How to Choose the Right Medigap Plan

How to Choose the Right Medigap Plan: A Retirement Advisor’s Perspective

As retirement advisors who help clients make informed decisions about Medicare every day, one of the most common questions we hear is: “Which Medigap plan is the best for me?”

The answer isn’t as simple as picking the plan with the most benefits. Choosing the right Medicare Supplement (Medigap) plan comes down to three key factors:

• The level of coverage you need
• Your ability to switch plans later
• How insurance companies increase premiums over time

Let’s walk through each of these considerations so you can make a well-informed decision.

Plan F, Plan G, or Plan N: Which Offers the Best Value?

Plan F

Plan F offers the most complete coverage—it pays all the gaps Medicare leaves behind, meaning zero out-of-pocket costs beyond your premium. However, it’s only available if you were eligible for Medicare before January 1, 2020.

Even for those who qualify, Plan F is often $500 to $600 more per year than Plan G. It also tends to experience faster rate increases. For these reasons, we rarely recommend it unless a client strongly prefers it.

Plan G

Plan G is the most balanced option and the one we recommend most often. It covers everything Plan F does except for the Part B deductible, which is $226 in 2023. After that, you are 100 percent covered for any Medicare-approved service.

In most cases, clients can save hundreds of dollars a year by choosing Plan G instead of Plan F, without sacrificing meaningful benefits. It’s a substantial, long-term value.

Plan N

Plan N has the lowest premiums of the three but comes with some cost-sharing. You may pay a $20 copay for doctor visits and $50 for emergency room visits. Plan N does not cover Part B excess charges, which occur when a provider bills more than the Medicare-approved amount.

Some advisors downplay the risk of excess charges. Still, we have seen them occur, especially with specialists or facilities that do not accept Medicare assignment. If avoiding unexpected bills is a priority, Plan G may be the safer option.

Plan Switching Rules: What Most People Don’t Realize

One major misconception is that Medigap policy owners can switch plans annually like Medicare Advantage plans. That is not the case. Medigap open enrollment is a one-time window, typically when you first become eligible for Medicare Part B. After that, switching to a more comprehensive plan may require medical underwriting. If your health has changed, you could decline.

Some states have special “birthday rules” or annual switching opportunities. Still, these are limited and usually only allow a switch to a plan with equal or lesser benefits.

Bottom line: You can move from Plan G to Plan N later, but it is challenging to move from Plan N back to Plan G without going through medical review. We strongly encourage clients to start with the right plan from the beginning to avoid this limitation.

Insurance Company Doesn’t Change the Plan—Just the Price

Every Plan G is the same, regardless of which company you buy it from. The benefits are standardized by law, except in Massachusetts, Minnesota, and Wisconsin. The only difference is the monthly premium and how each company handles rate increases over time. Think of it like buying the same brand-name product from different stores. The product is identical, but the price may vary. For this reason, we recommend comparing pricing across carriers. We do that for our clients across more than 50 plans nationwide.

How Rate Increases Work: Three Pricing Models

While Medigap plans are standardized, rate increases are not. Carriers use three different pricing structures:

1. Attained Age
   Your premium increases as you age. This model usually starts with the lowest premium but can see significant annual increases, especially as you enter your late 70s and 80s. Some clients have seen increases as high as 30 percent per year when combining age and inflation.
2. Issue Age
   Your rate is based on your age when you enroll and does not increase as you age. It still increases due to inflation and other market factors. This model tends to be more stable over time, but usually starts with a higher premium.
3. Community Rated
   Everyone in your area pays the same rate regardless of age. Younger individuals often receive a steep discount that gradually decreases each year. This model is more predictable, with average increases of 5 to 10 percent per year.

Each model has trade-offs, and the best choice depends on your age, health, and long-term financial outlook. We help clients evaluate which pricing structure aligns best with their situation.

Our Recommendation

When we factor in:

• Plan benefits
• Monthly premiums
• Rate stability
• Your ability to switch plans later

Plan G consistently stands out as the best overall value for most of our clients. It provides excellent coverage without the steep cost of Plan F and without the risks that come with Plan N.

Let Us Help You Make the Right Choice

We are independent retirement advisors and licensed insurance brokers who work with clients in all 50 states. There is no cost to you for our help—we are compensated directly by the insurance companies, which means our advice is unbiased and focused entirely on your best interests.

If you’re considering a Medigap plan—or want to make sure you’re in the right one—let’s start a conversation. We’ll compare plans side-by-side, explain the rate structures, and help you make a wise, confident decision that works for your long-term financial goals.