The Medigap Misunderstanding: The Medicare Decision That Can Cost You Later

Choosing your Medicare coverage is one of the most important financial and healthcare decisions you’ll make as you approach age 65. Yet there’s a common mistake many people don’t see coming—one that can quietly limit your future options and significantly increase your out-of-pocket costs later on.

We call it the Medigap Misunderstanding. Understanding how it works now can help you make smarter, more confident Medicare choices.

Your Two Main Medicare Coverage Paths

When you first enroll in Medicare, you generally choose between two primary coverage paths:

• Option 1: Original Medicare (Parts A & B) + a Medigap (Supplement) Plan + a separate Part D drug plan
• Option 2: A Medicare Advantage (Part C) Plan

Medigap is popular because Original Medicare typically pays about 80% of approved costs, and there is no annual out-of-pocket maximum on the remaining 20%. For people on a fixed income, even routine medical costs can add up quickly.

Medigap vs. Medicare Advantage: A Quick Comparison

Original Medicare + Medigap	Medicare Advantage (Part C)
Visit any doctor nationwide who accepts Medicare	Limited to the plan’s provider network
No referrals usually required	Referrals often required
Medigap (such as Plan G) covers most costs after the Part B deductible	Copays and coinsurance until you hit an out-of-pocket maximum (often $8,000+)
Requires a separate Part D prescription drug plan	Drug coverage is typically included
No built-in dental, vision, or hearing	Often includes dental, vision, hearing, and gym memberships

Where Things Get Complicated

Many people assume they can freely switch between Medicare Advantage and Medigap every year during Medicare’s Annual Enrollment Period. In most states, that is not true.

After your initial 6-month Medigap Open Enrollment Window (which begins when you first enroll in Part B), most Medigap plans require medical underwriting. That means you may have to answer health questions.

Depending on your health at that time, an insurance company may:

• Decline your application
• Charge you a higher premium
• Or limit your coverage

This is why many people who start with Medicare Advantage and later want to move to Medigap due to changing health needs find themselves facing unexpected barriers.

Are There Any Exceptions?

Yes—there are a few important exceptions where Medigap is guaranteed without health questions:

• Moving out of your Medicare Advantage plan’s service area
• Losing employer or group coverage through no fault of your own
• Leaving a Medicare Advantage plan within your first year (known as a “Trial Right”)

Additionally, a few states—such as New York, Connecticut, Massachusetts, and Maine—allow Medigap enrollment without underwriting year-round.

Outside of these special situations, eligibility is typically based on your health. Many people don’t learn this until they already need care.

Another Important Concern: Rising Premiums

Even after you’re approved for a Medigap plan, it’s important to understand that premiums typically increase over time. Rates are influenced by:

• Your age
• Inflation
• Healthcare usage in your area
• The pricing structure of your plan (community-rated, issue-age-rated, or attained-age-rated)

In some regions, increases are modest. In others, especially with smaller or aging policyholder groups, premium increases can be more noticeable.

Tips to Protect Yourself

• ✅ Work with an experienced, AHIP-certified Medicare broker
• ✅ Make an informed choice at age 65—this is your best shot at Medigap without health questions
• ✅ Re-evaluate your plan regularly as needs and premiums change
• ✅ Understand how your premiums may be structured for future increases

The Bottom Line

The Medigap decision is one many people revisit—sometimes too late. Choosing your Medicare path without understanding how future eligibility and costs work can limit your options and create unnecessary financial stress later on.

Taking the time now to understand the rules, your rights, and how today’s decisions affect tomorrow’s flexibility puts you back in control.

Written by Greg O’Rourke, a multi-state independent licensed Life, Health, and Annuities agent.