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What is Medigap?

Medigap is secondary insurance sold by private companies that can be used to cover the out-of-pocket costs of Medicare
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By | Updated on Mar. 8, 2024 Medically reviewed by Scott Dershowitz, LMSW, CMC
Medicare insurance card, stethoscope, and notebook: What is medigap?

Key takeaways

  • Medigap plans are supplemental insurance policies offered by private companies to cover out-of-pocket costs not covered by Original Medicare, including copayments, coinsurance, and deductibles.

  • There are ten standardized Medigap plans available, each identified by a letter, with plans F, G, and N being the most popular, but some plans like C and F are no longer available to new enrollees.

  • Unlike Medicare Advantage plans that offer additional benefits and have network restrictions, Medigap plans allow beneficiaries to use any doctor that accepts Medicare and focus on covering costs not paid by Original Medicare.

  • Enrollment in Medigap plans is best during the six-month Open Enrollment Period starting the first month of having Part B coverage and being 65 or older, with premiums varying based on factors like age, location, and tobacco use.

In this article:

Medigap policies, also known as Medicare Supplement policies, help cover some out-of-pocket costs associated with Original Medicare. There are multiple types of Medigap policies to choose from that fit your medical and financial needs.

What are Medigap plans?

Medigap plans get their name because they cover the difference or gap between the healthcare expenses paid for by Medicare and the payment left to the beneficiary. Medigaps are one way to lower or eliminate the out-of-pocket costs left over by Original Medicare.

Private companies provide Medigap policies and cover healthcare costs related to services under Original Medicare coverage.

Types of Medigap plans

Medigaps are standardized plans, which means every plan within a listed letter works the same, regardless of which private insurance company you choose. For example, a Plan F with Mutual of Omaha must provide the same coverage as Plan F from UnitedHealthcare. All companies must follow the standardization rules except for three states: Wisconsin, Massachusetts, and Minnesota.

There are 10 Medigap insurance plan types from which to choose with letter names A, B, C, D, F, G, K, L, M, and N. Some Medigap Plans are no longer available for new enrollees, including plans C and F. The coverage of each plan type is different. 

  • Plan A covers basic benefits, also known as the core benefits. Most notable are the 20% coinsurance and the hospital costs once the Part A deductible is met.
  • Plan B is identical to A, except it will pay the Part A deductible.
  • Plan C picks up all your Original Medicare costs except for Part B excess charges. This plan is only available for beneficiaries who were eligible for Medicare before Jan. 1, 2020.
  • Plan D coverage is the same as Plan C, except there is no coverage for the Medicare Part B deductible.
  • Plan F has historically been the most popular plan among Medicare beneficiaries. It covers practically all your Medicare cost-share. There’s a high-deductible Plan F, which lowers premiums but requires more out-of-pocket spending before insurance begins to pay for coverage. Once you meet the plan deductible, the plan covers all medical costs for the remainder of the year. However, the standard and high-deductible Part F plans are only available for beneficiaries who were eligible for Medicare before Jan. 1, 2020.
  • Plan G is the most comprehensive plan for new Medicare beneficiaries. It has the same coverage as Plan F but exudes the Part B deductible. There is also a high-deductible Plan G. Once you meet the plan deductible, the plan picks up all costs for the remainder of the year. If you were eligible for Medicare after Jan. 1, 2020, then Plan G is the plan that will give you the most benefits. 
  • Plan K essentially covers 50% of your Medicare costs for most services.
  • Plan L covers 75% of your cost for most services.
  • Plan M is similar to Plan D. Plan M covers 50% of the Part A deductible.
  • Plan N is similar to Plan G. The difference is that Plan G doesn’t cover the Part B excess charges. There are small copays on this plan. Up to $20 for a doctor’s office visit and up to $50 for an emergency room visit.

How to choose a Medigap plan

Once you understand and pick the plan letter, it comes down to the price and the company you choose. The best plan will vary based on your needs and budget.

Plan F has historically been the most popular plan among Medicare beneficiaries, according to America’s Health Insurance Plans (AHIP), but it is no longer available to beneficiaries who were eligible for Medicare after January 2020. Plan G has almost the same coverage as Plan F but at a lower cost, and Plan N provides coverage similar to Plan G but at a significantly better price. These three plans account for more than 80% of all Medicare Supplement enrollments, according to AHIP.

What does Medigap cover?

Most Medigap plans differ in types of copayment, coinsurance, or other medical expenses covered. All Medigap plans cover at least some portion, if not all, of:

  • Medicare Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are exhausted
  • Medicare Part A hospice coinsurance or copayment costs
  • Medicare Part B coinsurance costs
  • Blood transfusion costs up to the first three pints

In addition, some Medigap plans also cover:

  • Skilled nursing facility care coinsurance
  • Medicare Part A deductibles
  • Medicare Part B deductibles
  • Medicare Part B excess charges
  • Emergency medical costs during foreign travel emergency services
  • Medigap Plans K and L pay 100% of covered services for the rest of the calendar year after meeting the out-of-pocket limit and paying your Medicare Part B deductible

What’s not covered?

