| Medigap Policies to Investigate if Planning an Early Retirement

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supplemental health insurance | medicare | medigap | Medicare Supplement


Preparing for early retirement can often feel like a never ending series of to-do lists. Healthcare might become one of your primary focal points because you want continued healthcare coverage at affordable prices. When you’re on a fixed income, working healthcare into the budget might seem like an impossible task.

Fortunately, Medigap policies exist to help you accurately budget your healthcare costs. As the name suggests, Medigap insurance helps bridge the gap between what Original Medicare insurance covers and what it doesn’t.

Let’s dive into the specifics about Medigap policies and what you can expect.


Doctor explaining benefits to patient

Medigap is a type of healthcare insurance that provides additional coverage for Medicare policy holders. You’re eligible for Medigap when you reach age 65 and have joined Medicare Parts A & B.

There are 10 distinct Medigap policies from which to choose. Each offers a different set of coverages, so you can apply for one that fits your specific needs. The plans are labeled with letters just like Medicare: A, B, C, D, F, G, K, L, M, and N.


As you can see from the chart above, Medigap policies can cover anything from Medicare Part B coinsurance and copayments to Part A deductibles and foreign travel emergency.

But which Medigap policy will work best for you?


Plan F is the most comprehensive and popular Medigap insurance option. It covers 100 percent of your out-of-pocket costs except for the plan’s premium and the Part B premium as of 2018.

However, Plan F also costs the most out of all Medigap policies.

Medigap premiums vary widely, even within the same plan. Although the coverage levels are standardized, each insurance company sets its own premiums for customers. It’s essential to conduct thorough comparison shopping before you decide to buy a comprehensive plan like F.

The best reason to choose Plan F lies in its predictability. If you visit your doctor, for instance, you won’t have to part with a copay as you check out. Your costs remain largely fixed, so you can budget your finances more effectively.

Medigap Plan F will disappear in 2020. If you apply for the plan and are accepted before then, you’ll be able to keep it.


If you’re willing to assume slightly more risk with out-of-pocket expenses, you might find Plan C or G more attractive. Plan G is nearly identical to Plan F except that it doesn’t cover your Part B deductible.

Meanwhile, Plan C covers everything that Plan F does except for Part B excess charges. Physicians who accept Medicare can charge as much as 15 percent over what Medicare covers.

However, you can find general practitioners and specialists who don’t generate excess charges. You’ll save considerable money on your Plan C premium over Plan F, so you’ll have extra cash for expenses related to any excess charges a physician might add to your bill. Plus, unlike Plan G, Plan C covers 100 percent of your Part B deductible.

If you want to save money on your monthly bills, and if you’re already in good health, a plan like C or G might work better for you than Plan F. This is especially true for people planning on early retirement.


If you want the lowest possible premiums, Plans A and B should be on your radar. They cover just the basics, but they still allow you to save money over Original Medicare insurance. Low-premium Medigap policies lower your monthly expenses.

Just keep in mind that you’ll need a greater risk tolerance. For instance, neither Plan A nor Plan B covers deductibles for Parts A and B. This means that you’ll have to meet your deductible for both hospital and doctor visits.

While you can technically change your plan at any time, you will most likely be subjected to underwriting. That is unless you qualify for a guaranteed-issue right. When you’re planning for an early retirement, you might want to take into consideration how your health may change over the years when considering which plan is right for you.

If you decide to change your Medigap plan later on, you might be subjected to underwriting. The only exceptions are when you have guaranteed issue rights. Deciding on the best Medigap plan for you from the beginning will help avoid potential underwriting in the future.


There are only two Medigap policies that impose limits on out-of-pocket expenses. Plan K limits those costs to $5,240 in 2018, while Plan L sets the cap at $2,620. These limits can help you control health-related spending.

The downside is that these plans cover smaller percentages of certain expenses. For instance, Plan K only covers 50 percent of Part B coinsurance and copayments. These two plans cover 50 percent and 75 percent, respectively, of the first three pints of blood.


There is no one “right” answer when it comes to Medigap policies. You have to consider the amount of risk you’re willing to assume as well as other factors, such as your financial health.

If you’re planning on retiring early, you might be able to assume more risk. With that in mind, you can save money on your Medigap insurance policy premiums, which could help you financially in the long run.

Consider, as well, any coinsurance you might have and any pre-existing health conditions in your medical history. For instance, if you have to visit your general practitioner regularly for checkups related to a chronic illness, you might want to investigate Medigap policies that cover 100 percent of those copayments.


What is Medigap? It’s an insurance policy, separate from Original Medicare, that helps cover costs that Medicare alone doesn’t cover. You need Original Medicare (Parts A and B) before you can apply for a Medigap policy.

It can help you control your finances and avoid overspending on healthcare. There are 10 plans from which to choose, and each one offers a different level of coverage.

Some Medigap plans require you to assume more risk than others. The less risk you assume, the higher the premiums go. Early retirees can find a way to balance risk and expenses to fit their budgets and ensure their continued health.

If you’re thinking about retiring early, start learning your options with regard to Medigap insurance now. You can shop for Medigap policies until you find the one that best fits your specific needs.

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