As you approach or navigate retirement, understanding how Medicare fits into your overall health and financial plan is essential. While Original Medicare provides a strong foundation, it doesn’t cover every expense—and that’s where Medicare Supplement Insurance, or Medigap, can play an important role. This article explains what Medigap is, how it works, and how it can protect both your health and your wallet in retirement.
Why Medicare Supplement Insurance Matters
By now, you know that Medicare is an excellent foundation for your healthcare in retirement—but it doesn’t cover everything. After paying your premiums for Part B and any prescription plan, you may still face deductibles, co-pays, and coinsurance.
For many retirees, these out-of-pocket costs can add up quickly—especially after a hospital stay or ongoing medical treatment. That’s where Medicare Supplement Insurance, commonly known as Medigap, comes in.
Medigap plans are designed to fill the “gaps” left by Original Medicare (Parts A and B). They help smooth out unpredictable costs, providing financial stability and peace of mind when you need medical care the most.
What Exactly Is Medigap?
Medigap is private insurance that works alongside Original Medicare—not in place of it.
Here’s how it works:
- You keep Original Medicare (Parts A and B).
- Medicare pays its share of your covered healthcare expenses.
- Your Medigap plan then pays its share, covering some or all of the remaining costs (like deductibles, co-pays, and coinsurance).
Think of it as a secondary safety net. Instead of facing surprise medical bills, you’ll know more precisely what your healthcare costs will look like each month.
What Medigap Covers (and What It Doesn’t)
Each Medigap plan is standardized by the federal government, meaning that Plan G offered by one insurer provides the same basic benefits as Plan G offered by another. The difference lies mainly in the premium.
Here’s what most Medigap policies help cover:
- Part A coinsurance and hospital costs (up to an additional 365 days after Medicare benefits are used up)
- Part B coinsurance or co-payments
- Blood transfusions (first 3 pints)
- Part A hospice care coinsurance or co-payment
- Skilled nursing facility care coinsurance
- Part A and Part B deductibles (depending on the plan)
- Foreign travel emergency care (up to plan limits)
However, Medigap does not cover:
- Prescription drugs (you’ll need a separate Part D plan for that)
- Dental, vision, or hearing services
- Long-term or custodial care
- Private-duty nursing
If you prefer a plan that includes extras like dental or vision, you might explore a Medicare Advantage plan (Part C) instead—but that’s a different structure altogether.
How and When to Enroll in a Medigap Plan
The best time to buy a Medigap policy is during your Medigap Open Enrollment Period, which lasts six months starting the month you turn 65 and are enrolled in Medicare Part B.
During this time:
- You have guaranteed issue rights, meaning you can buy any Medigap plan sold in your state without medical underwriting.
- Insurers can’t deny you coverage or charge higher premiums because of pre-existing conditions.
If you miss this window, you can still apply later, but insurers may require medical underwriting and could deny coverage or charge more based on your health history.
Tip: If you already have a Medicare Advantage plan, you can’t buy a Medigap policy unless you switch back to Original Medicare.
How Much Does Medigap Cost?
Premiums vary based on several factors:
- The plan type (A through N)
- Your age and gender
- Whether premiums are community-rated, issue-age-rated, or attained-age-rated
- Your location (state and sometimes ZIP code)
- The insurance company you choose
In general, plans with higher monthly premiums cover more expenses, while lower-premium plans require more out-of-pocket costs when you receive care.
When comparing plans, look beyond the premium alone. Consider the total cost of coverage, including deductibles and co-pays, and think about your expected healthcare needs in the coming years.
Medigap vs. Medicare Advantage: What’s the Difference?
This is one of the most common areas of confusion.
| Feature | Medigap + Original Medicare | Medicare Advantage (Part C) |
| Provider Choice | Any doctor or hospital that accepts Medicare | Usually limited to a network (HMO/PPO) |
| Prescription Drugs | Separate Part D plan required | Often included |
| Coverage Outside U.S. | Limited (some plans include travel emergency) | Usually none |
| Referrals/Authorizations | Not required | Often required |
| Costs | Predictable; higher monthly premium, lower out-of-pocket costs | Lower premium, but higher cost-sharing |
| Extras (Dental/Vision/Hearing) | Not included | Often included |
Can You Have Both Medigap and Medicare Advantage?
No, you generally cannot have both Medigap and Medicare Advantage at the same time. They serve similar purposes but work in very different ways. In summary, Medigap is designed to supplement Original Medicare (Parts A and B) by covering certain out-of-pocket costs. Medicare Advantage (Part C) replaces Original Medicare with a private insurance plan that combines hospital, medical, and often prescription coverage.
If you wish to use Medigap, you must switch back to Original Medicare during a qualifying enrollment period.
Choosing between Medigap and Medicare Advantage often depends on personal preference:
- Do you value predictability and flexibility (any doctor, anywhere)? Medigap may be the better fit.
- Do you prefer a simplified, all-in-one plan with lower upfront costs? A Medicare Advantage plan could work better.
This is where thoughtful financial planning can make all the difference.
How Medigap Fits into Your Financial Plan
Healthcare in retirement isn’t just about staying healthy—it’s about protecting your financial well-being.
A Medigap policy can help:
- Stabilize your cash flow by reducing unpredictable medical bills.
- Protect retirement savings from large, unexpected healthcare costs.
- Provide peace of mind knowing that coverage gaps are minimized.
At EKS Associates, we often help clients evaluate how the premiums of a Medigap policy compare to potential out-of-pocket exposure without one. It’s about finding the right balance between cost, risk, and flexibility so your healthcare fits comfortably within your retirement plan.
Final Thoughts: Choosing the Right Coverage for You
There’s no one-size-fits-all answer when it comes to Medicare Supplement Insurance. The right plan depends on your health, lifestyle, budget, and comfort with risk.
If you’d like guidance evaluating your options or understanding how Medigap fits into your broader retirement plan, the advisors at EKS Associates are here to help. We take a holistic view of your financial picture, enabling you to make confident and informed decisions.
For a more comprehensive education on Medicare, check out the rest of our Medicare Education Series here:
