Actionable Strategies and Money-Saving Tips
Choosing the right Medigap plan is one of the most important financial decisions you will make for your retirement healthcare. Here are practical strategies to help you find a plan that provides strong protection without breaking your budget.
1. Prioritize Your Medigap Open Enrollment Period
This is the single most critical rule. Your six-month Medigap Open Enrollment Period begins on the first day of the month in which you are both 65 or older and enrolled in Medicare Part B. During this window, you have a “guaranteed issue right.” This means an insurance company cannot, by law, use your medical history to refuse to sell you any Medigap policy it offers or charge you more for it. If you have pre-existing conditions like diabetes or heart disease, this period is your golden ticket to getting coverage at the best price.
If you miss this window, you may have to go through medical underwriting to get a plan later. An insurer can then review your health history, charge you a much higher premium, or deny your application altogether. Do not miss this opportunity.
2. Focus on the Best Value: Plan G and Plan N
While there are several Medigap plans available, most new enrollees find the best value in either Plan G or Plan N.
- Plan G: The Gold Standard for Predictability. For anyone who became eligible for Medicare after January 1, 2020, Plan G offers the most comprehensive coverage available. It covers virtually all of your out-of-pocket costs, including the 20% Part B coinsurance and the large Part A hospital deductible. The only thing it doesn’t cover is the annual Medicare Part B deductible ($240 in 2024).
Example: You have several doctor visits and a procedure that costs $10,000. You first pay the $240 Part B deductible for the year. After that, Medicare pays 80% ($7,808) and your Plan G pays the remaining 20% ($1,952). Your total out-of-pocket cost for the year for Part B services is just the $240 deductible. This makes your healthcare costs extremely predictable.
- Plan N: The Smart Choice for Savers. Plan N is a great option if you want a lower monthly premium and are comfortable with some small, predictable cost-sharing. Like Plan G, it covers the 20% coinsurance. However, you will have to pay a copayment of up to $20 for some office visits and up to $50 for an emergency room visit that doesn’t result in an inpatient admission. It also doesn’t cover Part B “excess charges,” which are rare but possible if your doctor doesn’t accept Medicare assignment. For a healthy, budget-conscious senior, the premium savings on Plan N can be substantial over the year.
3. Ask About the Premium Pricing Method
When you get a quote, the premium price isn’t the only thing that matters. You should ask the insurance company how they price their plans, as this will affect how much your premium increases over time.
- Community-Rated: Everyone in a specific area pays the same premium, regardless of their age. Your premium will still go up due to inflation, but not just because you get older. This is often the best long-term value.
- Issue-Age-Rated: Your premium is based on your age when you first buy the policy. It is lower for younger buyers and won’t increase just because you age. It will, however, rise with inflation.
- Attained-Age-Rated: Your premium starts low but increases as you get older. These plans can look like a great deal when you’re 65 but may become unaffordable in your 70s and 80s. Be very cautious with these plans.
4. Shop Around and Look for Discounts
Since a Plan G is a Plan G everywhere, your goal is to find the lowest-cost plan from a financially stable company. Use the official plan finder tool on the government website to see which insurers offer plans in your area. For official information on Social Security and Medicare, visit SSA.gov and Medicare.gov. Get quotes from at least three different companies.
Also, be sure to ask about discounts. Many companies offer a “household discount” if you and your spouse are both enrolled in a plan from the same insurer. This can save you anywhere from 5% to 12% on your premiums.
5. Remember to Budget for a Part D Plan
Medigap policies sold today do not cover prescription drugs. You will need to enroll in a separate Medicare Part D Prescription Drug Plan. When budgeting for your senior healthcare, be sure to account for the monthly premium for both your Medigap plan and your Part D plan.
