How Much Should I Spend on a Medicare Supplement Plan?

Let’s begin with a hard truth about Medicare. No matter how you swing it, Parts A & B (“Original Medicare”) is not enough to cover your health expenses in retirement. Without some form of additional coverage, you could be on the hook for thousands of dollars in out-of-pocket costs every year, if not more.

Medicare Supplement Plans, or “Medigap”, is one of the easiest ways to fill the gaps in your coverage. A good Medigap plan can cover your deductibles, copays, coinsurance, and more, effectively bringing your out-of-pocket costs to $0.

The good news is, you have a lot of options. In all but three states, there are 10 standardized Medigap plans to choose from, each with a different mix of benefits, exclusions, and available at a variety of price points.

There’s another excellent, budget-friendly option for people who want a fairly comprehensive plan with a lot of benefits as well: the Medi-Share 65+ healthsharing plan. It’s an affordable non-insurance approach to helping people pay for their medical bills in retirement. 

You also have some choices when it comes to covering the cost of prescription drugs in retirement as well.

This article will survey your major Medigap options, how much you can expect to pay for each option, and how to go about deciding what option may be best for you.

We’ll also discuss Medi-Share 65+, your prescription drug coverage, and what you can expect to pay for each plan.

Ready to see how much a Medigap plan will cost you? Click here to get a free, instant quote.

Medigap Overview

Medicare Supplement Plans, or “Medigap”, are one of the easiest ways to fill the gaps in your coverage. A good Medigap plan can cover your deductibles, copays, coinsurance, and more, effectively bringing your out-of-pocket costs to $0.

For most people, the best and most comprehensive option for new Medicare enrollees is Medigap Plan G.

Plan G covers all your out-of-pocket costs under Medicare Part A (hospital insurance).

It also covers your 20% coinsurance under Medicare Part B, which covers physicians charges, lab fees, ambulance services, durable medical equipment.

If you enroll in a Medigap Plan G, your only cost for Medicare Part A and Part B-approved care other than your monthly Medigap premiums will be your annual deductible, which is $226 as of 2024. 

Medigap Plan G Costs

But Medicare Plan G comes at a cost: since it’s the most comprehensive plan currently open to new enrollees, it’s also the most expensive of the standard Medigap plans. 

According to a recent study from ValuePenguin, Medigap Plan G averages $145 per month, as of 2024.

But Medigap premiums vary significantly by location. In some high cost-of-living areas, Medigap Plan G costs are much, much higher. Some plans charge New York City residents more than $400 per month.

Medigap premiums also vary based on your age, sex, smoking/tobacco use status, and in some cases, if you missed initial enrollment eligibility, your medical history.

The best way to find out exactly what you can expect to pay for a Medigap Plan G plan is to contact us and get a formal quote for your specific situation. 

Lower-Cost Medigap Alternatives

Plan G is an excellent option for those who can afford it. But not everyone can afford to pay the full monthly premium. 

Fortunately, there are ways you can pay a little less per month for a Medigap plan.

Medigap Plan N vs. Medigap Plan G

If Medigap Plan N is available in your area, you may be able to save some money by choosing Plan N instead of Plan G. According to Value Penguin research, Plan N costs an average of $111 per month, for a monthly savings average $34.

That’s significantly less than Plan G. However, Plan N does not cover Medicare excess charges. These are charges your physician may bill you over and above the Medicare standard approved rates, which are relatively low.

Plan G covers them. Plan N does not.

If you have a medical need, having Plan G instead of Plan N leaves you potentially exposed to significant out-of-pocket exposure to surgeons’ fees and other physicians’ costs over and above the standard Medicare rate.

But this isn’t necessarily an issue, depending on where you live. Eight states prohibit or limit Medicare doctors from charging more than the approved reimbursement rate: Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island, and Vermont.

If you’re in one of these states, and don’t plan to spend much time outside of them, you may not need to spend the extra money for a Plan G. Plan N will provide the same benefits – at a lower cost.

