Medicare Supplement Insurance (Medigap) covers a variety of out-of-pocket costs under Original Medicare, but it does come with a monthly premium.
Medicare Supplement Insurance, also known as Medigap, is a popular way to help reduce your overall out-of-pocket costs when you have Original Medicare. These plans are standardized by the U.S. government, but can be complicated to understand even though the coverage is the same for everyone. On the one hand, having so many plan options is good, but it does make browsing for a plan a bit more time-consuming.
We’ll go over everything you need to know about what costs these plans cover, what your options are for buying a plan, and how much these plans are likely to cost you each month.
What exactly is Medigap?
Medigap plans are insurance plans that cover your out-of-pocket costs associated with Original Medicare coverage. Whereas most health insurance plans will cover actual medical care services, Medigap plans cover everything that your Medicare coverage leaves for you to pay out-of-pocket.
This means things like your copay, coinsurance, deductible, and other associated fees. With the exception of the first 3 pints of blood you have drawn in a given period, Medigap plans won’t cover your health care costs directly in the way that you’re used to from other plans.
Medigap only covers fees related to Medicare Part A and Part B. This means that you won't receive any help with out-of-pocket costs related to Part D prescription drug plans, or Part C Medicare Advantage plans.
What options are there?
When it comes to Medigap, there are many options to choose from. Even more so than Medicare Advantage plans, these plans are federally standardized. This means that although there are options, they are limited, and these will never vary in coverage details from one plan to another.
There are ten total Medigap plans out there: Plans A, B, C, D, F, G, K, L, M, and N. There are nine categories that Medigap plans cover, which are as follows:
- Part A coinsurance and hospital costs
- Part B coinsurance or copayment
- First 3 pints of blood
- Part A hospice care coinsurance or copayment
- Skilled nursing facility care coinsurance
- Part A deductible
- Part B deductible
- Part B excess charge
- Foreign travel exchange (up to plan limits)
The plans vary by how many of these categories they cover. Some plans also cover a percentage of the cost in a given category, while other plans cover the entire amount.
As an example of this variety, Plan F and Plan G cover all of the exact same things, with one exception: Plan F covers the Part B deductible and Plan G does not. This variety allows you to find a plan that has the exact mix of coverage that you need.
We won’t be covering every single plan in detail here, but only the most popular ones. If you want a full overview of what each plan covers, medicare.gov has a very useful page that displays all of the options very clearly.
How to know which plan to choose
Actually finding a Medigap policy that works for you can be a bit difficult because there are so many options. However, understanding what to look for is a lot simpler.
There is a simple formula you can apply to each plan in order to figure out if it’s worth it for you. Basically, if a plan covers more than you pay in monthly premiums, it will be financially worthwhile to purchase that plan.
For example, Plan A covers the Part A coinsurance, Part B coinsurance, first 3 pints of blood, and Part A hospice care coinsurance or copayment. In this case, you would have to look at all of these fees individually and then compare them to the overall premium cost per year. If the premium is lower than what you would pay, this plan will save you money.
For some plans, fees will vary. Although the deductible for Parts A and B is standard, you may pay different amounts for your 20% coinsurance each year, depending on how much care you get. Before you look at plans, make sure to understand all of the relevant categories and have an estimate for how much you expect to pay per year.
So, which plans are best?
Medigap has many options for a reason: different plans work for different people. However, there are some plans that are more popular than the rest, for good reason.
Plan F and Plan G: The current stars of Medigap
The most popular plans out there are Plan F and Plan G.
- Plan F is the plan that covers the most on the Medigap scene: it covers every single fee category fully, and 80% of the foreign travel exchange. This plan is great for people who want everything covered with minimal worry. If you are using the plan on a regular basis, this maximum coverage will be worth it. Unfortunately, it is now obsolete, as people who qualify for Medicare on or after January 1, 2020 may no longer choose Plan F. (If you already had Plan F, you may keep it.)
- Plan G is exactly like Plan F but doesn’t cover the Medicare Part B deductible. In 2023, this amounts to $226 per year. We've been recommending Plan G for years because the lower premiums typically mean your out-of-pocket is less than if you had Plan F - even though you're responsible for the Part B deductible.
High-deductible Plan F and Plan G
Plan G and Plan F also come in a high-deductible version. For these plans, you will pay significantly lower premiums but have a high deductible that you will have to pay before coverage kicks in. In 2023, this high deductible will be $2,700, no matter which company you purchase your plan from. Until you pay this amount in Medicare-related fees, like your deductible and coinsurance, your plan won't pay anything.
These plans are good for people who want some of the safety of Medicare Supplement insurance but don’t expect to actually use it quite as often.
Again, though, Medigap Plan F is no longer available for new Medicare enrollees. If you qualified before 2020, you can still get one of these plans, but that doesn't mean that you should. Once a Medigap plan is discontinued, monthly premiums tend to increase quickly.
Plan D and Plan N: On the rise
Although they aren’t quite as popular, Plan D and Plan N are rising in popularity. If you look at what they cover, it may look identical, and in some sense this is true. Plan D and Plan N both cover the same categories. They cover everything that Plan F covers, aside from the Part B deductible and Part B excess charges.
Part B excess charges are charges that you pay out-of-pocket if your provider doesn’t accept Medicare assignment and bills higher than the allowed amount. These additional fees can vary each year, since they depend on how much care you receive and whether or not your provider accepts assignment. For some people, there may be no excess charges at all.
What’s the difference between Plan D and Plan N?
The only difference between Plan D and Plan N is that Plan N has its own copayment and coinsurance structure. Plan N will pay your copayment or coinsurance for Part B, but you will have to pay a copay of up to $20 for doctor office visits and up to $50 for ER visits that don’t result in inpatient hospitalization.
Because of this, Plan N will tend to have lower premiums, but you will have to pay this additional copayment. This is better for people who don’t expect to go to the doctor as much, since they won’t have to pay the copayment as often, while still having the benefit of lower premiums.
How much will Medigap insurance cost me?
As always with private plans, this will vary. In general, more popular plans tend to have more price reductions, since providers are competing for more people to buy the plan from them. This means that although lower-coverage plans like Plan A may be cheaper overall, the ratio of coverage to cost will tend to be better for very popular plans, like the ones we listed.
Average costs for popular Medigap plans
These prices are national averages and should be taken with a grain of salt. Depending on your area, age, and other factors, you may end up paying significantly more or less than this for your plan, so always make sure to shop around.
- Plan F: Around $165-$200 per month
- Plan G: Around $100-$175 per month
- Plan D: Around $120-$160 per month
- Plan N: Around $95-$150 per month
Remember, this will vary widely between individuals, but you should expect a premium within this range, although plans with slightly higher or lower premiums are also possible.
What to remember as you start shopping
All of this information should give you a good overview of what to expect when it comes to Medigap related costs. The most important costs will end up being those specific to the plans you’re looking at, so remember to treat this as just a general guide.
As you look at plans, remember to compare the yearly premium amount to the amount you expect to spend in the relevant cost categories to calculate your overall expected savings. Make sure to compare several plans from different insurance companies, so you find a plan that has your perfect mix of coverage and savings.
Comparing Medigap plans is easy with our Find a Plan tool. Just enter your zip code to see Medicare plans in your area.
What's Medicare Supplement Insurance (Medigap)?
External Website Link
The Ultimate Guide to Medicare Supplement Insurance
Internal Website Link
Find a Medicare Plan in your area
It’s FREE with no obligation
Speak with a Licensed Insurance Agent
M-F 9:00am-9:00pm | Sat 9:00am-3:00pm EST