The '100% Overwhelming' Decision: What Do You Do About Medigap?

For years, David Haas has been something of the unofficial Medigap expert of Franklin Lakes, N.J.

That’s because whenever the financial planner’s clients reach that magic age of Medicare eligibility, they have some serious financial decisions to make about getting supplemental coverage — and don’t know where to turn.

The alphabet soup of plan options, the complexity of what’s covered and what’s not, the challenge of figuring out what Future You is going to need: It’s overwhelming and confusing.

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So Haas set out to learn “anything and everything” about Medigap plans, to help steer his friends and clients in the right direction (with no personal financial interest). But this year, that information came in handy for him.

Haas hit 65 this year. He had to make his own Medigap selection, one that will have ramifications for years.

“Think of it as a permanent decision,” says Haas. “You need to think about yourself in the future, not just in the present, which people have trouble doing. This choice is extremely important.”

A high-stakes choice

There are a number of reasons why this Medigap choice looms so large, with fallout that can reverberate for years.

Getting care through traditional or original Medicare can be expensive, which is why most beneficiaries who choose it over a private Medicare Advantage plan opt for an added private policy, known as Medicare Supplement Insurance or, more colloquially, Medigap.

So who needs Medigap plans? Anyone with traditional Medicare who wants help with out-of-pocket costs like coinsurance and co-pays — especially since those costs aren’t picked up by Medicare, and there is no cap on them. (Some Medigap plans also cover deductibles, but those are not available for Part B deductibles for those who become eligible for Medicare after Jan. 1, 2020). You can’t get a Medigap plan if you have a Medicare Advantage plan.

As such, Medigap is a good fit for frequent users of healthcare services. This holds true for your needs as you age because you may be locked in to your initial selections even as your health declines. Basically you are choosing predictability in costs, by paying a premium up-front, rather than risking that a serious illness or extended hospital stay could severely damage your finances.

Medigap makes sense for frequent travelers, since some Medigap plans cover emergency medical expenses while abroad.

But there are so many different options at so many different prices and offered by so many different providers that retirees often feel confused and frozen.

So they put it off until later, or make the wrong choice. Either way, it’s something that can affect them for the rest of their lives.

“It is 100 percent overwhelming,” says Kevin Moss, senior editor at the nonprofit Consumers’ Checkbook. “It’s such a consequential decision: It forces you to think about what you need right now, what you will need in five or 10 years, and what you will need all the way to the end of your life.”

And this is a choice being puzzled over by millions. In 2023 Medigap plans covered 13.6 million people, who paid $35.5 billion in premiums, according to the National Association of Insurance Commissioners.

Medigap vs Medicare Advantage

There are essentially two major paths you can take when you are choosing supplemental Medicare coverage.

One is Medigap, and the good news is that most people like it. In one 2023 study, 93% of beneficiaries said they were happy with their choice, with 80% saying they were either “very” or “extremely” satisfied. The other is Medicare Advantage — not quite as beloved, with 73% saying they are satisfied with their current plan, according to an AARP survey.

The Medicare Advantage plans are the ones you might be familiar with from all those incessant TV commercials. This is the private insurance alternative to traditional Medicare that typically charges modest (or even no additional) premiums and typically includes prescription drug coverage. It also often has extras, like coverage of vision and dental. But it limits you to a network of providers, and makes you jump through hoops by requiring prior authorizations for more expensive services. This can lead to delays or even denials of some coverage.

Others go with traditional government-run Medicare, which doesn’t have such limits on providers and has fewer requirements for prior authorizations. However, out-of-pocket costs can be much higher, so many traditional Medicare beneficiaries add a Medigap plan, which you can think of as a wrapper around the traditional Medicare plan.

For that, you pay additional premiums (an average of $217 a month in 2023, more than the standard 2025 $185 monthly Part B premium). (Keep in mind traditional Medicare does not cover prescription drugs, for which you will need a standalone Part D policy at an added cost.)

Pairing Medigap with traditional Medicare means you get help with out-of-pocket costs and can see any of the 98% of non-pediatric doctors who accept Medicare. In 2022 12.5 million people, or 42% of those in traditional Medicare, had a Medigap policy as well, according to KFF (formerly the Kaiser Family Foundation).

“With Medigap you can start right away when you’re 65 with no underwriting, which is so important to people with underlying conditions,” says Sally Greenberg, CEO of the National Consumers League. “Basically you can go to whatever doctor you want, and can sign up for any Medigap plan you choose. That’s pretty good.”

