Why Choose a Medicare
Supplement Plan G
Over a Medicare Advantage Plan?
by Eric Roehm MD, updated Nov. 2023
The Five Freedoms of a Medigap Plan G.
Medicare Choices at Age 65: Why a Medicare Supplement Plan G is often the best option. Strong financial pressures exist for most private health insurance companies to initially direct new enrollees to a Medicare Advantage plan. A Medicare Supplement Plan G is a much better choice for many. (Also called a Medigap Plan G). (As of 2020, there is a High Deductible version of Plan G in addition to the standard Plan G.)
1. The Five Freedoms of a Medicare Supplement Plan G.
2. High Deductible Plan G vs. standard Plan G
3. Why use an experienced independent insurance agent in your selection of your best Medicare option?
4. Summary of Medicare options on turning age 65.
5. Best Medicare option when turning 65 years of age.
6. Are there individuals best served by enrolling in a Medicare Advantage plan?
7. Cost Comparison of a Medicare Supplement Plan G to a Medicare Advantage plan.
8. Why focus solely on Medicare Supplement Plan G when other Medicare Supplement plans are available?
9. The “DIRTY LITTLE SECRET” of why most private health insurance companies slant initial enrollment information in favor of Medicare Advantage plans rather than Medicare Supplement plans.
11. Who wrote this information.
12. Useful links about Medicare
13. How to proceed in enrolling in Medicare 3 months prior to turning age 65.
14. Do I really need a Medicare prescription drug plan at time of enrollment to Medicare if I have no significant medication needs?
15. When is enrolling solely in Medicare Part A and Part B a good option?
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Five Freedoms of a Medicare Supplement Plan G
(also called Medigap Plan G)
FREEDOM 1: With a Medicare Supplement Plan G (also called Medigap Plan G), one can see any doctor that accepts Medicare. With a Medicare Advantage plan, one can usually only see a provider who is on the approved list of doctors for the HMO or PPO.
FREEDOM 2: With a Medicare Supplement Plan G, one can go to any of the vast number of hospitals or facilities that accept Medicare. With a Medicare Advantage plan, one can only go to a hospital or facility on the HMO or PPO list. (Or, in some instances, go to a physician or facility off the list, but at a considerable and often prohibitive cost.)
FREEDOM 3: With a Medicare Supplement Plan G, no specialist referral is needed. One can go directly to see a specialist without a referral. With a Medicare Advantage HMO plan, a referral is usually required before seeing a medical specialist. (With a Medicare Advantage PPO plan, a referral is not usually required.)
FREEDOM 4: Freedom from many of the payment hassles of constant copays and out-of-pocket expenses that are part of Medicare Advantage plans. With a standard Medicare Supplement Plan G, there is a small deductible per year ($240 in 2024) and $240 is the total out-of-pocket cost for the entire year. (A High Deductible Medicare Supplement Plan G version also exists and has a $2,800 per year deductible in 2024.) Comparison of standard Medicare Plan G vs High Deductible Plan G
Medicare Advantage plans typically have multiple copays with a maximum out-of-pocket cost limit of $4,000-$8,850/year.
For years with high use of medical care including hospitalizations, the total cost (including premiums) of a Medicare Supplement Plan G approach will usually be less expensive. For years with low use of medical care, a Medicare Advantage plan approach will be less expensive. (Outpatient drug copays are separate, significant costs similar for the drug plans used with both Medicare Advantage plans and Medicare Supplement plans.)
FREEDOM 5: Once a year a person with a Medicare Supplement plan has the option of leaving the plan and going to any Medicare Advantage plan without restriction, or increased cost, regardless of preexisting medical conditions.
In contrast, after initially choosing a Medicare Advantage plan, changing to a Medicare Supplement plan can be very difficult. After the initial 12 months of being in a Medicare Advantage plan, an individual usually no longer has the right to go to any Medicare Supplement plan. The individual Medicare Supplement private insurers can consider preexisting medical conditions and often deny coverage or substantially increase the cost of the premium.
2. High Deductible Plan G vs. standard Plan G
There is a standard (low deductible) Medicare Supplement Plan G with a total deductible of $240 per year (2024 information). (The standard Plan G is simply called Plan G since it is the original Plan G.) There is also available a High Deductible Medicare Supplement Plan G with a deductible of $2,800 per year (2024). The standard Plan G and High Deductible Plan G are identical except for the total yearly deductible of $240/year with the standard Plan G and $2,800/ year in the High Deductible Plan G. (Both versions of Plan G, for example, can go to any hospital or any physician that accepts Medicare.) Medical Supplement deductibles are indexed to inflation [CPI-U] and the deductibles increase with inflation each year.
