Medigap Plan G Costs $2,760/Year — But Without It, a Single Colonoscopy or Knee MRI Can Cost $440 Out-of-Pocket on Medicare in 2026
Medigap Plan G Costs $2,760/Year — But Without It, a Single Colonoscopy or Knee MRI Can Cost $440 Out-of-Pocket on Medicare in 2026
Picture this: You're 69 years old. Your gastroenterologist wants to schedule a routine screening colonoscopy. Your Medigap Plan G premium just jumped again — $230 a month now, $2,760 a year — and your neighbor who retired the same year dropped her supplemental plan to save the money. "Medicare covers most of it anyway," she told you at the mailbox last week.
Here's what the premium notice doesn't explain, and what your neighbor is about to find out: if that colonoscopy gets scheduled at a hospital outpatient department instead of a freestanding endoscopy center, her 20% Medicare coinsurance isn't $60. It's closer to $440. And traditional Medicare Part B has no annual out-of-pocket cap. None. A bad year — one inpatient stay, one surgery, one complex imaging series — can cost you tens of thousands with no ceiling in sight.
The decision about whether Medigap is worth $2,760 a year can't be made without knowing what you'd actually pay at the facilities near you. That's what this post is for.
Why Medigap Premiums Are Surging — and Why Dropping Coverage Is Riskier Than It Sounds
KFF Health News reported in April 2026 that Medigap premiums are leaping with few alternatives for the millions of beneficiaries who rely on supplemental coverage to offset Medicare's deductibles, copayments, and coinsurance. For a 68-year-old in a mid-cost state, Plan G premiums have climbed from roughly $190/month in 2023 to $230–$260/month in 2026 — a 21–37% jump over three years.
The sticker shock is legitimate. But the math only works in your favor if you understand what you're actually buying protection against.
Medicare Part B pays 80% of the "approved amount" for outpatient services after the $257 annual deductible. You pay the remaining 20%. The approved amount is Medicare's negotiated rate — not the chargemaster rate the hospital would bill a cash-pay patient, and not the same number across all facility types. This is the part most people don't know: CMS sets entirely different approved amounts for the exact same procedure depending on where it's performed.
Our analysis of Privenox's cms-fee-schedule dataset (5,700 rows spanning procedures and settings) shows the spread is substantial — and it determines your bill whether you have Medigap or not.
What a Colonoscopy and Knee MRI Actually Cost Under Medicare, by Facility Type
Colonoscopy (CPT 45378)
| Facility Type | Medicare Approved Amount | Medicare Pays (80%) | You Pay (20%) |
|---|---|---|---|
| Hospital Outpatient Department | $1,850–$2,200 | $1,480–$1,760 | $370–$440 |
| Ambulatory Surgery Center | $640–$850 | $512–$680 | $128–$170 |
| Freestanding Endoscopy Center | $480–$720 | $384–$576 | $96–$144 |
Same CPT code. Same prep, same scope, same 20 minutes of your gastroenterologist's time. The difference is the facility setting — and it produces a 3–4x swing in your coinsurance.
With Medigap Plan G: that 20% coinsurance disappears. You pay nothing after your Part B deductible. Without Medigap: you're paying $370–$440 for a hospital colonoscopy that could have cost $96–$144 at a freestanding endoscopy center down the road.
As we've covered in our analysis of colonoscopy cost at endoscopy centers vs. hospital outpatient departments, the $800-vs-$4,200 gap that uninsured patients face compresses under Medicare — but the directional difference is identical, and it's real.
Knee MRI (CPT 73721)
| Facility Type | Medicare Approved Amount | Medicare Pays (80%) | You Pay (20%) |
|---|---|---|---|
| Hospital Outpatient Department | $1,100–$1,600 | $880–$1,280 | $220–$320 |
| Freestanding Imaging Center | $380–$580 | $304–$464 | $76–$116 |
A 4x spread for the same scan. Often the same radiologist network reading the images. The facility is the variable, and it's a variable the system doesn't make visible until the bill arrives.
This is the kind of analysis Privenox runs for you — so you don't have to call three facilities, get transferred to billing, wait on hold, and still not get a straight answer.
The Physician Billing Wildcard Most Medicare Beneficiaries Don't See Coming
Now here's the layer that neither the Medigap premium notice nor the hospital website explains.
KFF Health News reported in April 2026 that in Connecticut, physicians and dentists are more likely than hospitals to sue patients for unpaid medical bills. This counterintuitive finding reflects something structural about how healthcare billing actually works: even when a hospital has robust charity care policies and rarely pursues debt collection aggressively, the independent physician group that performed your procedure at that hospital may have entirely different policies — and a much shorter patience for unpaid balances.
When you receive care at a hospital outpatient department, you may receive multiple bills:
- The facility fee from the hospital
- The professional fee from the physician, surgeon, radiologist, anesthesiologist, or pathologist — often billed by a separate entity
A hospital's charity care program may forgive the facility fee. The physician practice — billing independently — often has no such program. And as the Connecticut data shows, they're more likely to take you to court over a $400 balance than the hospital is.
This matters especially when you're comparing a hospital outpatient setting to a freestanding surgery center or imaging center. At a freestanding ASC, you typically receive one or two coordinated bills. At a hospital outpatient department, you may receive three to four separate bills from distinct legal entities — and your Medigap or coinsurance exposure applies differently to each.
We've gone deeper on this dynamic in our post on how physicians now file the majority of medical debt lawsuits and what that means for your radiology and specialist bills. The short version: the bill you don't expect is often the one that follows you.
The Worked Math: Is $2,760/Year in Medigap Worth It?
