Transcript of Medigap Pros and Cons 2025 Video

Are Medigap plans still worth the money in 2025 when so many Medicare Advantage plans offer zero premiums and extra perks like dental, vision, and hearing benefits, as well as gym memberships?

In this video, I'm going to show you the pros and cons of Medigap plans, also referred to as Medicare Supplements, in 2025 and beyond. When you first enroll in Medicare, you will choose one of two routes. One is to stick with Original Medicare and add a Medigap plan and a Part D drug plan, or two, to enroll in a Medicare Advantage plan that is offered in your local area.

Today, I'm showing you features of the first route, Original Medicare plus a Medigap plan. When you choose to stay with Original Medicare, Medicare will process your claim, and then it sends the remainder of the bill over to your Medigap company, which steps in to help pay for the things that otherwise you would've had to pay. Things like your hospital and outpatient deductibles, copays, and coinsurance.

There are several different Medigap plans that you can choose from, but today, the most popular plans are the ones with the most coverage, such as Medigap Plan G and Plan N, which have the most comprehensive coverage after you pay your Part B deductible.

With that said, let's dive into the pros and cons of Medigap plans. When you enroll in a Medigap plan, also sometimes called a Medicare Supplement, you can choose to see any provider that accepts Medicare nationwide. Medicare has more than one million providers in the United States, and the only question you'll ask your provider is, "Do you accept Original Medicare?" If he or she says yes, then you can use your Medigap coverage there, and it will pay exactly as it's supposed to, no matter which insurance company you purchase your Medigap policy from.

So, it's great for people who travel a lot in the U.S. or live a snowbird lifestyle, as you can use this coverage anywhere in the nation. There are no networks involved. There are some Medicare beneficiaries who have the means to pay a higher premium for a Medigap plan and want to do so in order to have that freedom to choose any Medicare provider nationwide. For many years, this freedom of access really could only be found in Medigap plans. However, in recent years, we have started to see Medicare Advantage plans also expanding their access.

Now, at Boomer Benefits, we work with some of the largest insurance companies offering both types of plans, and in Medicare Advantage plans, most of these now have developed national network features, which have greatly improved your access to providers when you are traveling outside of your home local area. Even so, if freedom of choice to any Medicare provider is the most important thing to you in choosing coverage, you really can't go wrong with a Medigap plan.

Another thing that many policyholders like about their Medigap plans is that they don't have to choose a primary care provider. If one day you decide that you need to see a specialist, you can simply schedule an appointment with any doctor that accepts Medicare and is seeing new patients.

Some Medicare Advantage plans, particularly the HMO network plans, which have the richest benefits by the way, will require you to choose a primary care provider and may require you to obtain a referral to see a specialist. Perhaps you have been in HMO plans your whole working career, and this just really doesn't faze you. However, if it does concern you, then you might consider either a Medigap plan or one of the Medicare Advantage PPO plans, which offer more flexibility.

Another great thing about most Medigap plans is that their benefits do not change from year to year. If you decide you want a Medigap Plan G, you will know exactly which benefits come with that plan, no matter which insurance company you buy it from. From year to year, when Medicare adjusts its deductibles, your Medigap plan continues to pay exactly how it was supposed to. You don't have to review the coverage each year to see what's changing from one year to the next.

However, you will need to review your notices from the Medigap company about rate increases. Just like any other type of insurance, Medigap plans tend to have rate increases every so often to help keep up with healthcare inflation. When you get those notices in the mail, you can simply call us here at Boomer Benefits, and our client service team can help you try to shop for a similar plan with a better rate if you can pass the underwriting required to change Medigap plans in your state.

Medigap plans cover all or part of your Medicare cost sharing, so it is very easy to estimate exactly what you'll owe for a particular healthcare service. For example, Part B covers 80% of your outpatient benefits after you've met your deductible, and popular plans like Plan G cover the other 20%. You don't pay anything out of pocket for outpatient services after you have met your Part B deductible, and lots of people really enjoy that.

And it's similar for hospital spending, too. If you enroll in a Medigap plan that covers your Part A deductibles and copays, you'll know that you'll have solid coverage for an inpatient hospital stay, with little to nothing out of pocket.

As you can see, there are a lot of great things to really like about Medigap plans. So, then what might be some things that people don't like about Medigap plans that make them want to consider the other type of coverage called Medicare Advantage? Let's take a look.

As we just discussed, there are several attractive features about Medigap plans. So, one of the downsides of having such good coverage is that you'll pay more for it. Premiums for Medigap plans are often much higher than Medicare Advantage plans because of all the things that we just shared. No network, no having to select a primary care doctor or get a referral to see a specialist, and predictable low backend spending.

Furthermore, in recent years, we've seen the annual Medigap rate increases for Medigap go up. We used to see rate increases for Medigap run around 5% per year, but in the last couple of years, we've started to see a rate increase of around 13% to 15% per year become the norm.

Now, these regular annual rate increases seem to be getting more and more difficult for many Medicare beneficiaries to sustain over the long term, especially considering that these premiums are on top of the Medicare Part B premiums that are also being deducted from your Social Security check, and you have to add on a separate Part D drug plan, many of which also have monthly premiums.

Medicare Advantage insurance companies, on the other hand, remained priced very low from year to year, with many plans charging you a zero premium, which means you pay nothing for the plan other than what you're already paying for Medicare Part B.

