What Are the Disadvantages of a Medigap Plan?

Medigap plans function as supplemental insurance, designed to help cover some out-of-pocket costs associated with Original Medicare Parts A and B. These plans are offered by private insurance companies and work alongside Medicare to provide additional financial protection. While Medigap policies can be beneficial for many, they also come with distinct limitations and considerations. Understanding these potential disadvantages is important for anyone evaluating their healthcare coverage options.

Financial Commitments

Medigap plans require a separate monthly premium, which is paid in addition to the monthly Medicare Part B premium. These premiums can vary significantly based on the specific plan type chosen, the insurance company providing the coverage, and the geographic location of the policyholder. For instance, premiums for a 65-year-old female non-smoker in Atlanta might range from around $44 for a high-deductible Plan G to over $100 for a standard Plan G. Pricing methods also influence costs, including community-rated plans where everyone pays the same, issue-age-rated where premiums are based on age at purchase, and attained-age-rated where premiums increase with the policyholder’s age.

Most Medigap plans do not have an annual out-of-pocket spending limit. This means financial responsibility could be unlimited for costs not covered by Original Medicare or the Medigap policy. Medigap Plans K and L are exceptions, as they include an out-of-pocket maximum. For example, in 2025, the out-of-pocket maximum for Medigap Plan K is $7,220, and for Plan L, it is $3,610.

Uncovered Healthcare Services

A significant limitation of Medigap plans is their lack of coverage for prescription drugs. Individuals needing assistance with prescription drug costs must purchase a separate Medicare Part D plan. Medigap plans also typically do not cover long-term care services. This includes care received in a nursing home, assisted living facility, or home healthcare for activities of daily living, such as bathing or dressing. These types of services are largely considered custodial care.

Medigap plans also typically do not cover:
Routine vision care, including eye exams, eyeglasses, and contact lenses.
Routine dental care, such as cleanings, fillings, extractions, and dentures.
Hearing aids and routine hearing exams.
Private duty nursing.

Enrollment Barriers

Enrolling in a Medigap plan can present challenges, particularly if an individual applies outside of specific enrollment windows. After an individual’s initial Medigap Open Enrollment Period, insurance companies can use medical underwriting to evaluate an applicant’s health. This process allows insurers to review health history, pre-existing conditions, and potentially deny coverage or charge higher premiums based on perceived risk. The Medigap Open Enrollment Period is a six-month window that begins when an individual is 65 or older and enrolled in Medicare Part B. During this period, insurers cannot deny coverage or charge higher premiums due to health status. Outside of this period, the ability to obtain a Medigap policy without medical underwriting is limited to specific “guaranteed issue” situations. These situations are not universally applicable and usually arise from specific events, such as losing employer-sponsored coverage or certain changes to Medicare Advantage plans.

Absence of Supplemental Perks

Medigap plans are standardized by federal law, meaning the benefits for each lettered plan are consistent across insurance companies. This standardization ensures that a Plan G from one insurer offers the same core benefits as a Plan G from another. However, this standardization also means Medigap policies do not offer ancillary benefits or “perks.” These plans do not include supplemental benefits often found in other types of health coverage, such as gym memberships, healthy food allowances, or transportation services. Medigap policies focus on covering gaps in Original Medicare’s costs, rather than providing additional health and wellness programs.