Evaluating Supplemental Medicare Options and Costs

Overview

Supplemental Medicare plans—commonly called Medigap—are sold by private insurers to cover some of the out‑of‑pocket costs Original Medicare doesn’t pay: deductibles, coinsurance, and copayments. They are designed to simplify budgeting for medical care by shifting variable costs into predictable monthly premiums.

Medigap plans are standardized in most states (plans labeled A through N), so the benefits of each lettered plan are the same across insurers within a state. Prices, however, differ by company and by how the insurer sets rates.

For official guidance on plan comparisons and enrollment windows, see Medicare.gov and CMS resources (Medicare.gov; Centers for Medicare & Medicaid Services) — these are the primary authorities for rules and protections.

In my practice I routinely see retirees underprice the value of peace‑of‑mind that a Medigap plan can provide. A modest premium increase can eliminate large, unexpected bills during a hospitalization or a series of specialist visits.

How Medigap plans actually work

• You must be enrolled in Medicare Part A and Part B to buy a Medigap policy.
• Medigap supplements Original Medicare only; it does not work with Medicare Advantage (Part C). If you have a Medicare Advantage plan, you generally cannot use a Medigap policy to cover cost sharing in that plan.
• Medigap plans pay after Medicare pays its share. For example, if Medicare approves a hospital charge, the Medigap plan may cover Medicare’s typical deductible or coinsurance, depending on the lettered plan.
• Medigap does not typically cover prescription drugs — if you need drug coverage, you’ll usually add Medicare Part D (a separate plan) or choose a Medicare Advantage plan that includes drug coverage.

Note: Plans are standardized as Plan A through Plan N, but some letters (Plans C and F) are not available to people who became eligible for Medicare on or after January 1, 2020 (CMS rule). Plan F remains available only to those who were eligible for Medicare before that date (CMS).

Cost components to evaluate

When estimating true cost, look beyond the monthly Medigap premium:

• Monthly Medigap premium: Varies widely by insurer and rating method.
• Medicare Part B premium: Paid to Medicare separately and not replaced by Medigap.
• Prescription drug plan premium (Part D) if you need drug coverage — many Medigap policies do not include drug benefits.
• Any remaining copays or cost‑sharing the chosen Medigap plan doesn’t cover (for example, Plan N has copayments for some office or ER visits).

Pricing methods insurers use (state dependent):

• Community‑rated: Everyone pays the same regardless of age.
• Issue‑age rated: Premium based on your age when you buy the policy — it won’t rise because you age.
• Attained‑age rated: Premium increases as you get older.

These rating methods matter for retirees comparing long‑term costs. Issue‑age can be cheaper if bought early; attained‑age often looks low at first but grows with age.

Enrollment windows and consumer protections

• Medigap Open Enrollment Period: A guaranteed issue window lasting six months that begins the month you turn 65 and are enrolled in Part B. During this window, insurers cannot use medical underwriting or charge more due to preexisting conditions (Medicare.gov).
• Guaranteed issue rights: Outside the six‑month window, you may have guaranteed issue rights in specific situations (e.g., losing employer coverage or certain state protections). Check Medicare.gov and your state insurance department for triggers that apply to you.
• Underwriting after open enrollment: Insurers can require medical underwriting, meaning they can decline coverage or charge higher premiums based on health conditions.

Always document dates for Part B enrollment and communications with insurers — these records matter if you need guaranteed issue protections.

Comparing Medigap to Medicare Advantage (Part C)

• Medigap: Works with Original Medicare, generally offers broader provider access (any provider accepting Medicare) and predictable cost sharing via premiums. No networks and usually fewer prior‑authorization surprises.
• Medicare Advantage: Bundles Part A, B, and sometimes D; often lower premiums but with provider networks, prior authorizations, and variable out‑of‑pocket maxima.

Choosing between Medigap + Part D and Medicare Advantage depends on health needs, preferred doctors, and willingness to trade network flexibility for lower premiums. See our primer on Medicare basics for retirees for broader context: Medicare Basics: What Retirees Need to Know.

