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Medicare Supplement Insurance, or Medigap, covers “gaps” in Original Medicare coverage, including certain copays, coinsurance and deductibles.
Some Medigap plans have a high-deductible option. High-deductible Medigap plans have lower premiums than the standard versions, but you have to pay the higher deductible for coverage to kick in.
Whether or not a high-deductible plan is worth it depends on the difference between your premiums for each version (high-deductible and standard).
Here’s what you need to know about high-deductible Medigap Plan F and Plan G.
Still deciding on the right carrier? Compare Medigap plans
How do high-deductible Medigap plans work?
There are 10 types of standardized Medigap plans with letter names in most states. The benefits for each plan type are regulated by the government. Only two types have high-deductible versions: Plan F and Plan G. If you have a Medicare Advantage plan, you can’t also buy a Medigap plan.
Medigap Plan F isn’t available to Medicare beneficiaries who became eligible for Medicare on or after Jan. 1, 2020. Medigap Plan G is the most similar option that’s available to all Medicare beneficiaries, and it’s also available as a high-deductible plan.
The standard and high-deductible versions of these Medigap plans cover the same benefits; the difference is when that coverage kicks in. Standard plans cover their benefits from the start, but high-deductible plans start paying for covered services only after you meet the annual deductible.
What do high-deductible Medigap plans cost?
You’re responsible for two kinds of costs with a high-deductible Medigap plan — the premiums and the deductible. The deductible is set by law, and it’s the same for everyone: $2,700 in 2023 ($2,800 in 2024). The Part B deductible and the cost-sharing you pay out of pocket apply toward the high deductible amount.
Premiums aren’t the same for everyone. The private health insurance companies that sell Medigap plans set their prices based on factors that can include your age, sex, location, tobacco use and health information, according to Medicare.gov.
Because high-deductible Medigap plans require you to meet the deductible before the plan pays for covered services, their premiums are lower than the standard versions. For example, a company might charge a new 65-year-old Medicare beneficiary $105 per month for the standard version of Medigap Plan G, but $35 per month for the high-deductible version, according to NerdWallet's 2022 analysis of price quotes from insurance companies that sell Medigap.
The difference in premiums between standard and high-deductible versions can grow as you age. For example, an 85-year-old Medicare beneficiary might pay $195 per month for standard Medigap Plan G or $60 per month for high-deductible Plan G.
When is a high-deductible Medigap plan worth it?
A high-deductible Medigap plan makes more sense than a standard version if the amount you spend to meet the deductible and premiums are less expensive than the premiums of a standard insurance policy.
If you’ll meet the deductible
If you’ll spend enough on coinsurance, copayments and deductibles to meet the Medigap deductible for a high-deductible Medigap plan, it’s worth comparing quotes to see which version is most cost-effective.
For the high-deductible version to cost less than the standard option, the lower premiums have to outweigh the added cost of meeting the deductible.
Benefits for high-deductible Medigap plans kick in after a deductible of $2,700 in 2023 ($2,800 in 2024). Divided over 12 months, that’s $207.50 per month. A high-deductible plan would need to have premiums at least $207.50 per month less than the standard version for you to spend less on it overall.
If you won’t meet the deductible
A high-deductible Medigap plan isn’t a good choice if you’re fairly certain that you won’t meet the deductible.
If you spend less than the deductible, the plan doesn’t pay for any services. Effectively, you get nothing in return for your premium payments.
If you’re not sure whether you’ll meet the deductible
In this case, you might want to consider your financial situation and how much you can afford to spend on out-of-pocket medical costs to determine if a high-deductible Medigap plan is right for you:
If you don’t end up meeting the deductible, then you’re out the cost of the premiums — which are generally pretty low — and also risk losing coverage that’s available with a standard Medigap plan.
If you do meet the deductible, you’re covered after that point, so you limit your potential out-of-pocket spending in case of unexpectedly high medical costs.
Find the right Medicare Supplement Insurance plan
Because Medigap plans are standardized, you can get precisely the same Medicare benefits from any company offering the plan. So when you shop, keep these considerations in mind to find the best policy to fit your needs:
Is your preferred plan available? Health insurance companies don’t always sell every plan, so check who sells the plan you want to buy in your area.
What are the premiums? Prices for the same plan can vary between companies, so check to find the most competitive rates.
Will your premiums change over time? Most policies cost more as you age, but some companies offer policies that let you lock in a price when you sign up.
Are there extras? Medigap plans’ core benefits are standardized, but in certain cases, some companies include such perks as discount programs or gym memberships.
If you have additional questions about Medicare, visit Medicare.gov or call 800-MEDICARE (800-633-4227, TTY 877-486-2048).