If you don’t live in one of these states, Plan N may present more potential financial risk than the small savings from the lower premiums are worth. 

Medigap High-Deductible Plan G

The Medigap High-Deductible Plan G is a great choice if you want the comprehensive protection against high-cost medical incidents that the regular Plan G offers.

If you want to save money on monthly premiums, you have some savings in the bank, but you still want a comprehensive Medicare supplement plan that covers all your Part B coinsurance costs.

As of 2024, Medigap Plan G premiums start around $40 in lower-cost-of living areas, up to about $90 per month for new enrollees not paying a late enrollment penalty.

In both cases, your maximum out-of-pocket exposure for all services covered under Original Medicare (Parts A and B) are the same as your deductible. However, neither Original Medicare or Medigap covers prescription drug costs, or long-term custodial care for chronic conditions such as Alzheimer’s.

Get a Free Medicare Supplement Quote

How much does a Medicare Supplement plan cost?

Like other health insurance plans, Medicare Supplement plans will vary in price depending on a number of factors. The big ones include:

• Your age
• The state you live in
• Your gender
• Tobacco use
• The provider you’re going with

Because there are 10 different standardized Medigap plans, the plan type is also going to have a big impact on how much you’re paying. For example, Medigap High Deductible G can start as low as $40 in certain areas. Meanwhile, Medicare Plan D can be over $300.

Here’s what you need to remember: The cost of your Medicare coverage is about much more than just the premium. You need to account for your personal health needs. Sometimes, buying the most affordable option can cost you even more money in the long run. (This is where we come in … Ask your Personal Benefits Manager for a free consultation).

Who has the cheapest Medicare Supplement plans?

For most Medigap plans, the price varies by both state and provider. For example, a particular provider might have the best rates on Plan F in one state, but not in another. This is another reason why it pays dividends to run your situation by a professional.

Which Medicare Supplement plan is the most affordable?

If you’re looking for the cheapest Medigap plan, Plan K is a good place to start. But Plan K only covers 50% of Part B coinsurance, hospice care, skilled nursing, and the Part A deductible. (Other Medigap plans cover 100% of these services, and can therefore save you more over time).

According to research by Value Penguin, the average cost for a Medigap Plan K is $77 per month.

However, you still retain a lot of risk.

If you’re considering a Plan K policy to save monthly costs, you should probably consider the Medi-Share 65+ healthsharing plan, detailed below. If you’re younger than 75, it’s only $22 more per month. But your out-of-pocket costs will be much lower if you need care. 

Consider Future Price Increases

It’s important to consider future Medigap price increases. Medigap premiums can and often  increase over time. The plan that shows the lowest premium today may have much higher total out-of-pocket costs over your lifetime.

When you’re looking at a Medigap policy, check to see how the policy is “rated.” This determines how the insurance company will handle price increases going forward.

There are three basic approaches:

1. Community rating.

With community rating, the insurance company charges the monthly premium to everyone who has the Medigap policy, regardless of age.

That means you won’t get an age-based increase as you get older.These plans may have higher premiums for younger plan members than other plans. But the pricing tends to be relatively stable. Your premiums may go up because of inflation and other factors, but not because of your age.

2. Issue-Age-Rated.

Also called “entry-age rated.” These plans are rated based on your age when you bought your policy.Premiums are relatively low if you buy in at age 65. The older you are when you first enroll, the higher your premiums.

Again, your premiums may increase over time due to inflation and other factors, but not because of your age.

3. Attained Age-Rated.

Your policy pricing is based on your current age, and goes up with your age over time.These plans tend to have the lowest premiums for 65 year-olds. But plan beneficiaries also experience the greatest price increases over time compared to other rating methods.

If you don’t want your Medigap premiums to go up by a large amount from year-to-year, you may need to be prepared to pay a little bit more in the short run.

If you are not yet aged 75, you should also consider the Medi-Share 65+ alternative, details below, which has a level price guarantee until your 75th birthday.

