How Do Medigap Policies Work?

Understanding Your Medigap Policy and Supplemental Insurance

Original Medicare (which includes Part A Hospital Insurance and Part B Medical Insurance) pays for most of the cost of enrollees' health-related services and medical supplies. But there is some cost-sharing (coinsurance and deductibles) that can result in a lot of out-of-pocket expenses, especially if you are hospitalized, need skilled nursing facility services, or receive extensive outpatient care such as ongoing dialysis.

Medicare Supplement Insurance (also known as Medigap policies) can cover these "gaps" by picking up all or most of the out-of-pocket costs that you'd otherwise have to pay if you had Original Medicare on its own. Some Medigap policies also will pay for certain health services outside the United States and additional preventive services not covered by Medicare. This article will explain how Medicap policies work, and what you need to know when you're selecting a policy.

Medigap insurance is voluntary—you're not required to purchase it—and you are responsible for the monthly or quarterly premium if you do decide to buy it. Medicare will not pay any of your costs to purchase a Medigap policy, although some employers and unions purchase Medigap coverage for their Medicare-covered employees or retirees.

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How Do Medigap Policies Work?

If you are enrolled in Original Medicare (Part A and Part B) and you have a Medigap policy, first Medicare pays its share of the Medicare-approved amounts for your covered healthcare costs. Then your Medigap policy pays its share of the cost.

In most cases, the Medigap plan is picking up the out-of-pocket expenses for things that Medicare does cover, just not in full (Original Medicare does not have a cap on out-of-pocket costs, so they can be unlimited if a person doesn't have supplemental coverage). A Medigap plan won't cover things like long-term care or dental and vision care, since those are things that Medicare doesn't cover.

For example, let's say you have Original Medicare plus Medigap Plan G (Medigap benefits are standardized and the plans have letter names). If you have type 2 diabetes and visit your primary care healthcare provider every three to four months for follow-up care, your Medigap policy will cover your Part B coinsurance but not your Part B deductible. In 2022, you'll pay for the first $233 of your outpatient costs (this is the Part B deductible in 2022).

Thereafter, Medicare pays 80% of the Medicare-approved amount for your practitioner’s visit, and your Medigap policy pays the remaining 20%. Let's say Medicare approves an office visit amount of $65, so Medicare pays $52, Medigap pays $13, and you don't have to pay anything.

Medigap policies are sold by private insurance companies. These policies are required to be clearly identified as Medicare Supplement Insurance. Each policy must follow federal and state laws designed to protect consumers.

In all but three states, Medigap insurance companies can only sell you a standardized Medigap policy identified by letters A through N. There are some letters missing, because plans E, H, I, and J were no longer sold after June 2010, and Plans M and N were added. People who already had plans E, H, I, or J were allowed to keep them.

As of 2020, Plans C and F are no longer available to people who are newly eligible for Medicare, although people who became eligible for Medicare prior to 2020 can keep or newly enroll in those plans.

Each Medigap plan must offer the same basic benefits, no matter which insurance company sells it. So, Medigap Plan N offered by Humana will provide the same benefits as Medigap Plan N offered by AARP/UnitedHealthcare. The prices will vary, but the benefits will not.


Not all plans are available in all areas. And three states—Massachusetts, Minnesota, and Wisconsin—have their own standardization process for Medigap policies. In those states, Medigap plans are still standardized, but they aren't the same as the plans that are sold in the rest of the country.

How Much Does Medigap Insurance Cost?

How much you pay for a Medigap policy depends on the plan you pick and which insurance company you use.

Each of the plans (A through N) offers a different set of benefits and the costs vary with the amount of coverage. In general, Plan A, which provides the fewest benefits, generally has the lowest premiums. Medigap plans that offer more benefits, such as Plans F or G, usually have a higher premium.

As of 2020, Plan F and Plan C are no longer available for newly eligible Medicare enrollees to purchase. This is due to the 2015 Medicare Access and CHIP Reauthorization Act (MACRA) that prohibits the sale (to newly eligible enrollees) of Medigap plans that cover the Part B deductible, which Plans C and F both do. The Medicare Part B deductible can change annually. In 2022, it's $233.

According to an analysis by American's Health Insurance Plans, Medigap Plan F still had the most enrollees as of 2019, with 49% of all Medigap enrollees covered under a Plan F. However, that was down from 55% in 2016. And Plan G, which is the most comprehensive option available for people who are newly eligible for Medicare in 2020 or later, had grown from 10% of enrollees in 2016 to 22% in 2019.

The American Association for Medicare Supplement Insurance reports that among people who are newly eligible for Medicare in 2020 or later, "the vast majority" are purchasing Plan G.