Now, this is really something to consider. If your initial Medigap premium that we quote you feels like a stretch, then ask for quotes for both types of coverage, and we can help you decide which makes sense for you for the long term.

Medigap plans fill in the gaps in your Original Medicare Part A and B benefits only. They do not include outpatient drug coverage. Instead, you'll purchase a standalone Part D drug plan to go alongside Original Medicare and your Medigap plan. This is then just fine for many years, as Part D premiums have generally been pretty reasonable and affordable.

However, the passage of the Inflation Reduction Act will make Medigap plans more tricky in the future. Though the Inflation Reduction Act reduced the true out-of-pocket costs for beneficiaries to $2,000 for their covered prescription drugs each year, this is not necessarily good for everything.

While Congress probably had good intentions for this, there were a lot of unintended, not-so-good consequences. First, we saw several carriers completely exit the Part D market altogether, and some of the other Part D companies reduced their plan offerings from three plans to just one plan. So, now, Medicare beneficiaries will have fewer choices for Part D coverage and fewer agents to service them, which I'll explain in a minute.

Overall, from 2024 to 2025, we saw a decrease from 22 national Part D plans to just 12 national plans in 2025. Second, those carriers that decided to stay in the market initially came in with these huge bids for Part D that would've increased drug plan premiums to well over $100 a month. So, the administration had to step in with a premium stabilization program to bring those premiums down for beneficiaries for now, but at an enormous cost estimated to be more than $7 billion.

When the federal government has to subsidize your drug plan by paying $159 a month to the insurance company, it has completely undermined the original intention of the legislation to lower costs for the Medicare program and for beneficiaries. Medicare is already on limited time before funds begin to run out unless Congress acts to sustain the Medicare program. So, this certainly didn't help the situation.

How long will they actually be able to sustain this program before standalone Part D drug plans skyrocket? Well, time will tell. Even the insurance companies who took advantage of their premium stabilization to lower standalone Part D premiums for 2025 can still increase the monthly premium you're goint to pay for Part D next year by as much as $35. Well, a $35 a month increase in your standalone Part D drug plan next year is not likely to be well received by beneficiaries who are also paying both for Part B and Medigap.

Lastly, to absorb the blow of the lower drug cap, some insurance companies decided to stop paying commissions to insurance agents who Medicare beneficiaries usually rely on for good advice about their drug coverage.

Part D drug plans had normal service issues like prior authorizations and drug exceptions and billing problems, and these are things that your agent has probably handled for you in the past, but now will be unable to do so. This is a huge concern as there will be far fewer agents around to service these drug plans. You also need to carefully look at the formularies for drug plans in 2025. Restrictions on networks, especially preferred networks, may also occur as we go forward.

As I mentioned earlier, all Medicare beneficiaries get one time, an opportunity to enroll in a Medigap plan with no health questions asked, right at the start of your Medicare. You'll have six months from your Part B effective date to enroll in any Medigap plan that you like in your zip code. Once that period has passed, though, changing your Medigap plan without underwriting is not guaranteed in all states.

In fact, in most states, the Medigap underwriter will review your health questions on your application along with your medical record and your prescription history, and they can accept or decline your application.

Some chronic health conditions may make it difficult or impossible for you to change from one Medigap plan to another. This means that if Medigap is your preferred coverage, it is important to choose your Medigap plan wisely upfront. We can help you do that when you are ready, and our service, of course, is absolutely free to you. You can also watch our Medigap by state playlist here on YouTube to find out if your state has any special underwriting or guaranteed issue rules that would make it easier to switch.

What we've started to see at Boomer Benefits in recent years is that more and more Medigap policyholders are unable to sustain the premium increases from year to year. If that happens, you can always contact us to look at your Medicare Advantage plan options in the future. We'll want to carefully show you the differences in how the two plans work, though, before you make any transitions in your healthcare coverage.

With Original Medicare and Medigap, what you see is what you get. If you want dental or vision coverage, you would have to add that separately in a separate policy. Our clients who choose Medicare Advantage plans over Medigap plans usually do so because of the low premiums, which we have already covered, but also because of the extras that are often built into Medicare Advantage plans.

Advantage plans get paid money by Medicare when you enroll into their plan. So, they throw in lots of extras to make their plan appealing to people like you. It's common to find dental, vision, or hearing benefits already included in a Medicare Advantage plan, whereas Medigap plans, as I mentioned, generally do not cover these items without an additional expense or separate policy.

Plans may also include other extras like free gym memberships or meal delivery after a hospital stay. So, some advantage plans like that are appealing, and they may even give you a credit toward your Part B premium. And where these are available, they tend to be especially popular as so many people today are living on fixed income and inflation in recent years has taken a big bite out of their budgets.

It's important for you to know that no matter which route you choose to go, Medigap or Medicare Advantage, one is not better or worse than the other. They are just different. And you want to choose the one that best suits your needs and your budget.

At Boomer Benefits, we have many clients who are quite happy on Medigap plans and can sustain the Part D premiums for now. And we're also seeing more and more beneficiaries choosing Medicare Advantage plans, and our clients on these plans like them fine, especially since they can get free support from our client service team on the backend, so that they are never alone in dealing with Medicare.

Now, our team is unbiased, and we can help you choose the type of coverage that really works best for you personally, your needs, and your budget. So, if you would like to learn more about whether the features you'll find in Medicare Advantage plans are worth having to deal with a network of providers, check out this video next.