The standard Medicare Supplement Plan G with a low deductible, rather than the High Deductible Plan G, is usually the better choice for most people choosing Plan G in my opinion. The standard Plan G has a higher monthly premium than the high deductible plan, but has a substantially lower yearly deductible and a greater convenience of use.
Comparative Cost: In the long run, it is not possible to say whether the standard Plan G or the High Deductible Plan G will be the least expensive. The deductible for physician fees and medical tests can rapidly add up. Medicare supplement plans are purchased from private companies. The prices of the plans vary depending on the individual company, though Medicare mandates the same scope and details of the coverage for any given plan, regardless of which company offers it. Individual companies will vary the monthly premium difference between their standard Supplement Plan G and their High Deductible Plan G. Even if the monthly premium difference is $80/month, ($960/year), deductibles from unexpected medical expenses and costs in the High Deductible Plan G can rapidly make-up and surpass that amount.
Furthermore, medical expenses tend to be lower for younger ages, and higher for older ages. When enrolling at age 65, perhaps the lower premium may save money in the initial years. In subsequent frequently less healthy years, one loses the unrestricted right to change to another type of Medicare Supplement policy. Preexisting medical conditions will then be considered when trying to switch from a standard (low deductible) Plan G to a High Deductible Plan G. The private companies that offer the Supplement policies can charge a higher price or even decline to offer you coverage. (Your unrestricted right to change to a different Medicare Supplement policy is usually a limited 7 month window of time. Of note, there are a handful of states that allow individuals to change the type of Medicare Supplement policy without consideration of preexisting conditions.)
Convenience: It is very pleasant and convenient to have only $240 of deductible before being done for the year. Medicare payment statements from the private companies are not easy to go through or even interpret at times. It is much easier to keep track of a $240 deductible being met, rather than a $2,800 deductible.
An additional viewpoint states the following “the feedback we get from clients that go this route (High Deductible Plan G) is that the lower premiums are often not worth the trouble. … best advice before enrolling in a high deductible plan is to do your homework and fully understand what you’re signing up for before you make your decision.”
3. Why use an experienced independent health insurance agent?
Medicare options, particularly at time of initial enrollment, are complex and rather overwhelming. A knowledgeable independent private insurance agent will provide more complete and less biased information than getting that information directly from a private company issuing the policies. Using an independent insurance agent usually costs you nothing, with the agent’s fee coming from the private insurance companies. An agent who gives clients the choice of both Medicare Supplement plans and Medicare Advantage plans is strongly preferable.
Both Medicare Supplement plans and Medicare Advantage plans are run by private insurance companies in a setting regulated by Medicare. If you desire a Medicare Supplement plan, your goal is to enroll with a private insurance company Medicare Supplement plan that has a long history in the marketplace with relatively stable premiums. There is no ready source for this information other than a private independent insurance agent. Seeing a comparative price list of the monthly premium prices of the multiple insurance companies that are offering Medicare Supplement plans in your area is often only possible with a private insurance agent.
If you desire a Medicare Advantage plan, the independent agent can tell you which Medicare Advantage private insurance plans have received the highest quality ratings. Otherwise, you may never hear about which Medicare Advantage plans in your area have the highest government quality ratings. (Though these ratings are imperfect, they are better than no information.)
Finding an independent health insurance agent:
-Ask your friends who have recently enrolled in Medicare if they used an independent health insurance agent that they liked.
–Possible Source for Independent health insurance agents in your area.
Disclosure: The author of this website has no financial or familial relationship to any health insurance agent.
4. Summary of Medicare options on turning age 65.
Medicare is a federal health insurance program that includes people 65 and older and certain individuals under age 65 with disabilities. There is a 7 month Medicare Initial Enrollment period that begins 3 months before the month of turning age 65 and ends 3 months after the birth month. During this period, insurance companies cannot consider preexisting medical conditions.
Obtaining Medicare Part A and Medicare Part B is required for both Medicare Supplement plans and Medicare Advantage plans.
Medicare Part A primarily covers hospital care. Medicare Part B covers doctors visits and outpatient care. Medicare Part A & B have large unlimited copays and out-of-pocket expenses. This makes having only Medicare Part A and Part B a poor option.
