Choosing a Medicare plan is one of the most consequential financial decisions retirees make. And it’s not just a question of how much you’ll pay in premiums or whether your doctors are in a plan’s network.

It’s also about what happens when your health changes, your medical bills mount and you discover that switching coverage may not be as easy as you thought.

That’s especially true for people weighing Medicare Advantage against Original Medicare with a Medicare supplement insurance policy, commonly known as Medigap. Medicare Advantage plans often come with lower premiums and additional benefits, but Medigap can offer more predictable out-of-pocket medical expenses and broader access to providers. 

The catch? In most states, once your initial Medigap enrollment window closes, you may have to pass medical underwriting to buy a policy.

And there’s a timely wrinkle for 2027. As some Medicare Advantage plans exit markets, affected beneficiaries may gain guaranteed-issue rights that allow them to purchase Medigap without medical underwriting. But those rights come with deadlines. 

In a recent episode of Decoding Your Money,” Votava, founder of Goodcare.com and author of Making the Most of Medicare,” explained what retirees need to know about Medigap, how to compare the costs of competing plans and why the least expensive coverage today could prove far more costly tomorrow.

Below is a transcript of that interview, edited for clarity and brevity.

The Medicare decision you may not be able to undo

Bob Powell: If your Medicare Advantage plan is leaving your area, you may have an opportunity you didn’t expect: the chance to buy a Medigap policy without answering questions about your health.

But you need to act. And if you’re turning 65 and choosing Medicare coverage for the first time, there’s another reason to pay attention. The decision you make today could affect your health care costs and choices for years.

We’re talking about Medigap, what it costs, what it covers and when you have the right to buy it.

And so that Medigap choice, when you want to make it down the road, you may have missed your window of opportunity to do it.

Katy, Medicare Advantage plans are leaving some markets. For someone who receives a notice that their plan is being discontinued, could that actually create an opportunity to buy Medigap without medical underwriting?

Katy Votava: It does. And it’s particularly relevant this year because we’ve seen so many plans canceled.

People get upset when they receive those notices. They get scared and think they’ve done something wrong. But it has nothing to do with the consumer. It’s a business decision by the insurance company.

When you get that notice, read it carefully. You have additional rights to sign up for a Medigap plan without underwriting, and you have extra time to make that decision.

But be careful about waiting beyond the end of December. You don’t want to find yourself in January with Original Medicare but without supplemental coverage or a prescription drug plan.

Could Medicare Advantage cost more than Medigap?

Powell: One of the reasons people choose Medicare Advantage is the lower monthly premium. But you look beyond premiums to what someone might actually spend on health care over an entire year. What does that comparison show?

Votava: I look at something called the stop-loss amount. Essentially, how much could you spend in a year? What’s your maximum financial exposure?

Medigap costs more each month. According to the Kaiser Foundation, the annual premium is about $2,300. Medicare Advantage might cost you only $172.

That’s a big difference.

But with Medigap Plan G, your out-of-pocket costs for Medicare-covered services are minimal. You pay the Medicare Part B deductible, and that’s essentially it.

When we did the math at Goodcare, comparing Original Medicare with Medigap and a Part D prescription drug plan against Medicare Advantage, we found annual exposure of about $5,200 with Medigap versus more than $12,000 with Medicare Advantage.

That’s a lot of money.

People are often surprised by the copayments and coinsurance. You could get an MRI and spend $300 or $400 out of pocket.

For people who see a lot of specialists or have significant health care expenses, Medigap can provide greater predictability.

And there’s another benefit. With Original Medicare, you have broad access to doctors and hospitals throughout the United States that accept Medicare.

Is your first Medigap decision your last?

Powell: That brings us to something people may not appreciate when they first enroll in Medicare. If they choose Medicare Advantage because they’re healthy and the premiums are lower, can they change their minds later and buy Medigap?

Votava: That’s where people can get into trouble.

When you first become eligible for Medicare, you have an opportunity to buy Medigap with guaranteed-issue protections. But in most states, after that initial opportunity passes, you may have to go through medical underwriting.

That means an insurance company can look at your health history. You might pay more, or the company might decline your application.

I’ve had people apply to three companies before they were accepted.

So your first opportunity to buy Medigap may be your best opportunity.

I understand why healthy people choose Medicare Advantage. The premiums are lower. But if their health changes and they want Medigap later, they may have missed the opportunity to get it.

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What if you’re still working at 65?

