What is the Cheapest Medicare Option?

by David Bynon, last updated

If you are about to get your Medicare benefits, you might wonder if you can afford a top-shelf Medicare Supplement plan.

A better question might be, can you afford not to have Medicare Supplement Insurance?

In this article, we’re going to explore 3 cheap Medicare Supplements to see if they can save us money in the long run. We’ll also show you how you can get a Free Medicare Supplement Rate Comparison to help you find the cheapest Medicare Supplement plan where you live.

Key Takeaways

  • There are no free Medicare Supplements (Medigap). The government does not subsidize Medigap plans.
  • The 3 cheapest Medicare Supplements are Plan N, Plan K, and High-Deductible Plan G. These plans can save you hundreds of dollars each year on your monthly premiums.
  • Plan N is an excellent plan with very good coverage. You pay a $20 copay to see your doctor and a $50 copay to use the emergency room.
  • Plan K is a shared-cost plan. You pay half of all Part A and Part B out-of-pocket expenses until the plan’s annual limit is reached.
  • High Deductible Plan G covers all Part A and Part B expenses once the Part B deductible and the annual high-deductible are paid.
  • Many savvy, healthy people self-insure the high-deductible by putting away the cost-savings between a regular Plan G and the high-deductible version.

Medicare Supplement Insurance Explained in 45 Seconds

With all of its moving parts, Medicare is confusing. So let’s cut the noise for a second and focus on one single issue, Medicare out-of-pocket costs.

When all is said and done, the only purpose Medicare Supplement Insurance (Medigap) has is to help you pay your out-of-pocket costs in Original Medicare. That’s it.

Both Medicare Part A and Part B are an 80/20 cost-sharing system. The government pays 80% and beneficiaries pay the remaining 20%. A Medigap policy helps us with our 20% share.

If you are struggling with the average cost of supplemental health insurance for seniors, one of the three cheapest Medicare Supplement might be an option for you.

Medicare Supplement Insurance Mitigates Risk

Medicare coverage has two parts. Medicare Part A is hospital insurance. Medicare Part B is medical insurance.

Most of us get premium-free Part A. We paid for it through payroll taxes during the years we worked.

And it’s a good thing, too, because hospital insurance is expensive. In 2024 people who did not pay Medicare taxes pay $506 per month for their Medicare Part A benefits.

Those of us (or our spouses) that did work and paid Medicare taxes for at least 10 years get premium-free Medicare Part A. And that’s a big relief, but it does not pay all costs when you need inpatient care.

Medicare Part A has deductibles and coinsurance that can be very costly. In fact, most of us can’t afford these costs in retirement.

For example, the Part A deductible this year $1,632 per benefit period. That’s the amount you can be billed each time you’re admitted as an inpatient (time limits and related causes may apply).

On top of the Part A deductible, you’ll pay 20% of all Part B costs. If you are hospitalized, that’s 20% of every test, doctor visit, supply, and medication used to treat you.

As if the idea of these costs isn’t scary enough, it’s important to understand that there is no limit. Medicare does not put a cap on your Part A and Part B out-of-pocket costs. If your medical bills put you in bankruptcy, the federal government does not care.

Buying Medicare Supplement Insurance from a private insurance company is how you mitigate this risk. If you are open to private health insurance, Medicare Advantage plans are another option.

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Cheap Medicare Supplements

If you are qualifying for your Medicare benefits this year, there are three cheap Medicare Supplements (Medigap plans) worth looking into. They include Medigap Plan N, Medigap Plan K, and High Deductible Plan G. Below, we will compare each of these plans so you can decide on the best Medicare Supplement plan for your needs.

Let’s start by having a look at the coverage each plan offers using the following chart:

Medicare Supplement Plans Comparison Chart for 2024

Get a Free Medicare Supplement Rate Comparison

Medicare Supplement Plan N

Plan N is one of the newest of the 10 standardized Medigap plans. It covers all of the big expenses in Original Medicare. What it does not cover are the Part B deductible and Part B excess charges.

Plan N also does not fully cover the Part B coinsurance. Individuals with this Medigap policy pay a $20 copay for their doctor visits and a $50 copay to use the emergency room.

This is an excellent Medicare Supplement for healthy individuals who rarely use healthcare services. When healthy policyholders do need to see their doctor or a specialist, the costs are minimal and worth the monthly savings on premiums.

Compared to Medicare Supplement Plan G, Plan N premiums are generally 20-30% lower. With the exception of a few high-cost areas, including Florida, the northeast, and the pacific northwest, Plan N premiums are very affordable. Rates start around $90 to $100 in most areas. In some states, like Iowa, rates start at less than $70 per month.

Medicare Supplement Plan K

Plan K is one of two shared-cost plans. The other is Plan L.

What makes this plan so affordable is that policyholders pay a percentage of all Part A and Part B deductibles and coinsurance until spending reaches the annual spending limit. Plan K policyholders pay 50%, whereas Plan L policyholders pay 25%.

The problem with Plan K is that the annual limit ($7,060 per year) is now getting to be as high as some Medicare Advantage plans. And, unlike most Medicare Advantage plans, Medigap policies don’t offer any additional benefits, such as Medicare Part D for prescription drug coverage.

That said, these plans are very economical, starting in the $45 range in most areas. Even in high-cost areas, like Florida, this plan starts at around $70 per month. If you want to see the rates in your area, just answer the following questions and we’ll do the rest.

High-Deductible Medicare Supplement Plan G

Two Medigap plans have a high-deductible variant. High Deductible Plan G is available to individuals who qualify for Medicare this year. High Deductible Plan F is only available to people who qualified for Medicare prior to 2020. Plan C has the same restriction.

Once the annual deductible is met, the high deductible variants cover everything that the standard plans cover. This year the deductible is $2,800.

