Are Medigap Plans Worth It?

Person counting money, wondering if Medigap plans are worth it

We won’t argue that Medigap plans are one of the more expensive options you have to supplement your Original Medicare benefits. Most of us pay just under $175 per month for Part B alone, so adding another $150 or more can often stretch our budgets. When presented with Medigap premiums, many of our clients ask us if Medigap plans are worth it.

We’ve got three very good reasons why Medigap plans are worth the investment – and we’ll let you know when they might not be!

1. Predictable Out-of-Pocket Costs

While adding a Medigap premium to your monthly budget may seem costly, one thing you can depend on with a Medigap plan is predictable out-of-pocket costs. This can actually make it easier to budget and give you peace of mind in knowing you won’t have any unexpected costs.

For example, let’s say you choose to enroll in Medigap Plan G. If you have Plan G, your only out-of-pocket cost (for covered services, of course) will be the Part B deductible. This year (2024), that deductible is set at $240. Once that deductible has been met, Medicare and your Medigap plan will pick up all costs. Yes, you still have your monthly premiums, but everything else that falls under inpatient or outpatient services is covered.

This is in stark contrast to Medicare Advantage plans, which are more of a “pay-as-you-go” option. They often have very low monthly premiums, but you almost always have copays for every service you need. So, while the monthly premium may sound more digestible at first, you could find yourself with many out-of-pocket costs should you need care. Oftentimes, these add up to more than if you had just paid the higher Medigap premium.

2. Freedom to Choose Providers

Another reason Medigap plans are worth it is that they give you the freedom to choose your providers. With a Medigap plan, you can see any healthcare provider that accepts Medicare, and most do. It will not matter from which insurance company you purchase the Medigap plan—there are simply no provider networks.

This allows you to choose the providers you want to see without fear of having no coverage or paying more to see the doctors you need. Plus, if you travel frequently, you won’t have to worry about finding an in-network doctor if you are away from home

This is another reason Medigap plans are a bit simpler than Medicare Advantage plans, which almost always require you to use contracted providers. In addition, Medicare Advantage plans often change their networks, so just because your provider is in-network this year does not guarantee their network status in years to come.

3. Unrestricted Medical Care

In that same vein, the care you receive from your chosen providers will also be much less restricted. Original Medicare does not invoke many prior authorizations. A prior authorization is something that health insurance companies use to keep their claims to a minimum. 

For example, if your Medicare Advantage plan requires you to have a prior authorization before surgery, your doctor will need to fill out the paperwork and submit it to the company for approval. Three things can happen next. The carrier could deny the surgery, they could require you to seek less costly treatment first, or they could approve the procedure. While the intention of a prior authorization isn’t bad, they do get in the way of getting the treatment you need in a timely manner. You won’t find many of these under Original Medicare or Medigap plans. Plus, if Original Medicare approves a service, it will automatically be approved by your Medigap plan.

Man with papers, wondering if Medigap plans are worth it

When You Should Not Purchase a Medigap Plan

Medigap plans are a great option for many Medicare beneficiaries, but they don’t work for everyone. We’ve found a couple of instances in which purchasing a Medigap plan was not in the client’s best interest.

First, if you have VA Healthcare or TRICARE for Life, you likely have enough coverage between those services and Original Medicare that you do not need to purchase an additional Medigap plan. In this case, sometimes a Medicare Advantage plan can be advantageous.

Second, we understand that sometimes, a budget just does not have room for a Medigap plan. In this case, a Medicare Advantage plan is still a much better option than having Original Medicare alone. Yes, you may run into copays, but they will be less than if you had only Original Medicare.