What Medigap typically does not cover

• Prescription drugs (usually — verify specific plan details).
• Long‑term custodial care (nursing home custodial care), vision, dental, hearing aids, or routine foot care.
• Care received outside the U.S. — some plans offer limited foreign travel emergency coverage; check plan language.

State variation and market considerations

Medigap rules and available plans can vary by state (for example, Massachusetts, Minnesota, and Wisconsin have different standardization). Premium ranges differ across insurers; shopping multiple companies can save hundreds annually. Use the Medigap comparison tools on Medicare.gov and consult your state insurance department for complaint histories and rate increase patterns (Medicare.gov; CMS).

Practical decision checklist

1. Are you enrolled in Part A and Part B? If not, get Part B enrollment timing right to preserve open enrollment rights. (Medicare.gov)
2. Do you want unrestricted access to Medicare providers or a lower‑cost network option? Medigap favors access; Medicare Advantage may save on premiums.
3. Can you afford the monthly Medigap premium plus Part B and possible Part D premiums? Calculate total annual costs, not just monthly premiums.
4. What pricing method will your insurer use (community, issue, attained)? Ask for historical rate increase information.
5. Do you qualify for any guaranteed issue rights if you miss initial enrollment? Keep written proof of qualifying events.
6. Would a high‑benefit plan (Plan G) or a lower‑cost plan with copays (Plan N) suit your expected utilization?

Common mistakes to avoid

• Buying a Medigap policy before enrolling in Part B or missing the six‑month open enrollment window without understanding underwriting consequences.
• Focusing only on monthly premiums and ignoring likely out‑of‑pocket costs over a year.
• Assuming Medigap covers prescriptions — most do not, so factor in a Part D plan if needed.
• Neglecting to compare pricing methods and historical rate increases between insurers.

Switching or dropping Medigap

You can apply for a different Medigap plan, but outside guaranteed issue periods insurers often require medical underwriting. If you’re considering moving to Medicare Advantage, weigh the risk that returning to Medigap later may be expensive or denied without guaranteed issue rights.

Real‑world examples (illustrative, anonymized)

• Example A: A 67‑year‑old with regular specialist needs chose Plan G for predictable hospital and Part B excess coverage; the higher premium cost was offset by lower unexpected bills during a year with two surgeries.
• Example B: A relatively healthy 66‑year‑old who values lower premiums and can tolerate occasional copays chose Plan N; this reduced annual premium expense but left modest copays for office and ER visits.

Tips to reduce Medigap costs

• Compare at least three insurers in your area and ask for quotes under the same rating method.
• Consider buying earlier if the insurer uses issue‑age rating.
• If you have employer coverage when turning 65, understand how employer retiree coverage interacts with Medigap guaranteed issue rights before dropping the employer plan.
• Look for community‑rated plans if you expect to age into higher premiums with attained‑age plans.

Where to get authoritative help

• Medicare.gov — Medigap basics, plan comparison tool, and enrollment rules (Medicare.gov).
• CMS — official rules on standardization and plan availability (CMS).
• State insurance department — for rate histories, consumer complaints, and local regulations.
• Licensed independent Medicare agent or a State Health Insurance Assistance Program (SHIP) counselor — they can explain tradeoffs and run apples‑to‑apples price comparisons. For related reading on budgeting for healthcare in retirement, see our guide: Planning for Healthcare Costs in Retirement: Filling Medicare Gaps.

Quick resources and rules to remember

• Plan F and Plan C are not available to people who first became Medicare‑eligible on or after January 1, 2020 (CMS).
• Your Medigap Open Enrollment Period is the six months that start the month you turn 65 and have Part B; during that period insurers cannot refuse coverage for health reasons (Medicare.gov).

Professional disclaimer

This entry is educational and not individualized financial or insurance advice. Rules and plan availability can change; consult Medicare.gov, your state insurance department, and a licensed Medicare advisor for personalized guidance.

Sources

• Medicare.gov — Medigap policies and protections (Medicare.gov).
• Centers for Medicare & Medicaid Services (CMS) — Medigap standards and Plan F/C rule changes (CMS).
• National Council on Aging — Understanding Medicare Supplemental Insurance (NCOA).