here’s what you need to know before you make a choice…


Don’t be fooled by the term “annual enrollment period.” This creates the impression that you will have plenty of chances to make changes to your Medigap plan choices throughout retirement.

Reality: You’ll probably have only one window when you’re guaranteed to be able to enroll in whichever Medigap plan you want—the six-month Medigap open-enrollment period that starts on the first day of the first month in which you turn age 65 or older and sign up for Medicare Part B.

It is true that there may be other opportunities to apply for Medigap plans after this window closes, but then your application will be subject to medical underwriting, meaning that you could be rejected or charged higher premiums due to a preexisting health condition. Exceptions: You might have an opportunity to enroll in a Medigap plan after your initial enrollment period without medical underwriting if you have health coverage through an employer when you first sign up for Medicare Part B but that employer coverage ends…if the Medigap or Medicare Advantage plan you selected during your original open-enrollment period is no longer available in your area…or if you move to a different area. If you live in Connecticut, Massachusetts or New York and are Medicare-eligible, you can obtain Medigap coverage at any time without medical underwriting. Several other states, including California, Maine and Oregon, also offer annual opportunities to enroll in Medigap plans without medical underwriting.


If you choose Medigap, you’ll probably choose Plan G or N. There’s an overwhelming alphabet soup of Medigap plans available—in most states, there are Plans A, B, D, G, K, L, M and N…and that doesn’t even include Plans C and F, which are available only to people who became Medicare eligible on or before January 1, 2020.

Reality: If you don’t want to evaluate every one of those plans, you can focus on just two of them. Virtually everyone who decides to sign up for Medigap opts for either Plan G or Plan N.

Plan G covers the most Medicare out-of-pocket costs among the Medigap plans still available. If you want the most comprehensive coverage and you’re willing to pay a potentially significant premium to obtain it, Plan G is likely for you. Plan G premiums average around $120 to $180/month.

Plan N provides much of the coverage of Plan G but at a lower cost. Plan N premiums can be as low as $80 to $100/month.

Main difference between Plans G and N: Plan N has co-pays for certain services—up to $20 for some office ­visits and up to $50 for some emergency room visits—and it doesn’t cover the “excess charges” imposed by a small percentage of health-care providers. Plan G has no co-pays. Example: A 65-year-old nonsmoking woman in Texas might pay around $100 per month for Plan G…or around $75 per month for Plan N. Note that Medigap premiums can vary dramatically from state to state, even for the same plan.


Choosing a Medigap plan is just step one…step two is deciding whom to buy it from. There’s a good chance that multiple insurance companies will offer the Medigap plan that you wish to purchase in your area. The coverage these plans provide will not vary—a Plan G offered by Aetna will cover the same out-of-pocket costs as one issued by Mutual of Omaha, for example.

What will vary: The premiums charged for the plan and the rate at which those premiums might increase in future years. Simply signing up for the plan you want from the company that currently charges the lowest premiums in your area is a viable strategy…but if several companies offer roughly similar prices, consider asking an insurance broker familiar with Medigap plans about these companies’ track records for imposing price increases.


You don’t have to sign up for the same Medigap plan as your spouse—but you might save some money if you do. Medicare and Medigap policies cover individuals, not couples or families—one spouse’s premiums, deductibles and out-of-pocket maximums are completely separate from those of the other spouse. There’s usually no need for one spouse to consider the other’s health-care needs when choosing a Medigap plan.

But there is one potential exception—companies that issue Medigap plans sometimes offer household discounts of as much as 10% to 15% when two or more people living at the same address sign up. That can be a significant incentive for a married couple—or any other Medicare-eligible ­individuals who share an address—to obtain Medigap plans from the same company.


Some Medigap plans offer medical coverage outside the US—but there are big gaps in the protection they provide. Unlike Original Medicare, Medigap Plans C, D, F, G, M and N do provide coverage when abroad—but that foreign coverage has substantial limitations. It covers only medical emergencies, not routine care…has a 20% co-pay and a $250 annual deductible…is available only if the care begins during the first 60 days outside the US… requires patients to pay foreign medical bills out-of-pocket, then apply for reimbursement…and is capped at $50,000 in total lifetime coverage. In short, it’s better than nothing but still could leave world travelers with hefty out-of-pocket costs. Better: Consider obtaining travel insurance for added protection before international trips.


Your Medigap premiums will increase over time. Typically premiums climb by 3% to 8% annually, but there are examples of Medigap plans increasing rates by 10% or even 12% per year. If you end up in a Medigap plan that costs more than you think it’s worth, you have two options…

Switch Medigap plans—in most states, that would require going through the medical underwriting process.

Switch from Medigap to a Medicare Advantage plan—you can enroll in Medicare Advantage without medical underwriting during Medicare’s annual enrollment period from October 15 to December 7 of each year.


Your current health needs shouldn’t be your top concern when you pick a Medigap plan. When you select a health insurance plan prior to Medicare eligibility, it generally makes sense to choose the option best-suited to your current health-care needs—but that’s because you’re locking yourself into this coverage for only one year.

When you select a Medigap plan, there’s a good chance that you’ll have that plan for the rest of your life, so ask yourself, Do I want to pay significant monthly premiums throughout retirement by enrolling in a comprehensive Medigap plan…or avoid those premiums but face the risk of steep out-of-pocket health costs down the road?

Exception: Making Medigap decisions based on your current health-care needs does make sense if you live in a state that allows Medigap plan changes each year without medical underwriting.


You can’t use Health Savings Account (HSA) dollars to pay Medigap premiums. This is a common source of confusion, because you can use HSA dollars to pay Medicare premiums. People who spend HSA dollars on non-qualifying expenses typically must pay income taxes on that money plus a 20% penalty, but the penalty does not apply after age 65. Related: Once you’re enrolled in Medicare Part A and/or Part B, you are no longer eligible to contribute pretax dollars to an HSA. You can, however, continue to spend any money that you had previously contributed to an HSA.

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