Why Your Monthly Premium Is Only Part of the Story
Most people shop for Medigap by looking at the monthly premium and stopping there. That’s a mistake that can cost you hundreds or even thousands of dollars a year.
Here’s the thing. Medigap isn’t just a premium you pay every month. It’s a contract that either covers certain Medicare cost-sharing or it doesn’t. To figure out what a plan actually costs you in a given year, you have to add up every dollar that could come out of your pocket — premium, deductibles you’re still responsible for, and any potential out-of-pocket exposure the plan leaves uncovered.
I’ve worked with people who chose a cheap Plan K because the monthly premium was $60 lower than Plan G, then got surprised when they still owed thousands after a hospital stay. The math didn’t work in their favor. Let me show you how to run these numbers properly before you commit to a plan.
There are three buckets every Medigap cost calculation has to include: your annual premium total, your remaining deductible exposure, and your maximum possible out-of-pocket liability. Once you know all three, you can actually compare plans side by side.
Step One: Annualize Your Premium and Know What It Buys
Start with the easy part. Take your monthly premium and multiply it by 12. A 65-year-old woman in Ohio shopping for Plan G in 2026 might see premiums ranging from about $110 to $175 per month depending on the insurer. That’s a spread of $780 a year for the exact same coverage. Same benefits, different price tag. That’s why shopping around matters.
But annualizing the premium is just the baseline. You also need to understand what that premium is actually buying — because not all Medigap plans cover the same things, and the gaps they leave behind become part of your total cost calculation.
Plan G, for example, covers everything Medicare Part A and Part B leave unpaid except for one thing: the Part B deductible. In 2026, that deductible is $257. So your true annual cost for Plan G is your premium total plus $257 — you’ll owe that deductible every year before Medicare starts paying its share of outpatient services.
Plan N covers the same things as Plan G, minus the Part B deductible, and it also leaves you exposed to copays of up to $20 for office visits and up to $50 for emergency room visits that don’t result in inpatient admission. So for Plan N, your annual cost calculation has to include the $257 Part B deductible plus a realistic estimate of what those copays will add up to based on how often you use care.
Someone with three doctor visits a year and no ER trips might pay $60 in copays under Plan N. Someone managing a chronic condition with monthly specialist visits might rack up $240 in copays alone. Same plan, very different actual cost.
Step Two: Factor In Deductibles You’re Still On the Hook For
This is where a lot of people get tripped up, especially with the lower-tier plans like Plan K and Plan L.
Plan G and Plan N are the most popular plans for good reason — they cover the Part A hospital deductible in full. That deductible in 2026 is $1,676 per benefit period. Notice I said “per benefit period,” not per year. If you’re hospitalized, discharged, and then readmitted more than 60 days later, you owe that deductible again. Two hospitalizations in different benefit periods could cost you $3,352 before Medigap picks up anything, under a plan that doesn’t cover that deductible.
Plans K and L are cost-sharing plans. They cover a percentage of most Medicare cost-sharing rather than the full amount. Plan K covers 50% of most things; Plan L covers 75%. They do have annual out-of-pocket limits — in 2026, Plan K’s limit is $7,220 and Plan L’s is $3,610 — but those limits only apply to Medicare-approved charges, and you still pay your share until you hit the cap.
To calculate your true exposure under Plan K or Plan L, you need to assume a bad year. What if you had a serious illness? What’s the maximum you could owe? For Plan K in 2026, that’s $7,220 plus your annual premium. For a lot of healthy 65-year-olds, that number is shockingly high compared to what they’d pay with Plan G.
The Biggest Mistake People Make: Ignoring the Worst-Case Scenario
I’ll say this plainly: if you’re only calculating what a plan costs in a good year, you’re doing it wrong.
The whole point of Medigap is to protect you against financial risk from health events you can’t predict. So your cost comparison has to include two scenarios: a light-use year and a heavy-use year. Run both.