Two major solutions for the unlimited out-of-pocket expenses with Medicare Part A & B alone:
1) Obtaining a Medicare Supplement plan (also called a MediGap plan) that covers the deductibles and copays that traditional Medicare (Part A and Part B) doesn’t cover. Private insurance companies provide the Medicare Supplement plans. In 47 states, there are 8 standardized Medicare supplement insurance plans, each represented by a letter of the alphabet available to new enrollees turning 65. One Medicare Supplement plan letter has 2 versions. (There is a Plan G and a Plan G-high deductible version.)
Though premium costs vary, the benefits of each plan within a lettered category remain the same, regardless of the insurance company or location. For example, Plan G benefits are the same in Idaho as they are in Texas. (Three states, Massachusetts, Minnesota, and Wisconsin, use a different system and the comments on this website do not apply.)
2) Obtaining a Medicare Advantage plan (also called Medicare Part C). Medicare Advantage plans are provided by a private insurance company and take over providing Medicare benefits usually with an HMO or PPO. These plans are also highly regulated. Medicare Advantage participants are still in Medicare. However, benefits are provided and paid for by the Advantage plan private insurance company.
Both Medicare Advantage plans and Medicare Supplement (Medigap) plans require enrollment in Medicare Part A and Part B.
With a Medicare Advantage plan, a drug prescription plan is usually included. With a Medicare Supplement plan approach, a separate drug prescription plan (Medicare Part D) needs to be purchased. The government heavily subsidizes both the Medicare Advantage drug plan and the separate Medicare Part D drug plan.
5. Best Medicare option for most individuals when turning 65 years of age.
Three months before turning age 65, an appointment should be made with an independent health insurance agent who has considerable experience both in enrolling clients in Medicare Supplement plans, as well as Medicare Advantage plans.
In contrast, if you initially enroll directly with a private health insurance company you will always learn of fewer options and potentially select an inferior product for a Medicare Supplement plan or a Medicare Advantage plan.
A standard Medicare supplement Plan G is the best option for many persons turning 65 and enrolling in Medicare. There is both a standard (low deductible) and a high deductible version of Plan G.
The best option for the majority of individuals is to sign up for traditional Medicare Part A and Part B. (Signing up for Medicare Part A and Part B is required for both Medicare Supplement plans and Medicare Advantage plans.) Then obtain a Medicare Supplement Plan G to pay out-of-pocket expenses that Medicare Part A and Part B do not cover. A prescription drug plan, Medicare Part D, should also be obtained.
An alternative is to sign up for Medicare Part A and Part B and then enroll in one of the Medicare Advantage plans. This is an excellent option for a substantial number of enrollees. Most Medicare Advantage plans include a drug plan, though details vary. An independent insurance agent can offer advice regarding which Medicare Advantage plans have been rated higher in quality, and help you enroll in a Medicare Advantage plan.
If you have health insurance that will be provided by your employer or some other entity past the age of 65, then you are in a special situation. You will be best served by talking to your organization’s human resource person, as well as an independent health insurance agent. Many of the recommendations of this website may not apply.
6. Are there individuals best served by a Medicare Advantage plan rather than a Medicare Supplement Plan G?
Of course there are many individuals for whom a Medicare Advantage plan is the preferable choice. An example is a person in good health who has limited financial resources that doesn’t mind being in an HMO/PPO with restrictions placed on which doctors and hospitals are covered. Without a major illness, the Medical Advantage plan will be less expensive because there is usually no monthly premium for a Medicare Advantage HMO plan. However, with an expensive illness, the Medicare Advantage plan can result in paying thousands of dollars while the Medicare Supplement plan G has a limit of $240. (For more detailed cost comparison, see section 7.)
There are also a number of benefits that Medicare Advantage plans frequently offer that are not included with Medicare Supplement plans. These can include a free hearing test and eye test. Glasses or contacts may be covered (For example, coverage may consist of a total of $200-250 towards the purchase of contacts or glasses during a 2-year period.) Some financial assistance for a hearing aid purchase is often provided. Coverage for some dental preventative services and a gym membership can be included as well. As of 2018, Medicare Advantage plans may elect to cover some items for chronic home care as well. top of page
7. How do costs of a Medicare Supplement Plan G compare to a Medicare Advantage plan?
Update: As of 2020, in addition to the standard low deductible Medicare Supplement Plan G, there is a Medicare Supplement Plan G with a high deductible option, $2,800 in 2024, called Plan G- High Deductible. The following comments are for the standard Medicare Supplement Plan G with the lower deductible ($240 in 2024).