If you’re looking at the $2,800 deductible compared to Plan K’s $7,060 annual limit, and you’re wondering why anyone would choose Plan K, you’re not alone. It’s much easier to get to reach the annual deductible in a high deductible plan than it is the out-of-pocket limit in one f the two shared cost plans.

And, here’s the good news. High Deductible Plan G costs a little bit less than Plan K. That makes it the cheapest Medicare Supplement plan of all. In most areas, this policy starts at around $40 per month. Even in high-cost areas, like Tampa, Florida, this policy starts at around $50 per month.

Another reason to look at this plan vs. K is that it covers foreign travel emergencies, whereas K does not. If you’d like to see rates for this plan in your area, complete this form and we’ll send you a free report. Be sure to check “Lowest Cost Plans” so we know what you want.

What About Medicare SELECT Plans?

We didn’t mention Medicare SELECT plans as a cheap plan option because they are not available in most areas. Still, they are worth looking into.

Medicare SELECT policies are just like other standardized Medigap insurance policies with two notable differences. They have a provider network and their monthly premiums are much lower.

If you buy a SELECT plan, you agree to use the local provider network for all of your regular care. If the provider network does not have the specialist you need, it works like any other plan, and you can always get emergency care out-of-network.

Find Plans in your area with your ZIP Code

Can You Afford to Self-Insure?

One of the best ways to save money on car insurance is to buy a policy with a higher deductible. Let’s face it, even the slightest fender-bender will cost a few thousand dollars at the body shop.

Does it make sense to pay higher premiums or to be a better, more defensive driver? For most people, the latter works out pretty well over time. The same is true when it comes to supplemental Medicare insurance.

If you have taken care of yourself, watch what you eat, don’t smoke, and drink in moderation, you might want to look at yourself as a good candidate to self-insure.

Just like a high deductible on your car insurance, a high deductible on your health insurance can pay off, if you’re smart about it. In this case, being smart about it means putting what you save (between a regular plan and a high deductible plan) away. That way the money is there when you need it.

Let’s use a simple example. Say a regular Plan G for you starts out at about $125 per month (San Diego starting rate 1/1/2023) but the high-deductible version is only $32.  That’s a savings of $93 per month or $1,116 per year. Putting that much away into savings, you can have the full high-deductible amount put away in a little more than two years.

Now, when the hospital bills start coming in, you’re not worried about them. They’re covered.

What if you’re not someone in perfect health? Talk to your doctor about it.

As soon as you get your benefits you have a “Welcome to Medicare” visit with your doctor that’s fully covered by Medicare. Use this visit to have this discussion with your doctor. Then have a conversation with your insurance agent.

Who Sells Cheap Medicare Supplements?

Most health insurance and life insurance companies that sell Medicare Supplement policies offer the lowest-cost plans. This includes AARP/United Healthcare, Humana, Aetna, Blue Cross Blue Shield, Mutual of Omaha, and many more.

The best way to find lower premiums where you live is to use our Free Medigap Quote Service and check the box for “Lowest Cost Plans”.

Call 1-855-728-0510 (TTY 711) for plan assistance.

If you qualify for Medicare and don't know where to start, MedicareEnrollment.com, an independent HealthCompare insurance broker, has licensed insurance agents who can help you with your Medicare enrollment options, Mon-Fri, 8am-9pm , SAT 8am-8pm EST.

What is the Best Medicare Supplement?

When it comes to your Medigap coverage, the term “best” is a relative thing. If the cheapest plan you can get is what’s best for you, we covered the three least expensive plans above.

If “best” means getting the most coverage, then Plan F, Plan G, and Plan C have the most coverage. Just remember that only people who qualified for Medicare before 2020 are eligible for Plan F and Plan C.

When considering your plan options, be sure to take into account your future medical costs. Make sure your basic benefits (i.e., Medicare-approved services) are covered. These are generally your most costly out-of-pocket expenses.

When is the Open Enrollment Period for Medicare Supplements?

Here’s some good news. Unlike Medicare Advantage plans and Medicare Part D plans, Medicare Supplements do not have an open enrollment period.

The bad news is that you have Medigap protections that expire.

We each get a personal Medigap Open Enrollment Period. It begins when you first enroll in Medicare Part B and ends six months later. During this time you have a guaranteed issue right to buy any Medigap policy you want.

You can’t be turned down, even if you have a pre-existing condition.

Once your Medigap protections expire, your application for coverage can be rejected. And, insurance companies have the right to ask you questions about your health for underwriting purposes.

Do Cheap Medicare Supplements Include Drug Plan Benefits?

No. But, you can add prescription drug coverage to your Original Medicare benefits with a Medicare Part D plan.

In most areas, plans start at less than $20 per month.

What Else Don’t Medicare Supplements Cover?

Medicare Supplements are not like Medicare Advantage plans, which have the option to include extra benefits. But, these plan types, which may include HMO plans, PPO plans, and private-fee-for-service plans, have restrictions that Original Medicare and Medigap don’t have.

For example, Original Medicare does not have provider networks and you don’t need to get a referral to see a specialist. With most Medicare Advantage plans, you do.

The big item that most people care about, that isn’t covered by Original Medicare, Medicare Supplements, or Medicare Advantage, is long-term care. This isn’t the same care as what you get from a skilled nursing facility after a hospital stay. Medicare covers that type of care. We’re talking about nursing home care when you can no longer care for yourself.

Call 1-855-728-0510 (TTY 711) for plan assistance.

If you qualify for Medicare and don't know where to start, MedicareEnrollment.com, an independent HealthCompare insurance broker, has licensed insurance agents who can help you with your Medicare enrollment options, Mon-Fri, 8am-9pm , SAT 8am-8pm EST.

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