Alphabet soup

If you choose the Medigap path, that’s only the first step. Then you have additional choices to make. There are 10 standardized levels of plans: A, B, C, D, F, G, K, L, M, N. These are administered at the state level, so the policies you are offered depend on your particular location; insurers might offer some, but not all.

That’s a lot of letters, so to help narrow those down: Almost all Medigap enrollees are in Plans F or G, which are the most comprehensive options. Each of those plans amounts to 41% of Medigap policyholders — although F is no longer available to new signups. Plan N (and its lower premiums) is the third most popular at 11%.

Another thing to know: Even though plan types are standardized in terms of what they cover, premiums are not set at the same rate; different insurers charge different premiums for the same plan, which is why shopping around is critical. They also may raise rates differently; One analysis last year found, for example, that larger insurers implemented larger increases.

There are a few more major tripwires ahead, and you have to pick your way through this minefield very carefully.

To understand the point, consider a common scenario: A new retiree chooses to go with a Medicare Advantage plan with its lower premiums and extra offerings. After all, younger retirees may not have the serious health problems that would benefit from better access to specialists and less red tape from prior authorizations.

But as they age, they can find themselves locked into their Medicare Advantage plan, because traditional Medicare carries too many additional costs. Mitigating the costs with a Medigap plan is blocked at this point because of underwriting requirements.

This is why it’s so important to get it right the first time.

Compare Medigap plan benefits

Here are the benefits of the three most popular Medigap insurance plans. For a table including all plans, go to Medicare.gov.

*Plans F and G offer a high-deductible plan in some states.

**Plan N pays 100% of the costs of Part B services, except for copayments for some office visits and some emergency room visits.

Note: Plan F isn’t available if you turned 65 on or after Jan. 1, 2020, and to some people under age 65. You might be able to get these plans if you were eligible for Medicare before Jan. 1, 2020, but not yet enrolled.

Source: Medicare.gov

Timing is key

The timeline is to first get Medicare Part A (which covers hospital charges) and Part B (doctors), and then consider a Medigap plan.

There is a limited time window for getting Medigap done with no underwriting. This is known as “guaranteed issue,” and it applies for the first six months after you become eligible for Medicare (typically age 65, although potentially younger for those with disability).

And what if you are still working, and enjoying employer health coverage, past 65? In that case you can delay Medicare — meaning that the clock on your Medigap decision is also stopped. (Note that that clock only starts when you select Medicare Part B.) After you stop working or lose employer health coverage, you have an eight-month special enrollment period for Medicare.

But wait beyond these time windows for your Medigap choice, and you may have a problem.

“This is a one-time opportunity that does not repeat,” says Nancy Ochieng, a senior policy analyst with KFF. “If you miss that window, you can be charged higher premiums, or be denied a Medigap policy.”

As a result, you want to do your research before turning 65, so you don’t get caught flat-footed. NCL’s Greenberg suggests starting your homework well in advance — as much as 18 months beforehand.

Switching is a challenge

If you don’t like your initial selection, switching plans later on or getting a new plan can be difficult, expensive or impossible.

If you do want to swap Medigap plans without underwriting, you can do so, but only within that six-month Medigap open enrollment period (after you have signed up for Medicare). After that, you may not qualify for “guaranteed issue,” which could mean higher premiums or outright denial.

Practically speaking, if you miss that period and develop serious health issues, you can feel trapped in your existing plan. “People might think they can easily switch out at any time, but you can’t,” says Greenberg. “I don’t like that model at all. You’re stuck in a service you no longer want.”

There are, however, some exceptions, depending on where you live. Connecticut, Massachusetts and New York, for instance, offer continuous or guaranteed issue at any age, and Maine offers it during a one-month period every year (although only one plan type, Plan A). Next year, Minnesota, as well, is slated to allow enrollees a one-time opportunity to get a Medigap plan, at a potentially higher cost after their initial enrollment period.

Eight states have a so-called “birthday rule” that allows switching without underwriting to a Medigap policy that is similar or less comprehensive than the one you have.

Specific qualifying events also come into play in 35 different states, according to KFF tabulations. Those might include losing retiree coverage from your previous employer, moving out of a plan’s service area or losing Medicaid eligibility.

Paying the bill

There are a lot of things to like about Medigap, but there is no denying that there is a bill attached, which could become bigger.