Costs for a Medicare Advantage plan and a Medicare Supplement Plan G differ substantially in both premium costs and potential out-of-pocket costs. A Medicare Advantage plan often has no monthly premium, while a Medicare Supplement Plan G always has a monthly premium. On the other hand, the Out-of-pocket costs with some Medicare Advantage plans can go as high as $8,850/year, while the Medicare Supplement Plan G has a maximum out-of-pocket total yearly cost limited to the Part B deductible; $240 in 2024.
There are certain costs that are identical with a Medicare Supplement Plan G and a Medicare Advantage plan. Participants in both must pay a Medicare Part B premium and that is not affected by which plan is selected. Most participants pay no premium for Medicare Part A.
A More detailed look:
Premium Costs:
Medicare Supplement Plan G + drug plan premium costs: ≈$1,860 per year
A Medicare Supplement Plan G can be obtained for approximately $120-130/month (≈$1500/year) in Austin Texas, Travis County. A prescription drug plan to go with the Medicare Plan G is $25-30/month. Total yearly cost of Medicare Plan G and prescription drug plan is approximately $1,860/year. (Of note, charges for the same Medicare Supplement plan G vary for different areas of the country. Miami, Florida, for example, has very high Medicare Supplement premium prices that are twice that of Austin, Texas.)
Medicare Advantage HMO plan including drug plan premium costs: Usually has $0 in premiums for the entire year. Medicare Advantage PPO plans usually have a monthly premium but it is typically considerably lower than a Medicare Supplement Plan G. Private insurance companies provide Medicare Supplement Plan G and Medicare Advantage plans and prices vary per individual company as well.
Out-of-pocket Costs (for seeing physicians, outpatient studies, and hospitalizations):
– Medicare Supplement Plan G: Maximum total out-of-pocket costs for the year: $240 in 2024.
– Medicare Advantage plans: Maximum total out-of-pocket costs with copays for the year typically in the range of $4,000-$8,850/year. (Out of network doctors and hospitals, when allowed, have significantly higher maximum copays).
Hospitalizations with Medicare Advantage plans are expensive with a single 6 day hospitalization resulting in out-of-pocket expenses of over $1500 in most plans. (In contrast, with a Medicare Supplement plan G, the hospitalization and physician expenses will cost at most $240 and be payable only if that deductible has not already been met with prior outpatient visits.)
The dollar amounts for out-of-pocket costs for either type of plan do not include outpatient out-of-pocket medication expenses. These additional out-of-pocket costs are similar for a Medicare Advantage plan that includes a drug plan and for a drug plan used with a Medicare Supplement Plan G. Out-of-pocket expenses can vary widely between different Part D plans.
If an individual stays healthy, a Medicare Advantage plan is less expensive If an individual gets sick and requires expensive medical care, the Medicare Supplement Plan G approach is often less expensive.
The initial selection of a Medicare Advantage plan would be much more appealing if a person was allowed select a Medicare Advantage plan initially, and then in later years switch to a Medicare Supplement plan when more extensive medical care is needed. However, this is not the case. After the initial enrollment period near the age of 65 (with some exceptions), Medicare Supplement plans can consider preexisting conditions and can deny enrollment or charge much higher monthly premiums.
8. What is the reason this discussion of Medicare Supplement plans focuses solely on Plan G?
The simple answer is that a Medicare Supplement Plan G is the best option for most Medicare enrollees currently initially enrolling in a Medicare Supplement plan. (There is both a standard [low deductible] and a high deductible version of Plan G. A case can be made that most individuals will be best served by the standard low deductible Plan G.)
There are 8 different types of Medicare Supplement plans available for new enrollees who are turning 65 years old in 2020 or later, each designated by a letter of the alphabet. Medicare Plan G offers excellent coverage. Medicare Supplement Plans C & F are no longer offered to new enrollees turning 65 as of 2020. (Anyone with a current Plan C or F can keep it indefinitely.) Medicare Plan G with the standard (low) deductible has a $240 Medicare Part B deductible in 2024. This deductible amount is indexed to the inflation rate and will change annually.
(Three states, Massachusetts, Minnesota, and Wisconsin, use a different system and the comments on this website don’t apply.) top of page
9. The “dirty little secret” regarding private insurance companies and Medicare Supplement plans and Medicare Advantage plans.
With the right patient, a health insurance company can make substantially more money by enrolling that individual in one of their Medicare Advantage plans compared to a Medicare Supplement plan. Healthy patients who make limited use of health care resources in a Medicare Advantage plan are a financial bonanza for the company. There is a strong financial incentive for a private insurance company to enroll a healthy patient into one of their Medicare Advantage plans in preference to a Medicare Supplement plan.
Also: Inspector General reports Medicare Advantage plans have been improperly denying many medical claims.