A Medicare beneficiary who already had Plan C or F prior to 2020 can keep it. And a Medicare beneficiary who was already eligible for Medicare prior to 2020 can newly apply for Medigap Plan C or F if they choose to do so (either to replace another Medigap plan, or to newly enroll in Medigap). But Medigap insurers in most states can use medical underwriting if a person applies for a plan after their initial enrollment period ends. In other words, enrolling in a new Medigap plan more than six months after enrolling in Medicare isn't always possible, as a person's medical history might result in the insurer rejecting the application.


The most comprehensive option that's available to newly eligible Medicare enrollees as of 2020 is Plan G; it's the same as Plan F except that it doesn't cover the Part B deductible.

Medigap Plans L and K provide fairly comprehensive coverage, but they do not cover all of the out-of-pocket costs. Instead, for most services, they pay a portion of the out-of-pocket costs (50% for Plan K and 75% for Plan L) and the enrollee pays the rest. These Medigap plans do have out-of-pocket caps, after which the Medigap plan will pay the full share of the covered out-of-pocket costs: In 2022, the caps are $6,620 for Plan K, and $3,310 for Plan L.

There is also a high-deductible version of Medigap Plan F and Plan G, which require the enrollee to pay $2,490 before the Medigap plan starts to pay benefits (again, with the caveat that Plan F, including the high-deductible version, cannot be purchased by anyone who is newly eligible for Medicare after 2019).

Costs Vary by State and Company

Although Medicare defines what each Medigap plan offers, it does not regulate what the insurance company can charge. The American Association for Medicare Supplement Insurance analyzed 2020 Plan G premiums for a 65-year-old male and found premiums ranging from $109/month in Dallas to $509/month in Philadelphia. In each area there are numerous insurers offering Plan G, and the prices vary significantly from one insurer to another.

As of 2020, the monthly premium for Medigap Plan A (for a 65-year-old) in North Carolina ranged from as low as $97 to as high as $605. This would amount to an annual difference of $6,096 between the premiums for the lowest-cost plan versus the highest-cost plan—both of which have identical benefits.

Medigap insurers are required to offer at least Plan A. If they also offer other plans, they must offer at least Plan D or G to people who became eligible for Medicare in 2020 or later, and at least Plan C or F to people who became eligible for Medicare prior to 2020. It's up to each insurer to determine which other plans, if any, to offer. So the list of insurers that offer each plan will vary from one state to another. And you may find that some of the Medigap plan versions aren't available in your area.

What Type of Benefits Do Medigap Policies Offer?

Medigap plans A through N all include the following basic benefits:

  • Inpatient hospital care: Covers the Medicare Part A coinsurance, plus coverage for an additional 365 days after Medicare coverage ends (all of the Medigap plans except Plan A cover some or all of the Medicare Part A deductible)
  • Outpatient and healthcare provider costs: Covers the Medicare Part B coinsurance for your practitioner's services and hospital outpatient therapy (which is generally 20% of the Medicare-approved amount for the service), but not the Part B annual deductible
  • Blood: Covers the first three pints of blood you need each year
  • Hospice care: Covers the Part A hospice care coinsurance

Note: Medigap Plans K and L pay a portion of the costs for outpatient and healthcare provider services, blood, and hospice care, but they do not fully cover the out-of-pocket costs for those services. Medicare.gov has a chart showing how each plan covers the various out-of-pocket costs that a Medicare beneficiary could have.

Depending on which Medigap plan you select, you can get coverage for additional expenses and benefits Medicare doesn't cover, including:

  • Hospital (Part A) annual deductible: Plans B to N, but only partial coverage with Plans K and M
  • Skilled nursing facility coinsurance: Plans C to N, but only partial coverage with Plans K and L
  • Emergency care during foreign travel: Plans C, D, F, G, M, and N
  • Medicare Part B excess healthcare provider charges: Plans F and G

An excess charge is an amount above the Medicare-approved amount that a healthcare provider who does not participate in the Medicare program (but who has not opted out altogether) can charge.

When Can I Buy a Medigap Policy?

Unlike Medicare Advantage and Medicare Part D, there is no annual open enrollment period for Medigap plans. Several states have established limited annual windows when Medicare beneficiaries can make changes to their Medigap coverage without medical underwriting, but these are the exception to the rule.

Federal rules grant a one-time six-month open enrollment window for Medigap, which starts when you're at least 65 and enrolled in Medicare Part B. During that window, all Medigap plans available in your area are available to you on a guaranteed-issue basis, regardless of your medical history. After that window ends, it's gone forever. That means if you apply for a Medigap plan later on (either for the first time, or to switch to a different plan), the insurance company can look at your medical history and use it to decide whether to offer you a policy.

There are some limited circumstances that will allow you a guaranteed-issue right to buy a Medigap plan after that initial window ends, but for the most part, Medigap plans are medically underwritten after that six-month window ends.

In addition, there's no federal requirement that Medigap insurers offer plans on a guaranteed-issue basis when an applicant is under age 65 and enrolled in Medicare due to a disability (15% of all Medicare beneficiaries nationwide—more than 8 million people—are under age 65).