Powell: Suppose someone turns 65 but continues working and remains on an employer’s health insurance plan. Do they still have an opportunity to buy Medigap when they retire?

Votava: Yes. When people leave employment and enroll in Medicare, they have an opportunity to make that decision.

They need to decide whether they want Original Medicare with Medigap and a separate prescription drug plan or Medicare Advantage.

The important thing is to coordinate the timing so there’s no gap in coverage.

Which Medigap plan should you choose?

Powell: Even after someone decides Medigap is the right approach, there’s another problem: all those different plans. How do you sort through the choices?

Votava: It can be confusing. There are numerous standardized plan designs, and some cover more benefits than others.

In my experience, I generally recommend Plan G.

I call it G for good. It covers nearly all the benefits available under Medigap, except the Medicare Part B deductible.

One thing I’ve found is that buying a plan with fewer benefits doesn’t necessarily save you money. Sometimes a plan that covers less costs nearly as much as Plan G.

So don’t assume fewer benefits automatically mean a lower premium.

Why do Plan G premiums differ if the benefits are identical?

Powell: Here’s something that might surprise people. Two companies can sell Plan G with the same standardized benefits but charge very different premiums. How should consumers choose?

Votava: The benefits are prescribed by law, but these are private insurance policies.

You might find 10 or 12 companies offering Plan G in your area, all charging different premiums. One company might charge 50% more than another for essentially the same coverage.

I recommend looking for a solid company and then comparing prices.

Medicare.gov has improved its shopping tools. It now includes premium information, which makes it easier to compare plans.

You also need to recognize that premiums increase over time.

There are different pricing methods, including age-rated and community-rated policies. Those differences can influence what you pay as you get older.

If two policies are close in price, that’s when I would look more closely at how their premiums are calculated.

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When can you switch Medigap plans without underwriting?

Powell: We’ve discussed what happens when a Medicare Advantage plan is discontinued. Are there other situations when someone might have guaranteed-issue rights?

Votava: Yes. There are circumstances involving initial Medicare eligibility, leaving employer coverage and losing certain existing coverage.

Some states also have additional protections.

New York, Connecticut, Massachusetts and Maine have special rules. Other states have adopted what are sometimes called birthday rules or other opportunities to change coverage.

But you need to understand exactly what your state allows.

And even when you don’t have guaranteed-issue rights, that doesn’t necessarily mean you can’t buy Medigap. You may still qualify through underwriting.

The important thing is to investigate your options before dropping existing coverage.

What happens if you move to another state?

Powell: A lot of retirees move after they leave the workforce. Could moving create another opportunity to obtain Medigap?

Votava: It can, depending on the circumstances.

I’ve worked with people who moved from Rochester, New York, to Florida and discovered that their Medicare Advantage coverage wasn’t accepted by the providers they wanted to see.

They had missed their opportunity to exercise certain enrollment rights and were facing medical underwriting if they wanted Medigap.

That’s why I tell people to shop for health insurance before they move.

You’re not just shopping for a house. You’re shopping for access to health care.

The same advice applies when adult children move an older parent or relative closer to them. Find out which insurance plans are available and which doctors and hospitals accept them before making the move.

What doesn’t Medigap cover?

Powell: Medigap can provide substantial protection against out-of-pocket medical expenses. But what doesn’t it cover?

Votava: One of the biggest misconceptions involves prescription drugs.

Medigap doesn’t cover the out-of-pocket costs of prescription medications. You need a separate Medicare Part D plan.

Medigap also generally doesn’t cover routine dental care or provide an allowance for eyeglasses.

Some Medigap insurers have added benefits such as fitness memberships, including programs similar to SilverSneakers.

But those additional benefits shouldn’t be the main reason you choose a policy.

Are Medicare Advantage’s extra benefits worth it?

Powell: Medicare Advantage plans advertise dental, vision, hearing and fitness benefits. How much weight should people give those benefits?

Votava: I consider them the icing on the cake.

First, make sure your medications are covered and your doctors and hospitals are in the plan’s network.

Then look at the additional benefits.

A couple of dental cleanings or an eyewear allowance may be appealing. But those benefits often have limits.

You don’t want to choose a plan because it has all the bells and whistles and then discover that the doctors or hospitals you need aren’t covered.

That’s when people regret their decisions.

Should you insure against catastrophic expenses or routine costs?

Powell: You’ve described this as a risk management decision. How should people think about paying more for Medigap when they may not need much medical care?

