Medigap coverage – think it through

When I was managing employer health plans we offered several options. One had a low deductible and came to be known as the “Cadillac” plan. Many employees chose that coverage purely out of fear of health care costs. Even as the premium increased to the point the overall cost was greater than other options, many employees stuck with the Cadillac plan guaranteeing they would lose money each year.

Before you select a health plan, run the numbers, compare fixed costs – premiums – with potential out of pocket costs.

Seniors who were 65 before January 2020 can still enroll in Medigap Plan F. Plan F covers all Medicare deductibles and co-pays. The coverage is the same as Plan G except plan G does not pay the Medicare Part B deductible – $226 in 2023.

I recently had an exchange with a retiree.

Retiree: I have BC/BS plan F. I was lucky enough to get that, never any problems with them either and only get the monthly bill.

Me: Are you sure it’s worth it? Have you done the math to see if the additional F premium over G is less than the annual Part B deductible? That’s $18.83 per month in 2023.

Retiree: It’s well worth it for me since I go to 3 doctors and everything is covered also. No co-pays either and I get reimbursed for it. Plan F isn’t available anymore either, so making sure I have great coverage for the future

Me: I think you miss the point, both F and G pay co-pays and deductibles EXCEPT G does not pay the Part B deductible. As I said, if Plan F premiums are higher by more than $18.83 per month, you are losing money.

The Cadillac syndrome is alive and well😢


  1. Yes, that is why I didn’t choose an F plan. Also it is basically a closed plan now with the participants getting older and sicker. And the premium rates will be increasing faster to pay for this.


  2. In most states, unlike medical insurance with an employer, there is no guarantee issue of Medigap policy without underwriting other than the 8-month period after starting Part B or you are no longer eligible for the current Medigap plan – not paying your premium is not valid reason. While Part D plan can be changed annually regardless of health like you did while employed.


  3. Richard, thanks for posting. Reminds me of a conversation I had years back with a much younger colleague. He asked me which corporate health plan I was choosing? The least expensive was my answer, run the numbers I told him. His response was my wife wants to be able to go to the doctor anytime she wants without a copay or worrying about the expense. Again I said, you may be better off paying the copays with a lower premium….just run the numbers.
    In retrospect I wish I had taken time to help this young colleague run the numbers and emphasized the importance of having an emergency fund to help support household cash flow and unexpected financial demands. I perhaps falsely assumed he understood my answer.
    I have been retired now for 8 years I still run the numbers and select the least costly option….my wife and I are blessed to enjoy good health, if that was not the case other options way be better.


  4. I am still 4 years from being forced onto Medicare. I am still investigating all these plans and I expect them to change by then.

    When you say $226 deductible that is $226 per covered person per year ($452 a couple) or is that per provider or treatment?

    So far in the 5 years that I have been retired, I have made out with the so call “Cadillac” plan. Two of the years, I would have paid out more out of pocket in a high deductible plan than my combined premiums and co-pays that I am currently paying. Not paying that extra deductible money has made up for the extra 3 years of paying the higher premiums. I would have lost money. Also, so far there has been only minor billing issues mostly with the providers coding of the services wrong because everything is covered.


    1. First, keep in mind all Medicare coverage is individual, there is no couple coverage. The Part B deductible is per calendar year. If you select Plan G Medigap coverage to supplement basic Medicare your coverage will be equal to or better than your current coverage. The exception and greatest risk is Part D Rx coverage because there are so many variables some based on the actual prescriptions a person takes.


      1. I think I had already figured out the Part D trap of checking medication. Thanks for the info. I have already warned my wife that we could end up with different plans.


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