You can click on a state on this map to learn how Medigap eligibility is regulated in each state.

States can set their own rules for Medigap eligibility. The majority of the states have implemented laws ensuring at least some access to Medigap plans for beneficiaries under age 65, and some states have made it easier for enrollees to switch from one Medigap plan to another, even after their initial enrollment window ends.

Do I Need a Medigap Policy If I Am Enrolled In a Medicare Advantage Plan?

As long as you are enrolled in a Medicare Advantage Plan, you do not need to buy a Medigap policy, and it would not provide you with any benefits. In fact, it is illegal for anyone to sell you a Medigap policy if you are in an Advantage plan.

If you have a Medigap plan and then switch from Original Medicare to Medicare Advantage, you're allowed to keep your Medigap plan—and some people do, in order to ensure that it will still be there if they want to switch back to Original Medicare after their one-year "trial right" period. But you won't be able to use the Medigap plan while you have coverage under an Advantage plan. A Medigap plan won't pay for any of your Advantage plan's deductibles, copayments, or coinsurance, so it would essentially be dormant coverage for the whole time you have an Advantage plan.

So most people who switch to Medicare Advantage drop their Medigap coverage at that point, in order to avoid paying premiums for a dormant plan. If they switch back to Original Medicare within a year, they'll have a guaranteed-issue right to return to their old Medigap plan, or to one of several other options if the old plan is no longer available. But after 12 months, a person who returns to original Medicare would have to go through medical underwriting in order to purchase a new Medigap plan.

Who Else Doesn't Need Medigap Coverage?

Medigap plans aren't necessary if you're covered by Medicaid in addition to Medicare (i.e., dual-eligible), or if you have coverage under an employer-sponsored plan that provides coverage that supplements Medicare.

According to a Kaiser Family Foundation analysis, 30% of Original Medicare beneficiaries had supplemental coverage from an employer-sponsored plan in 2016, 29% had Medigap coverage, and 22% had Medicaid. Most of the rest—19% of all Original Medicare beneficiaries—had no supplemental coverage at all, while 1% had some other type of supplemental coverage.

Where Can I Learn More About Medigap Coverage?

Before buying a Medigap plan, it’s important that you understand Medicare’s Medigap rules, your rights, and the Medigap options available in your state. The following resources are a good place to start:

Summary

Medigap plans, also called Medicare Supplement plans, provide supplemental coverage for people who are enrolled in Original Medicare (Part A and Part B). The Medigap plans cover some or all of the out-of-pocket costs that the Medicare beneficiary would otherwise have to pay out-of-pocket.

Medigap plans are sold by private insurance companies, but are standardized so that they provide the same benefits regardless of which insurer offers the plans. There are several different types of plans, so different benefits are available depending on which plan type a person chooses.

A Word From Verywell

If you're enrolling in Original Medicare and don't have supplemental coverage from an employer, you'll definitely want to consider a Medigap plan. Without one, your out-of-pocket exposure under Original Medicare is unlimited.

There are a variety of Medigap plans available, with premiums that vary considerably depending on the plan and insurer that you choose. As long as you enroll in the first six months after you're at least 65 and enrolled in Medicare Part A and Part B, your Medigap enrollment will be guaranteed-issue, regardless of your medical history. But you'll want to carefully consider your options; in most states, there's no annual enrollment window to switch to a different Medigap plan.

15 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Centers for Medicare and Medicaid Services. Guidance: Employers/Unions & Medigap Issuers – Which Notice of Creditable Coverage to Provide?

  2. Centers for Medicare & Medicaid Services. Part B costs.

  3. Centers for Medicare & Medicaid Services. K & L Out-of-pocket limits announcements.

  4. America's Health Insurance Plans. The State Of Medicare Supplement Coverage.

  5. American Association for Medicare Supplement Insurance. Medicare Insurance Facts Data and Statistics.

  6. Medicare.gov. How To Compare Medigap Policies.

  7. American Association for Medicare Supplement Insurance. Medicare supplement plan G prices vary widely.

  8. North Carolina Department of Insurance. Medicare supplement premium comparison database.

  9. Norris, Louise. medicareresources.org. Is there a best time to enroll in a Medicare Supplement plan?

  10. Centers for Medicare & Medicaid Services. Guaranteed-issue rights.

  11. Kaiser Family Foundation. Distribution of Medicare beneficiaries by eligibility category.

  12. Norris, Louise. medicareresources.org. Medigap eligibility for Americans under age 65 varies by state.

  13. Kaiser Family Foundation. Medigap enrollment and consumer protections vary across states.

  14. Centers for Medicare & Medicaid Services. Medigap & Medicare Advantage plans.

  15. Kaiser Family Foundation. An overview of Medicare.

By Michael Bihari, MD
Michael Bihari, MD, is a board-certified pediatrician, health educator, and medical writer, and president emeritus of the Community Health Center of Cape Cod.