Votava: Think about homeowners insurance. You buy it, but you’re glad when your house doesn’t burn down.

With health insurance, we’ve combined two different ideas.

One is protecting yourself against catastrophic expenses. The other is getting discounts on routine services.

Those aren’t necessarily the same thing.

People sometimes focus on dental coverage or eyewear because they know they’ll use those benefits. But the much bigger financial risk may be the medical care they don’t expect to need.

That’s why I focus on total out-of-pocket exposure.

Medigap is expensive, and not everyone can afford it. Medicare Advantage may be the right choice for some people.

But consumers need to understand what they’re buying and the financial risks they’re accepting.

Can you leave Medicare Advantage between January and March?

Powell: There’s also a Medicare Advantage enrollment period during the first three months of the year. Could that provide another opportunity to move to Original Medicare and Medigap?

Votava: It can be a useful time to explore your options.

If you’re enrolled in Medicare Advantage and discover that your doctors aren’t covered, you may be able to switch to another Medicare Advantage plan.

You can also investigate moving to Original Medicare and applying for Medigap.

But remember, you may have to go through medical underwriting.

I recommend finding out whether you can obtain Medigap before dropping your Medicare Advantage coverage.

You also need to arrange prescription drug coverage.

Does Medigap cover medical care overseas?

Powell: Many retirees travel internationally. What protection does Medigap provide if someone becomes sick or injured overseas?

Votava: Certain Medigap plans provide limited foreign travel emergency coverage.

There can be a $250 deductible and a lifetime benefit limit of $50,000, with restrictions on when coverage applies.

Generally, you pay for the medical care overseas and then submit a claim when you return.

But there’s another expense travelers should consider: medical evacuation.

That can cost $100,000 or more, depending on the circumstances.

If you become seriously ill overseas and need to be transported home, a regular commercial flight may not be an option.

That’s why I recommend considering separate medical evacuation coverage when planning international travel.

Where can consumers get unbiased Medicare advice?

Powell: With so many plans, different enrollment rules and changes in the insurance brokerage business, where should people turn for help?

Votava: There are some very good insurance brokers, but the business is changing. Commissions have been reduced in parts of the Medicare marketplace, and that’s making things more challenging for brokers.

I recommend getting a referral from a trusted financial adviser or someone who has had a good experience.

Another excellent resource is your State Health Insurance Assistance Program, or SHIP. In Massachusetts, it’s called SHINE.

These programs provide counseling without insurance commissions.

You can also call Medicare directly or use Medicare.gov.

And when you ask for help, have your medication list ready. You need to know whether your prescriptions are covered and what you’ll pay for them.

Don’t forget that if you choose Original Medicare with Medigap, you’ll generally want a separate Part D prescription drug plan.

How can you compare Medigap plans based on your own costs?

Powell: finStream, of which I’m a founder, also developed a tool called MedigapLens to help consumers evaluate these decisions.

Rather than comparing premiums alone, MedigapLens lets you compare standardized Medigap plans based on what you might spend during a year of medical care.

You select your state and when you first became eligible for Medicare. Then you choose a light, moderate or heavy year of care, or enter your own assumptions.

Next, you enter actual premium quotes for the plans you’re considering.

The tool calculates the estimated total cost, including premiums and out-of-pocket expenses, and compares the results with Plan G.

It’s not designed to tell you which plan to buy. It’s designed to help you understand the financial trade-offs and have a more informed conversation with an insurance professional or SHIP counselor.

What’s your most important advice for the 2027 Medicare enrollment season?

Powell: You’ve worked in Medicare for decades. How would you characterize the changes we’re seeing as we head into 2027?

Votava: This is one of the most challenging periods I’ve seen.

We’re seeing significant changes in prescription drug coverage, insurance premiums and Medicare Advantage plans.

Some PPO plans are disappearing, and networks are becoming narrower.

Prescription drugs are another concern. There are more effective medications, but many are extremely expensive. The changes in how drug plans are financed are also affecting the marketplace.

Consumers need to be particularly careful when shopping for Part D coverage.

And if you’re considering Medicare Advantage, don’t be attracted solely by a lower premium or additional benefits.

Look at your medications. Look at your doctors and hospitals. Understand your network restrictions and your potential out-of-pocket costs.

And know your rights to appeal coverage decisions.

It takes effort, but doing your homework gives you the best opportunity to find coverage that works for you.