Here’s a concrete example. A 68-year-old man in Florida is comparing Plan G at $155 per month and Plan K at $85 per month.
| Scenario | Plan G Total Cost | Plan K Total Cost |
|---|---|---|
| Healthy year (no hospitalizations, routine care only) | $1,860 premium + $257 deductible = $2,117 | $1,020 premium + ~$400 estimated cost-sharing = $1,420 |
| Moderate year (one short hospitalization) | $1,860 premium + $257 deductible = $2,117 | $1,020 premium + ~$1,800 cost-sharing = $2,820 |
| Bad year (major illness, multiple services) | $1,860 premium + $257 deductible = $2,117 | $1,020 premium + $7,220 max out-of-pocket = $8,240 |
Plan K saves you money in a perfectly healthy year. But Plan G costs you the same no matter what happens. That’s the trade-off. And for most people approaching their 70s with any existing health conditions, the risk of that bad year is not as remote as they’d like to think.
In my experience, people consistently underestimate how much medical care they’ll use in their late 60s and 70s. They compare plans based on who they are today, not who they’re likely to be in five years. That’s a trap.
How to Build a Realistic Cost Comparison for Your Situation
Here’s a practical framework for comparing two or more Medigap plans. Go through each of these line items for every plan you’re considering.
- Annual premium: Monthly premium multiplied by 12.
- Part B deductible: Add $257 in 2026 if the plan doesn’t cover it (that’s Plan G, Plan N, and all plans except A, B, C, and F).
- Estimated copays: For Plan N, estimate your office visit and ER copays based on your typical usage. Three to four doctor visits a year plus no ER trips is a reasonable starting point if you’re healthy.
- Part A deductible exposure: For plans that don’t cover the Part A hospital deductible (Plans K, L, and M cover it partially), factor in your realistic risk of hospitalization.
- Maximum out-of-pocket exposure: For Plans K and L, note the annual cap. For Plan G and Plan N, there’s no cap because the coverage is essentially complete — the gap is so small it barely registers.
Once you’ve built this out for two or three plans, you can see your realistic cost range for the year and your worst-case scenario. That’s what you actually need to make a smart decision.
I’d also strongly suggest getting quotes from at least three insurers for the same plan. Medigap plans are standardized by letter, so Plan G from Carrier A and Plan G from Carrier B cover identical services. Price is the only meaningful difference, along with the insurer’s financial stability and their history of rate increases.
A company that offered Plan G at $110 per month but raised rates 12% a year for three years will cost you more than one that started at $130 and raised rates 4% annually. Ask carriers for their rate increase history before you sign up. Some states require this disclosure; others don’t. It’s worth asking anyway.
Bottom Line
For most people in their mid-60s, Plan G is the clearest value when you run the full yearly cost calculation — it caps your exposure at the annual premium plus the $257 Part B deductible, no matter how sick you get. If your budget is tight and you’re in genuinely good health, Plan N is worth a close look, but you need to honestly estimate your copay exposure before you commit. Stay away from Plans K and L unless someone has walked you through that worst-case math and you’re truly comfortable with a potential $7,000+ out-of-pocket year.
Frequently Asked Questions
Does the Part B deductible reset every year?
Yes. The Part B deductible resets on January 1 every year. In 2026, it’s $257. You pay that once per calendar year before Medicare Part B starts covering its 80% share of outpatient services. Plans G and N don’t cover this deductible, so it’s a fixed annual cost you need to include in your calculations.
Can Medigap premiums go up every year?
They can, and they usually do. Medigap premiums aren’t locked in for life. Insurers file rate increases with state insurance departments, and most plans see increases every year. This is one reason why the initial premium isn’t the only number that matters — a plan that’s cheapest today might not be cheapest in year five. Asking about a carrier’s rate increase history before you enroll is genuinely useful information, not just a formality.
What if I barely use any medical care — is Medigap even worth it?
This is a fair question. In a year where you only have routine preventive visits covered at 100% by Medicare anyway, you might feel like you paid premiums for nothing. But that framing misses the point. Medigap is insurance against a bad year, not a prepayment for care you expect to use. One hospitalization without Medigap can cost you $1,676 just in the Part A deductible, plus 20% of all Part B services with no cap. The peace of mind that comes from knowing your maximum exposure is $257 a year on top of your premium is worth real money for most people.
How do I compare Plan G from different insurance companies if the coverage is the same?
Price, rate increase history, and financial strength rating. That’s the list. Since the benefits are standardized by federal law, you’re purely shopping on cost and carrier reliability. Get quotes from multiple companies, look up each carrier’s AM Best or Moody’s financial stability rating, and ask specifically about their average annual rate increases over the past five years. Some states make this easier than others, but a good independent insurance broker who specializes in Medicare can pull this data for you.
