Medigap Plans Explained: Which Supplement Plan Is Best for You in 2024

Medigap, also called Medicare Supplement insurance, is a policy sold by private insurance companies that helps pay for the out of pocket costs that Original Medicare does not cover. These costs include the Part A deductible of $1,632 per benefit period, the Part B deductible of $240 per year, the 20 percent coinsurance on Part B services, and the daily coinsurance for extended hospital stays. Without Medigap, these costs can add up to thousands of dollars per year, particularly if you have a hospital stay or need expensive outpatient treatments. With Medigap, your out of pocket exposure is reduced significantly or eliminated entirely, depending on the plan you choose.

Medigap plans are standardized by the federal government, which means Plan G from Company A covers exactly the same benefits as Plan G from Company B. The only differences between companies offering the same plan type are the premium price, the company's financial stability, and the quality of customer service. This standardization makes comparing plans straightforward: once you decide which plan type you want, you simply shop for the lowest premium from a reputable company. There are currently eight Medigap plan types available to new enrollees, lettered A through N, though plans C and F are no longer available to people who became eligible for Medicare after January 1, 2020.

Plan G has become the most popular Medigap plan for people newly eligible for Medicare, and for good reason. It covers every gap in Original Medicare except the annual Part B deductible, which is $240 in 2024. That means after you pay $240 per year, Plan G covers 100 percent of your remaining Medicare approved costs: no coinsurance, no copayments, and no surprise bills. You can see any doctor in the country who accepts Medicare without worrying about networks, referrals, or prior authorization. The predictability and simplicity of Plan G is its greatest appeal.

Monthly premiums for Plan G vary by location, age, gender, and insurance company, but typically range from $100 to $250 per month for a 65 year old. Some companies use attained age rating, where your premium increases each year as you age. Others use issue age rating, where your premium is based on your age when you purchase the policy and does not increase due to aging, only due to inflation and medical cost increases. Issue age rated policies tend to have higher initial premiums but lower long term costs. If you plan to keep your Medigap policy for many years, an issue age rated plan may save you money over time compared to an attained age plan that starts cheaper but increases every year.

Plan N offers slightly less coverage than Plan G but at a noticeably lower premium. The key difference is that Plan N charges a copayment of up to $20 for some doctor visits and up to $50 for emergency room visits that do not result in admission. Plan N also does not cover the Part B excess charges, which are amounts that doctors who do not accept Medicare assignment can charge above the Medicare approved rate. In practice, very few doctors charge excess amounts, and many states prohibit the practice entirely, so this exclusion affects relatively few beneficiaries.

The premium savings between Plan N and Plan G are typically $30 to $60 per month, which amounts to $360 to $720 per year. If you visit the doctor four times per year and pay the maximum $20 copay each time, your additional out of pocket cost under Plan N is $80 per year. Compare that to the $360 to $720 you save in premiums, and Plan N comes out ahead for most healthy beneficiaries who do not see the doctor very frequently. However, if you have chronic conditions that require frequent doctor and specialist visits, the copayments can add up, and Plan G's complete coverage of the 20 percent coinsurance may be worth the higher premium.

The best time to buy Medigap insurance is during your Medigap Open Enrollment Period, which begins the month you turn 65 and are enrolled in Part B. This window lasts six months, and during this time, insurance companies must sell you any Medigap policy they offer at the standard rate regardless of your health status. They cannot charge you more because of pre existing conditions, and they cannot deny you coverage. This guaranteed issue right is extremely valuable because it is the only time most people have unconditional access to Medigap plans.

After the six month window closes, insurance companies in most states can use medical underwriting to evaluate your health before deciding whether to sell you a policy and how much to charge. If you have significant health issues, you may be denied coverage entirely or charged a much higher premium. Some states have additional protections that extend guaranteed issue rights beyond the federal minimum, so check your state's rules. But in general, buying Medigap during your initial open enrollment period is strongly recommended because it is the one time you are guaranteed access to the plan you want at a fair price. Waiting to see if you need it is a gamble that often does not pay off, because the people who wait the longest are often those who develop health issues that make them uninsurable later.

The choice between Medigap plus Original Medicare and Medicare Advantage is one of the most consequential decisions new Medicare beneficiaries face. Medigap with Original Medicare gives you the freedom to see any doctor in the country who accepts Medicare, with no networks, no referrals, and predictable out of pocket costs. The trade off is that you pay monthly premiums for both Part B and the Medigap plan, and you need a separate Part D plan for prescription drugs. The total monthly cost for Part B plus Medigap Plan G plus a Part D plan is typically $350 to $500 per month, but your exposure to unexpected medical costs is minimal.

Medicare Advantage plans often have lower monthly premiums and include extra benefits like dental, vision, and hearing coverage that Medigap does not offer. But they require you to use a provider network, may require referrals for specialist care, and have out of pocket maximums that can reach $8,850 per year for in network care. If you rarely travel, are comfortable with network restrictions, and are in generally good health, Medicare Advantage can provide comprehensive coverage at a lower monthly cost. If you value the freedom to see any doctor anywhere, travel frequently, or have health conditions that may require expensive treatment, Medigap provides stronger financial protection and more flexibility. Neither option is universally better; the right choice depends on your individual health needs, financial situation, and personal preferences.