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The Medigap Option

MoneyWise | Nov 19, 2022

Show Notes

You’ve just turned 65 or you're about to. That means you have to make some important decisions about health care. You may decide to sign up for an Advantage Plan when you sign up for Medicare at age 65. But that’s not the only choice you have for additional coverage. We’ll talk about another option on this MoneyWise.

  • A Medigap policy is one more piece of the insurance jigsaw puzzle you may want to consider. It could save you thousands in medical bills.
  • Medigap is an extra form of health insurance you can buy if you already have Medicare.
  • Like a Part C Medicare Advantage Plan, a Medigap policy will help you pay some of the costs that aren’t covered by Medicare Parts A and B where you still have to pay deductibles, copays and coinsurance for approved medical care and services, which can add up quickly.
  • A Medigap plan is a private insurance policy that can help you pay for some of the out-of-pocket costs that aren’t covered by Medicare. The premium would be in addition to your Medicare Part B premium and Part D prescription drug premium. One important thing to remember is that you can’t have a Medicare Advantage plan and Medigap insurance. You have to choose one or the other to supplement basic Medicare.
  • So which one is better for you? It depends on your finances and health circumstances. Comparing the two, Medigap coverage will usually have a higher monthly premium, but lower out-of-pocket expenses. Medicare Advantage plans generally cost less and cover more services.
  • You might look at it this way: If you’re in good overall health, you might choose a Medicare Advantage plan. But if you have a covered condition that requires frequent medical services with co-pays, Medigap might be the way to go.
  • Something else to consider: Traditional Medicare and Medigap policies cover you for any doctor or facility that accepts Medicare. But Medicare Advantage plans usually limit you to the doctors and facilities in their network.
  • So Medigap costs more, but you get to choose your doctor, and that’s a very attractive feature for folks with a pre-existing condition.
  • If you’re 65 or older and eligible for Medicare and you already have Medicare Parts A and B, you can get a Medigap policy. But again, not if you already have a Medicare Advantage plan. You can’t have both.
  • Now, when it comes to what’s covered by a Medigap plan, things can get a bit confusing. Again Medigap plans in general cover deductibles, copays and coinsurance costs. But there are actually many different types of Medigap plans, and each is identified by a letter: A, B, D, G, K, L, M and N.
  • Each plan provides a different level of supplemental coverage to Medicare. You have to pick the one that best meets your needs. Fortunately, you can find a comparison of the different Medigap plans at Medicare.gov.
  • And this should help simplify your decision. All Medigap policies have standardized coverage. Every company offering Medigap L, for example, has to cover the same things. The only difference will be the price. So after you choose the lettered plan that works best for you, just shop for the lowest price in your state.
  • It varies depending on your state and the plan you choose, but the average for 2023 is $155 a month. However, that’s only for an individual. Under the rules, your spouse would have to have a separate plan.
  • One other thing to keep in mind, with a Medigap plan, you may also want to get separate Medicare Part D coverage, because it doesn’t cover prescription drugs.
  • If you decide to go with a Medigap plan, you can sign up for any plan offered in your state during the six months after you enroll in Medicare Part B. That initial enrollment window is crucial because during that period, you’re eligible for any plan even if you have health problems. The company has to take you on and they can’t charge you extra for a medical condition. After six months, however, you no longer have that guarantee.
  • Now there’s one more thing you should know about healthcare coverage now that you’re turning 65. We mentioned that you can’t have both Medicare Advantage and Medigap coverage. However, if you already have Medicare Advantage and you’d like additional coverage, you can check out a medical cost sharing ministry.
  • For example, with Christian Healthcare Ministries, you can have both a Medicare Advantage plan and CHM coverage, which costs about the same as a Medigap plan.

On this program, Rob also answers listener questions:

  • How do you determine whether to take a pension as a monthly payout or a lump sum?
  • Does it make sense to tap home equity to pay off credit cards?
  • Is this a good time to invest more money into the market?
  • How do you get started with a budget when you’re behind on everything?


Remember, you can call in to ask your questions most days at (800) 525-7000 or email them to Questions@MoneyWise.org. Also, visit our website at MoneyWise.org where you can connect with a MoneyWise Coach, join the MoneyWise Community, and even download the free MoneyWise app.

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