A sicker patient, particularly with multiple hospitalizations, can be costly to a private insurance company. Since a company has greater financial exposure for gain and loss in their Medicare Advantage plans, the insurance company prefers this sicker patient to not enroll in their Medicare Advantage plan, but rather in a Medicare Supplement plan. (Preferably, from the company’s perspective, this patient signs up with another company’s Medicare Supplement plan.)
Medicare Advantage plans cherry pick patients
Though this section used the words “dirty little secret”, the fact of the matter is that the private health insurance companies are simply responding to the financial incentives that are built into the system. The companies’ actions reflect the current existing financial incentives.
In summary, all Medicare Advantage plans and Medicare Supplement plans are through private health insurance companies. Since health insurance companies can make the most money enrolling a relatively healthy person into a Medicare Advantage plan, their marketing and initial enrollment methods will usually favor an initial evaluation for entry into one of their Medicare Advantage plans (when they offer both types of plans). top of page
10. How to choose the best Medicare prescription drug plan. (Can the free Medicare Advantage prescription drug plan actually cost more? -Yes)
11. Who wrote this information?
As a cardiologist I have explored the issues of Medicare insurance from both a policy viewpoint, and a personal enrollment perspective. The information presented here is to serve as a guidepost to help new enrollees with the incredibly complex maze of Medicare choices. There are strong financial incentives for health insurance companies to enroll healthy individuals in a Medicare Advantage plan, even when a Medicare Supplement plan may be in the new enrollee’s best long-term interest if all the facts were known. (An independent health insurance agent who helps clients enroll in both Medicare Supplement plans and Medicare Advantage plans is without this inherent bias.)
Much of the information on the web reflects the financial incentives for private health insurance companies to enroll healthy individuals into their Medicare Advantage plans. The information on this website serves as a counterpoint to the bias towards Medicare Advantage plans that is present in much of the information provided by health insurance companies. (As an addendum, the author has no financial relationship with any of the entities, including any private health insurance agents.)
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12. Links for signing up and learning about Medicare.
List of independent health insurance agents in your area
Find a Medigap plan from Medicare website
Signing up online for Medicare part A and Part B
Medicare Advantage plans improperly deny claims
Select most economical prescription drug plan at Medicare.gov
Scroll down and click “Find plans, Find health & drug plans”, then follow instructions below:
Detailed instructions for using Medicare.gov website to select drug plan
Medicare Advantage plans cherry picking patients
Medicare Choices as per Medicare.gov
Risk Pool Analysis reveals success or failure of Medicare Proposals
13. How to proceed in enrolling in Medicare 3 months prior to turning age 65 years of age.
Steps for enrolling in Medicare 3 months prior to turning age 65 years of age.
First, see an independent health insurance agent for advice and information.
Enroll in Medicare Part A and Part B through Social Security online or by going to Social Security office.
Then obtain a Medicare Supplement Plan G and a prescription drug plan (Medicare Part D) with the help of the private insurance agent. Alternatively, enroll in a Medicare Advantage plan.
If you have other health insurance coverage that continues age 65 and beyond, talk to your human resource person and a private insurance agent for advice as the first step. top of page
14. Do I really need a Medicare prescription drug plan if I have no significant medication needs when enrolling in a Medicare Supplement or Medicare Advantage plan?
Not obtaining a Medicare prescription plan appears to be a poor financial decision. It is true that one can always enroll in a drug prescription plan during a future annual fall open enrollment period. However, there is a lifelong surcharge that applies to the drug plan monthly premium. The penalty is 1% of the average prescription drug plan premium for every month not covered. Therefore the penalty will increase the longer you are without coverage and be paid the rest of your life. And the bigger penalty may be the cost of a future drug. If you do not have a drug plan and then need an expensive drug mid year, you must pay out of pocket until you can be enrolled the following January 1st. (If you have other creditable drug coverage such as that provided by the Veteran’s Administration, the penalties do not apply.)
Hence, not getting a Medicare Advantage plan that includes a drug plan or not obtaining a separate drug prescription plan (Medicare Part D) is financially unwise.
15. Is enrolling solely in Medicare Part A and Part B ever a good option? No.
There is an option of obtaining Medicare Part A and Medicare Part B and doing nothing further. Obtaining only Medicare Part A & B is a poor option because of the very high potential out-of-pocket costs without any reasonable limits to those costs. If an individual has no available funds for insurance and does not qualify for government assistance, a Medicare Advantage plan with a $0 monthly premium that includes a prescription drug plan is by far the better option.