The Medi-Share 65+ Healthsharing Alternative

Medi-Share 65+ is a more affordable non-insurance alternative to the more popular and comprehensive alternative to the more comprehensive and popular Medigap plans currently open to new enrollees: Medigap Plan G and Plan N. 

Medi-Share isn’t insurance. Instead, it’s a non-profit, faith-based healthsharing ministry whose hundreds of thousands of members nationwide have agreed to help share each other’s medical burdens.

Medi-Share 65+ is the healthsharing plan designed specifically for Medicare beneficiaries.

It provides sharing benefits comparable to Medigap Plans G and N. With Medi-Share 65+, you are responsible for an annual household portion (AHP) of $500. This serves the same function as your deductible under Medigap and other conventional insurance policies.

This annual household portion is calculated per household, not per individual, as it is with Medigap plans.

Once you pay the first $500 for medical services covered under Original Medicare but not paid by the government, your fellow MediShare 65 Plus members pick up the rest, for the remainder of your plan year.

However, Medi-Share 65+ is available at a significantly lower monthly cost compared to Medigap Plan G or N.

While Medigap prices vary widely depending on your location, pricing for Medi-Share 65+ is uniform no matter where you live:

Age 65 to 74: $99 per month
Age 75 and up: $150 per month
(As of 2023)

If you enroll in Medi-Share 65+ prior to age 75, you will receive guaranteed level pricing until you turn 75.

When you’re looking for Medicare supplement plans, it’s a good idea to make a side-by-side comparison with current Medi-Share 65+ prices. In some higher-cost areas of the country, choosing the Medi-Share cost-sharing alternative instead of a conventional Medigap health insurance policy can save hundreds of dollars per month.

How to Enroll in Medi-Share 65 Plus – Step-by-Step

If Medi-Share 65+ is a good match for you, enrolling is very easy, and takes just minutes!

Here’s how to sign up for Medi-Share 65+:

First, you’ll need your Medicare Card Number or benefits verification letter from Medicare.

• Click the enrollment link here, and answer some basic contact information.
• Click “I’m not a robot,” and submit.
• On the next page, click the date on which you want your Medi-Share 65+ membership to become effective. You have a choice of three dates across the top.
• Enter your state of residence, zip code, marital status, and date of birth of the oldest person enrolling on your application.
• Enter the number of people applying in your household.
• Click “See Pricing.” If the birthday you entered puts you or the oldest applicant at age 65 or older, the next page will give you pricing for the Medi-Share 65+ plan.
• Click “Select.”
• Enter the primary applicant’s identifying information.
• Click “Onward.”
• Enter your address information.
• Click “Save and Continue.”
• The next page will ask you if you are enrolled in a Medicare Advantage or Medigap plan, or if you plan to be when your Medi-Share plan becomes effective.
• To join Medi-Share 65+, you must click “No.” You only need one of these plans. You cannot join Medi-Share 65+ at the same time you’re enrolled in either Medicare Advantage or Medigap. If you’re transitioning from either plan to Medi-Share 65+, you must cancel your old plan when your Medi-Share 65+ plan becomes effective.
• Enter your 11-digit Medicare number from your Medicare Card or benefits verification letter.
• Enter your Medicare Part B start date, using the drop-down menu.
• Enter your Medicare.
• Click “Continue.”
• Answer the remaining questions as prompted.
• Select a payment method.
• Cancel other Medicare Advantage or Medigap insurance as of your Medi-Share 65 Plus effective date.

If you have any questions or hit a glitch on your application, call us at 800-913-3416, or make an appointment with a Personal Benefits Manager.

Medicare Prescription Drug Coverage

Original Medicare does not cover prescription drugs. Neither do Medigap policies, nor Medi-Share 65+. Some Medicare Advantage (Part C) insurance plans include prescription drug coverage, but not all of them.