“Plan G is the most popular Medigap plan, and in that plan for major medical care — doctors, hospitals, imaging — you won’t face any costs out-of-pocket,” says Moss. (It does not cover Part B deductibles.) “But that does come at a cost, which is that you have to pay the Medigap premium.”

Those premiums can vary widely from state to state, and provider to provider. The average of all Medigap policies is $217 monthly, according to MedPAC data. But that ranges from $191 in Alaska, to $267 in New York.

And with the popular Plan G, the average is $164 nationally — but only $140 in Hawaii and New Mexico, and $236 in New York.

“Focus groups generally say they are satisfied with their Medigap plans, but premiums remain one of the primary concerns,” says KFF’s Ochieng. “Because Medigap is regulated at the state level, the state sets the rules, and that makes premiums vary a lot. That makes it very important to compare policies and consider the premiums.”

There are different pricing systems you might encounter: It might be a “community rated,” where everyone in your location is charged a similar amount, regardless of age. Or pricing might be “issue-age rated,” based on how old you were when you got the policy; or “attained-age rated,” meaning that your premiums will go up over time.

To wit: Year-over-year Medigap premium increases from 2023-24 ranged from 0% to 18%, for insurers with over a million Medigap members, according to the American Association for Medicare Supplement Insurance. For companies with between 400,000 and a million members, the price hike ranged from 7.5% to 20%.

One positive is that there are a fair amount of deals available, similar to those you find elsewhere in the insurance world. “There are a lot of discounts,” says Moss. “For example, you might qualify for discounts for women, or non-smokers, or married people, or whether you pay on an annual basis, or if you buy directly from an insurer instead of through an agent.”

Agents and incentives

There’s an entire industry of brokers and agents who can walk you through this choice. That can be both good and bad. After all, they have a financial incentive for their work; they work on commission.

Your first stop should be State Health Insurance Assistance Programs, at www.shiphelp.org. You can get one-on-one, unbiased help from trained counselors. “That’s the primary resource that should be used,” says KFF’s Ochieng.

As for brokers: As long as you know how they’re compensated, and don’t feel pressured into choosing the wrong plan, then you use them to gather information.

“I think it’s a wise idea for people to take advantage of those folks,” says Greenberg. “If I were trying to make my own decision, I would talk to several different brokers and get their views. I’m that kind of consumer.”

Other things to watch out for: Perhaps an agent works with a particular company or companies, and since they don’t work with all providers, they may not be showing the entire menu of plans available to you. (Check your state insurance website for a fuller picture, and to research complaint data.)

Or they might be given perks by providers for sales, and be incentivized to steer you into certain plans. That was the main focus of Senator Elizabeth Warren’s (D-Mass.) 2023 report “Sales Before Seniors: How Medigap Insurers’ Sales Rewards Hurt Seniors on Medicare.”

Its findings: Six million beneficiaries purchased Medigap plans from companies that offered salespeople rewards like cash bonuses or trips to places like the Bahamas, Maui and Aruba.

That’s not illegal — but creates “incentives for them to steer older adults to Medigap products that may not be the best fit for their financial and healthcare needs,” the report says.

As for David Haas, he opted for the Plan G high deductible version, which charges much lower premiums, but still protects him in those catastrophic health crises that can really blow up his finances. He hopes he made the right choice.

Medicare Open Enrollment for 2026

The annual Medicare Open Enrollment period for 2026 starts Oct. 15 and runs through Dec. 7. You can make changes to your coverage, such as switching to a Medicare Advantage plan, enrolling in or dropping a Part D plan or switching back to Original Medicare.

Where to turn

Given the complexity of the subject and the volume of information about Medigap plans, how can you make sense of it all? A few places to start:

State Health Insurance Assistance Programs: When it comes to plan particulars, it’s state-level information you want, since that’s where programs are administered. Use the SHIP locator at SHIPhelp.org, or call 877-839-2675.

Medicare Plan Finder: This is a helpful federal site (www.medicare.gov/plan-compare) for walking you through supplemental coverage options. Enter your zip code, and get an immediate display of Medigap plan options available, from A though N.

MedPAC: MedPAC advises Congress on Medicare policy. To learn what plans are most popular, a breakdown of benefits, how premiums are set and so on check out the “Preliminary Work on Medigap” presentation.

Independent reviews: Some financial information sites rate Medigap plans. NerdWallet recently outlined its picks for 2025. (Overall winner: AARP/United Healthcare.) Or ValuePenguin makes suggestions based on plan type, rather than particular companies. Its selection for most people: Plan G.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

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