Medigap plans don’t typically cover the following services:

  • Vision
  • Eyeglasses
  • Hearing aids
  • Dental care
  • Long-term care
  • Private duty nursing
  • Prescription drugs

Original Medicare with a Medigap vs. Medicare Advantage

Both Medigap and Medicare Advantage Plans are offered by private insurance companies, but there are significant differences. Medicare Advantage Plans, also called Medicare Part C, are an alternative to Original Medicare.

These plans cover everything Original Medicare covers and may offer extra benefits that Original Medicare doesn’t cover. You can enroll in a Medicare Advantage Plan after enrolling in Medicare Part A hospital and Medicare Part B medical insurance. When you enroll, your Medicare Advantage Plan takes over the administration of your Medicare Part A and Medicare Part B coverage.

Medigaps are intended simply to cover the Medicare costs that Original Medicare leaves to the beneficiary. If you have a Medigap policy, Medicare pays its share of the Medicare-approved amount for covered services, and then your Medigap policy will pay its share of covered benefits. You’ll pay what’s left.

Medigap plans are only allowed to pay for items and services covered by Medicare Parts A and B. Unlike Medicare Advantage, Medigap coverage does not include prescription drugs, hearing, vision, or dental services that Original Medicare does not cover.

Medicare Advantage and Original Medicare with a Medigap Plan provide different options to suit your circumstances best.

Choice of doctors: Medicare Advantage requires you to use doctors in the plan’s network. If not, you have to pay more out-of-pocket or have no coverage at all. In contrast, you can use any doctor or hospital that accepts Medicare when enrolled in Original Medicare with a Medigap plan.

Premiums: Medicare Advantage Plans have low premiums, whereas Medigap plans have higher premiums.

Coverage: A Medicare Advantage Plan includes all the benefits of Original Medicare and more. Medigap policies cover out-of-pocket costs associated with Original Medicare’s Part A and B.

Extra benefits: Many Medicare Advantage Plans offer additional benefits such as dental, vision, and hearing coverage, while Medigap Plans cover emergency care if a person travels overseas.

Prescription drug coverage: Medicare Advantage Plans may include your Medicare prescription drug plan. But with Original Medicare with a Medigap, you must buy separate Medicare Part D prescription drug coverage.

Enrollment: A Medicare Advantage Plan offers two enrollment periods each year, whereas, with a Medigap, people may enroll anytime as long as they meet the medical underwriting requirements.

Medicare Advantage can be a suitable and money-saving choice if you’re in good health with few medical expenses. But if you have a severe medical condition with expensive treatment and care costs, a Medigap may make more sense. 

A person can’t have both Medicare Advantage and Medigap simultaneously, but you can switch between Medicare Advantage and Original Medicare with a Medigap plan. Medicare Advantage and Medigap plans do not work together.

How much do Medigaps cost?

Medigaps are optional insurance policies. If you choose to get one, you’re responsible for paying a monthly premium from the private insurance carrier. This cost is in addition to the monthly Part B premium you pay to Medicare.

The following factors can impact the monthly cost of Medigap plans:

  • Your location
  • Your gender
  • Your age
  • Tobacco usage
  • Household discounts
  • How you pay
  • When you enroll

Because private insurance companies offer Medigap plans, they are generally allowed to use medical underwriting to decide whether or not to accept your application and what your cost will be. However, during the Open Enrollment Period, they must sell you a policy at the standard rate regardless of any health conditions. 

Medigap premiums must be approved by the state’s insurance department and are set based on plan history and operating costs. There are three ratings used that can affect your rates and rate increases.

  • Issue Age Rated: Issue age means you will pay the rate based on your current age. Your rates will not increase due to age. Issue Age doesn’t mean the plan will not see a rate increase. You will have rate increases based on inflation, claims history, and other factors. You will typically pay more when you’re younger but less as you age.
  • Attained Age Rated: Age Attained means your rate will go up based on your age, inflation, and other factors. You’ll usually start at a lower premium in attained age policies. Still, the price will increase quicker than the issue age.
  • Community Rated: Community rating means everyone in the community pays the same rate. These are usually more expensive when you start but will level out over time.

Most states and carriers use the attained age rating when pricing their Medigap plans.

How to enroll in Medigap

Step 1: Decide which benefits you want. Then, decide which of the Medigap plan types (letter) meets your needs.

Step 2: Find out which insurance companies sell Medigap policies in your state.

Step 3: Learn about the insurance companies that sell the Medigap policies you’re interested in and compare costs.

Step 4: Buy the Medigap policy.

The best time to apply for a Medigap policy is during your six-month Medigap Open Enrollment Period. The Open Enrollment Period begins the first month you have Part B coverage, and you’re 65 or older. 

Your Medigap policy is guaranteed renewable as long as you continue to pay your premium. Since it is guaranteed renewable, your plan automatically renews each month. The only way a company can cancel your Medigap plan is due to non-payment or if the company becomes insolvent. 

Medigap eligibility requirements may vary from state to state, so consult a Medicare representative at 1-800-Medicare if you have questions or need help selecting the policy that best meets your needs.

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