Your Medigap plan costs you $2,600 a year: It pays to shop around

About 12.5 million Medicare beneficiaries were enrolled in Medigap plans in 2022, according to KFF’s most recent comprehensive data.

That represents about 42% of everyone in original Medicare. Put another way, roughly four in 10 people with original Medicare buy a Medigap policy to supplement their coverage.

A separate KFF analysis of 2023 NAIC data found that the average Medigap premium was $217 a month, or about $2,604 a year. Premiums vary widely by state, plan type, and the insurer’s pricing method, whether it is issue-age, attained-age, or community-rated.

Plan G is a good example of this variation. The average premium for Plan G was $164 a month in 2023, or about $1,968 a year, though costs differed significantly depending on where beneficiaries lived.

Medigap policies are standardized under federal law. Each plan with the same letter must offer the same basic benefits, no matter which insurer sells it. These policies are designed to cover the gaps left by Medicare Part A and Part B, including deductibles, coinsurance, and copayments.

For new enrollees, Plan G remains the most popular option because it provides the broadest coverage available today. Once beneficiaries meet the annual Part B deductible, Plan G covers nearly all out-of-pocket costs for Medicare-approved services.

Medigap plans are standardized by law and are designed to fill the “gaps” in Original Medicare (Part A and Part B). Medigap coverage is consistent across every insurance company for a plan of the same letter (e.g., Plan G is the same whether sold by Company A or Company B).

Now, as part of our Man vs. Machine series, we asked Google’s Gemini AI assistant: Is it worth shopping my Medigap plan each year?

Below is Gemini’s answer, along with our expert’s critique.

Gemini: Shop Medigap each year

The short answer is: It can be highly beneficial to shop your Medigap (Medicare Supplement Insurance) plan, but the ability to switch plans easily without medical underwriting is usually limited after your initial enrollment.

Here is a breakdown of why it’s worth comparing prices and the important considerations for switching.

Why Medigap shopping is highly recommended

Since all Medigap plans of the same letter (e.g., Plan G) must offer the exact same standardized benefits regardless of the insurance company, the only real difference is the premium (monthly cost) and the company’s customer service/history of rate increases.

• Significant Premium Variation: Premiums for the same Medigap plan letter can vary significantly — sometimes by hundreds of dollars per month — between different insurance companies in the same area. Shopping around ensures you’re not overpaying for identical coverage.
• Annual Rate Increases: Medigap premiums almost always increase yearly due to inflation, rising health care costs, and, for some plans, your increasing age (attained-age rating). These rate hikes can be substantial, often 10% or more, making it worthwhile to compare costs annually or every few years.

The major hurdle: Medical underwriting

While you should shop and check prices annually, the ability to switch to a cheaper plan or a different company is the tricky part.

In most states, if you are outside of your one-time, 6-month Medigap Open Enrollment Period (which starts when you turn 65 and enroll in Medicare Part B), you will be subject to medical underwriting to switch policies.

• What this means: The new insurance company can review your health history and pre-existing conditions. They can use this information to:
  Charge you a higher premium.

  Deny you coverage entirely.

If your health has declined since you first enrolled, shopping around may only confirm that your current, automatically-renewable policy is still your best option, despite the rate increases.

Key exceptions and strategies for switching Medigap policies

There are a few situations where you can switch Medigap policies without medical underwriting:

Conclusion and next steps

For most people, the decision of whether to switch hinges entirely on whether they qualify for a guaranteed issue right or live in a state (like Massachusetts) with continuous open enrollment.

If you are in a state like Massachusetts with continuous open enrollment, you benefit from a state rule that allows you to switch Medigap policies at any time of the year without medical underwriting. Therefore, for you, it is absolutely worth shopping your Medigap plan each year to find the lowest premium for the same coverage.

The expert responds

Melinda Caughill, the president and co-founder of i65.co, had this to say:

Nicely done, Gemini! The last time I asked an AI about Medigap policies, it missed the Guaranteed Issue Rights entirely, which is terrifying, since that’s the single biggest hurdle in changing Medigap policies.

Gemini was also correct in noting that plans with the exact same benefits can cost hundreds (or even thousands) of dollars more than others. That point cannot be overstated.

If I’m going to nit-pick (which I believe is the entire spirit of this column), the only gap in Gemini’s answer is this: If it’s worth comparing Medigap policies, how does a person actually do that?

Here’s what I tell my clients:

Medigap policies are cost insurance, not health insurance. Medicare decides what’s covered and which doctors you can see. Your Medigap policy simply pays the leftover costs — deductibles, coinsurance, and copays — exactly as federal standardization requires (or state standardization in Massachusetts, Minnesota, and Wisconsin.

There is zero wiggle room. A Plan G from Blue Cross Blue Shield must pay those costs identically to a Plan G from UnitedHealthcare.

When people say, “I love my BCBS Plan G because I can see all my doctors and never have a copay,” they could replace “BCBS” with almost any other insurer, and the statement would still be true.

So if the benefits are the same, how do you compare Medigap policies? It always comes down to two questions:

1. What is the premium today?

This is easy to find. Simply go to Medicare.gov and pull a quote based on your age, sex, and tobacco use.

2. How are premiums likely to increase over time?

This is the harder and far more important question. Forecasting premium increases is a complex mix of the risk pool, policy pricing method and loss ratios.

Risk pool size: Essentially, how many people are in the plan in your state?
The purpose of insurance is to spread risk. A $500,000 medical claim in a 39-person risk pool is very different from the same claim spread across 39,000 people. Larger pools usually mean more stability and fewer dramatic spikes.

Pricing method: Is the plan attained-age, issue-age, or community-rated?
Attained-age plans increase twice per year (once for your birthday, once for inflation). Issue-age plans don’t increase due to birthdays. Community-rated plans technically don’t either, but many reduce an age-related discount, producing a birthday-adjacent bump. How many increases you experience each year can dramatically affect long-term costs.

Loss ratios: This is a measure of how much of each premium dollar goes back out the door in health care claims. By law, insurers can keep up to 35 cents per dollar for admin and profit. If they consistently keep the full amount, there’s little justification for big increases. If they’re losing money, spending more on claims than they collect, you can absolutely expect much steeper hikes.

Looking at these factors (along with historical rate increases) gives you a clearer picture of the future. Granted, none of this is a perfect science, since actuarial math is notoriously opaque. However, these guidelines will make you a far smarter consumer.

Finally, when should you compare plans? If you’re subject to medical underwriting, you can try to switch any time of year. You are not limited to Medicare Open Enrollment. And no, underwriting is not magically easier during Open Enrollment. I wish it were. It is decidedly not.

Related: What Medicare Part B price hike means for your 2026 Social Security

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