If you enroll in a Medigap or Medi-Share 65+, or in a Medicare Advantage plan that does not include prescription drug coverage, you should consider purchasing a standalone Medicare Part D plan. 

Again, your Part D plan premiums will vary based on your age, sex, location, and other factors. But according to research from the Kaiser Family Foundation, the national average monthly cost for a Medicare Part D prescription drug insurance policy as of 2024 is $43 per month.

That represents an increase of 10% compared to 2023.

There’s a big cost spread among the different prescription drug plans. The cheapest nationally available plan is $6, while the most expensive Part D plan costs $111 per month. Costs may vary based on your location.

Not all Medicare Part D plans are alike. You should also ask your Personal Benefits Manager or agent about the various internal plan costs, including deductibles and copays.

As of 2024, Medicare Part D plans may have a deductible of up to $505 before your plan begins to pay benefits for drugs other than insulin products.

For example: your out-of-pocket costs will be much higher for brand-name drugs compared to generics.

Most generics will be very affordable. But more recent brand-name drugs may carry co-insurance costs from 15% to 25% for drugs on the formulary’s “ preferred” list, and from 40% to 50% on non-preferred drugs.

As of 2024, new federal rules require providers to cap out-of-pocket insulin costs at $35 per month.

Medicare Part D Costs for Higher-Income Individuals

If your income is above a certain limit ($97,000 if you file individually or $194,000 if you’re married and file jointly, as of 2024, you’ll need to pay more for a Medicare Part D plan). The extra amount you must pay is sometimes called “Part D-IRMAA”.

Medicare will use your 2023 income for calculating this amount, not your 2024 income.

If you fall in this category, your Part D-IRMAA Premium Adjustments will be as follows: 

If you are married but file separately and your income falls below $97,000 per year, you’ll pay only your Part D premiums.

If your income is over $97,000 but less than $403,000 and you file separately, your Premium Adjustment will be $70.

If your income is over $403,000, you’ll pay an additional $76.40, in addition to your Part D premium for the plan you select.

Note that this Part D-IRMAA premium adjustment doesn’t go away if you get your prescription drug benefits within a Medicare Advantage plan. You’ll still have to pay it.

If you’re not sure whether you will be required to pay extra for your Part D benefits under IRMA, the Social Security Administration will tell you. 

What about Medicare Advantage?

When it comes to shoring up your Medicare coverage, Medigap plans are not the only option. With Medicare Advantage (MA), you can get even more comprehensive coverage, without having to buy and maintain multiple plans. You get all the same coverage as Parts A & B, in addition to other critical things like vision, dental, and long-term care.

However, MA plans also come with a few downsides. Specifically, you could see higher out-of-pocket costs and will be more restricted on which doctor’s you can visit.

If you’re not sure whether to go with Medigap or Medicare Advantage, give your Personal Benefits Manager a call. We’ll give you everything you need to know to make the right decision.

How do I get the lowest rates on Medigap?

These days, it seems like you can get a Medicare Supplement plan just about anywhere. But just choosing the first provider you see is not a good idea. If you want the absolute best rates available, you need to work with someone who truly knows the territory.

At MediGap Advisors, we believe that people should be as informed as impossible before buying health insurance. Our experts are equipped with up-to-the-minute info on every Medicare plan on the market, from standalone Medigap plans to low-cost Medicare Advantage. And better yet, we’re paid by Medicare, not you. That means that you’ll never pay a dime for our services, and you don’t have to worry about being pushed into a plan that isn’t a good fit.

Ready for your free Medigap consultation? Click here or call 800-913-3416.Here are some additional articles on Medicare supplement plans: Should I Switch Medicare Supplement Plans? | When to Sign Up for a Medicare Supplement or Medicare Advantage Plan

Here are some additional pages related to this article: Available Medicare Supplement Insurance Plans | Medicare Medical Savings Accounts

For more details, read our exclusive Medicare Advantage and Supplement Guide, updated for 2024.

Click here to access the newly-updated Medicare Playbook 2024 Edition.