What Medigap Is and How It Works

Medicare Supplement Insurance, commonly called Medigap, is private health insurance designed to pay for many of the out-of-pocket costs that Original Medicare leaves behind. Original Medicare includes Part A (hospital insurance) and Part B (medical insurance). Together they cover a large share of healthcare expenses for Americans 65 and older, plus certain younger people with disabilities, but they were never intended to cover everything.

When you have only Original Medicare, you are still responsible for deductibles, coinsurance, and copayments. Part B typically pays 80% of approved doctor and outpatient costs after you meet an annual deductible, leaving you responsible for the remaining 20% with no cap. A single hospital stay can trigger a Part A deductible of more than $1,600 (2024 figure), and that deductible resets every benefit period. Medigap policies are designed to plug those specific gaps, which is where the name "Medigap" comes from.

Medigap plans are sold by private insurance companies but are standardized at the federal level. In most states, you can choose from 10 standardized plan types labeled A, B, C, D, F, G, K, L, M, and N. Each letter represents a defined set of benefits, no matter which insurance company sells it. Plan G from one insurer must include the same core benefits as Plan G from another insurer in the same state. The main difference between companies is price, customer service, and rate-increase history.

What Medigap Plans Cover

While benefits are standardized by letter, not every plan pays for every gap. Understanding which costs each plan covers is the key to choosing the right one.

  • Part A coinsurance and hospital costs: Most plans cover this fully after Medicare pays its share, which can add up to several hundred dollars a day for long hospital stays beyond 60 days.
  • Part B coinsurance or copayment: This is the 20% you normally owe for doctor visits, lab work, durable medical equipment, and outpatient services.
  • Skilled nursing facility coinsurance: Medicare covers the first 20 days fully, but days 21 through 100 require a daily coinsurance. Many Medigap plans cover this entirely.
  • Part A deductible: Plans B, C, D, F, G, and N all cover the Part A deductible, which can be a meaningful benefit if you expect any hospital care.
  • Part B excess charges: Some doctors do not accept Medicare assignment and may charge up to 15% above the Medicare-approved amount. Plans F and G cover these excess charges; most others do not.
  • Foreign travel emergency care: Plans C, D, F, G, M, and N include 80% coverage for emergencies abroad after a small deductible.

Plans K and L are partial-coverage options that pay a percentage of costs (typically 50% or 75%) and include an annual out-of-pocket limit. Once you hit that limit, the plan pays 100% of covered services for the rest of the year. This gives them a structure similar to a Medicare Advantage plan, but they still work alongside Original Medicare and allow nationwide provider access.

Medigap vs Medicare Advantage: Why the Distinction Matters

One of the most important decisions you make at age 65 is whether to keep Original Medicare and add a Medigap policy, or replace Original Medicare with a Medicare Advantage plan. These are very different paths, and the choice affects both your monthly costs and how you receive care.

Medigap (with Original Medicare):

  • No network restrictions. You can see any doctor or hospital in the U.S. that accepts Medicare, which is most providers.
  • Predictable costs. You pay a monthly premium for the supplement plus the Part B premium, with little to no out-of-pocket cost when you use services.
  • No referral requirements for specialists.
  • Coverage travels with you, even if you move to another state.

Medicare Advantage:

  • Often has lower or $0 premiums, but includes copays, coinsurance, and an annual out-of-pocket maximum.
  • Uses provider networks (HMO or PPO), so you may need to stay in-network for the lowest costs.
  • Frequently bundles extra benefits like dental, vision, hearing, and gym memberships.
  • Usually requires you to live in the plan's service area.

Medigap premiums are typically higher than Medicare Advantage premiums, but many people find the trade-off worth it because of the freedom to choose providers and the absence of surprise bills. For someone who travels frequently, sees multiple specialists, or wants to avoid prior authorization requirements, Medigap is usually the stronger fit.

When to Enroll and How Pricing Works

The best time to buy a Medigap policy is during your six-month Medigap Open Enrollment Period, which starts the month you are both 65 or older and enrolled in Part B. During this window, insurers must sell you any plan they offer regardless of your health, and they cannot charge more based on pre-existing conditions.

If you apply after this window, insurers in most states can ask health questions, review your medical history, and decline coverage or charge higher premiums. A few states (such as New York, Massachusetts, Connecticut, Maine, and Oregon) offer year-round guaranteed issue or special rules that make switching easier, but in most of the country, your enrollment window is the most valuable protection you have.

Medigap pricing generally falls into three categories that affect how your premium changes over time:

  • Community-rated (no-age-rated): Everyone in the same area pays the same premium regardless of age. Your rate still rises over time due to inflation, but not because of your birthday.
  • Issue-age-rated: Your premium is based on the age you were when you bought the policy. Younger buyers pay less, and increases are tied to inflation rather than aging.
  • Attained-age-rated: Premiums start low but increase as you get older. These plans are usually the cheapest at 65 and the most expensive by age 85.

Comparing the pricing method is often as important as comparing the monthly premium quote, because a plan that looks cheap now may cost significantly more over 20 years.

Choosing the Right Plan: Practical Buyer Criteria

Once you understand the structure, the next step is matching a plan to your situation. Three criteria usually drive the decision:

1. Budget vs Predictability. If low monthly cost is your top priority and you are comfortable with some cost-sharing when you use care, Plan N often delivers the best value. Plan N covers the Part A deductible and most coinsurance but leaves you responsible for small copays at the doctor (up to $20) and emergency room (up to $50), plus it does not cover Part B excess charges.

2. Maximum Coverage. Plan G is the most comprehensive option available to new Medicare beneficiaries since Plan F closed to anyone who became eligible after January 1, 2020. Plan G covers all Original Medicare gaps except the Part B deductible, which is a small annual amount. For people who want essentially full coverage with predictable costs, Plan G is usually the strongest fit.

3. Budget-Conscious Coverage. Plans K and L offer lower premiums in exchange for sharing more of the cost until you hit the out-of-pocket cap. They make sense for healthy people who want protection against a major medical event without paying for richer coverage they may not use.

Beyond the letter, compare insurers on three practical measures: price stability over the past three to five years, customer service reputation, and whether the company offers household discounts or easy premium payment options. Two identical Plan G policies from two different companies can vary by $30 to $80 per month at age 65, and that gap usually widens with age.

Medigap is not the right choice for everyone, but for those who want nationwide access to providers, predictable costs, and freedom from network rules, it remains the most straightforward way to fill the gaps in Original Medicare. The key is to enroll on time, choose the plan letter that matches your risk tolerance, and price it across multiple insurers in your state.