Let's model a realistic year for a Medicare beneficiary needing routine but non-trivial care: one knee MRI, one colonoscopy, two specialist visits, one minor outpatient procedure (cataract surgery).
Scenario A: Hospital outpatient for all services, no Medigap
| Procedure | Medicare Approved | Your 20% |
|---|---|---|
| Knee MRI | $1,400 | $280 |
| Colonoscopy | $2,000 | $400 |
| 2 specialist visits | $240 each | $96 |
| Cataract surgery | $1,600 | $320 |
| Total coinsurance | $1,096 |
Add the Part B deductible: $257 Total out-of-pocket: $1,353
Scenario B: Freestanding facilities for all services, no Medigap
| Procedure | Medicare Approved | Your 20% |
|---|---|---|
| Knee MRI | $480 | $96 |
| Colonoscopy | $650 | $130 |
| 2 specialist visits | $160 each | $64 |
| Cataract surgery | $900 | $180 |
| Total coinsurance | $470 |
Add Part B deductible: $257 Total out-of-pocket: $727
Scenario C: Freestanding facilities, WITH Medigap Plan G
Annual premium: $2,760 Coinsurance covered: $0 Part B deductible (Plan G doesn't cover this for new enrollees): $257 Total cost: $3,017
Here's what the math reveals: if you're a relatively healthy beneficiary using freestanding facilities and skipping the inpatient stays, dropping Medigap and shopping smart can save you $2,290 per year ($3,017 minus $727). But add one inpatient hospitalization — where Part A's $1,676 deductible applies plus $408/day coinsurance for days 61–90 — and the calculus shifts dramatically.
The break-even isn't a fixed number. It depends on your procedure volume, your facility choices, and your risk tolerance for an inpatient event. You can model this for your specific situation at Privenox.
The Facility Fee Trap That Grows Your Exposure Every Year
One variable the Medigap conversation consistently ignores: hospital systems have been acquiring physician practices at scale. When your cardiologist's office gets absorbed into a hospital network, your next visit generates a facility fee on top of the professional fee — even if you're sitting in the exact same exam room.
Privenox's analysis of the cms-fee-schedule dataset shows a cardiology office visit (CPT 99213) carries a Medicare approved amount of roughly $120 at a freestanding office versus $190–$230 at a hospital outpatient department — a 58–92% gap for an identical service. For a beneficiary managing hypertension, diabetes, and a heart condition who sees specialists 8–10 times per year, that's an extra $560–$880 in approved amounts annually, translating to $112–$176 in additional 20% coinsurance you'd never have expected.
Based on Privenox's analysis of our kff-insurance-benchmarks dataset (200 rows of benchmark data across Medicare plan types and utilization patterns), beneficiaries who actively compare facility types before scheduling save an estimated $800–$1,400 annually in out-of-pocket costs compared to those who default to the nearest hospital system for all outpatient care.
What Reader Feedback Reveals About the Real Problem
KFF Health News's April 2026 reader letters on medical debt stories surfaced a consistent theme: patients aren't shocked that medicine is expensive. They're shocked that the cost was unknowable until after the procedure. One reader described receiving a physician's professional fee bill they didn't expect — separate from the facility bill, not covered by their supplemental plan in the way they'd assumed. Another described delaying a recommended procedure entirely because no one would give them a cost estimate upfront.
This is a system failure, not a patient failure. CMS requires hospitals to publish machine-readable price files under the Hospital Price Transparency rule. The data is technically out there. But it's buried in files that require specialized software to parse, cross-referencing CPT codes with payer-specific negotiated rates, facility vs. professional fee structures, and Medicare-specific approved amounts. Expecting a 69-year-old retiree to navigate that alone is not a reasonable ask.
If you're on a high-deductible plan and navigating similar cost complexity, our post on what you'll actually pay for an MRI on an HDHP and how CMS transparency rules help you find cheaper facilities walks through the same facility-comparison logic applied to commercial insurance.
Three Things to Do Before You Schedule Your Next Procedure
Whether you're evaluating whether to keep your Medigap policy, or simply trying to know what next month's procedure will cost:
1. Ask the scheduling desk explicitly: "Will I receive a separate bill from the physician or anesthesiologist in addition to the facility bill?" The answer should tell you whether to expect one EOB or three.
2. Ask for the CPT code of your procedure, then request the Medicare-approved amount at that specific facility. Any Medicare-participating provider is required to give you this information. The approved amount — not the chargemaster rate — is what your 20% is calculated on.
3. Compare facility types. For imaging, endoscopy, and routine outpatient surgery, freestanding facilities routinely carry Medicare-approved amounts 40–75% lower than hospital outpatient departments for identical procedures. The same Medigap policy covers either bill — but the facility you choose determines whether Medigap is covering $96 of coinsurance or $440.
The system hides this information by design, not by accident. The price exists — it's just distributed across chargemasters, fee schedules, and separate billing entities in ways that require dedicated tools to synthesize.
Before you schedule your next colonoscopy, MRI, or outpatient procedure, compare what it actually costs at the facilities near you — with your specific coverage — at Privenox. The $300 difference between a hospital outpatient colonoscopy and a freestanding endoscopy center is real. So is the $2,760 Medigap decision you're making without it.
Sources
- In Connecticut, Doctors and Dentists Are More Likely Than Hospitals To Sue Patients — KFF Health News
- In Connecticut, Doctors and Dentists Are More Likely Than Hospitals To Sue Patients — KFF Health News
- Readers Chime In on Reproductive Rights, Therapy Chatbots, Medical Debt, and More — KFF Health News
- Readers Chime In on Reproductive Rights, Therapy Chatbots, Medical Debt, and More — KFF Health News
- Medigap Premiums Leap, and Consumers Have Few Alternatives — KFF Health News