What Is Medigap and How Does It Work?

If you’ve started looking into Medicare, you may have come across something you didn’t expect: it doesn’t cover everything. Copayments, coinsurance and deductibles can add up quickly, especially if you end up with a hospital stay or a series of doctor visits. That’s the gap Medigap was designed to fill.

Whether you are helping a parent explore their options or you are turning 65 and trying to figure out what makes sense for your budget and health. Here’s what it is, how it works, what it covers and how you can tell if it’s worth adding into your Medicare coverage.

What Is Medigap?

Medigap, also called Medicare Supplement Insurance, is a policy you buy from a private insurance company to help cover your share of costs under Original Medicare. This is not a substitute for Medicare. It works with Medicare to pay for some or all of the bills Medicare doesn’t fully pay.

To qualify for Medigap, you must generally already have Part A (hospital insurance) and Part B (medical insurance). Once you have Medicare, a policy covers costs such as coinsurance and deductibles, depending on the plan you choose.

All but Massachusetts, Minnesota, and Wisconsin have standardized Medigap plans identified by letters. That standardization matters: a Plan G from one company gives you precisely the same benefits as a Plan G from another. Price and customer service are as much a part of what sets insurers apart as coverage.

How Does Medigap Work? 

Medigap is pretty simple in its order of operations. First, Medicare pays its portion of an approved cost. Then your Medigap policy pays some or all of the rest, depending on the benefits of your specific plan.

Say you have an outpatient surgery. Medicare Part B generally pays 80% of the allowed amount after you meet your deductible. Without Medigap, you’d pay the other 20% yourself. With a plan like Medigap Plan G, your policy would cover that leftover coinsurance, so you walk away owing little to nothing for that visit.

In addition to the standard Part B premium, you’ll pay a monthly premium to your Medigap insurer. Some are cheaper with higher out of pocket exposure, others are more expensive up front and cover almost everything. It’s a trade-off between predictable costs each month and predictable costs for care, and the right balance depends on how often you expect to need care.

What Medigap Plans Cover?

Medigap is designed to pay for specific, defined gaps in Original Medicare. Your coverage may include, depending on the plan you choose:

• Part A & Part B coinsurance, including extra costs for hospital stays after you’ve used all your Medicare benefits.

• Deductibles, with some plans pay the Part A deductible in full, and some pay part of the Part B deductible for those of you already enrolled in older plans.

• The first three pints of blood you need each year for a transfusion.

• Foreign travel emergency care, available on select plans like C, D, F, G, M and N, usually up to a lifetime limit.

All Medigap plans must at least cover Part A coinsurance and hospital costs, because that’s the baseline benefit that’s included in all 10 plans. From there, coverage grows based on which letter plan you choose.

What Medigap Does Not Cover?

Medigap is designed to fill the gaps in Original Medicare, not to cover services that Original Medicare failed to cover in the first place. That means several common expenses are all on you regardless of which plan you choose:

• Prescription medications. You will need a separate Part D plan to cover your drugs.

• Long-term care, including custodial care in a nursing home. 

• Routine dental and vision care such as cleanings, fillings, or eye exams and glasses.

• Medicare doesn’t cover private-duty nursing.

• Hearing aids and hearing tests

It is just as important to know what is excluded as to know what is included. You’ll have to pay for these yourself, as your Medigap policy does not cover them if you have a lot of prescriptions or dental needs.

What Are The Medigap Plan Types?

Medigap has 10 standardized plans, labeled with a letter: A, B, C, D, F, G, K, L, M, and N. They all cover Part A coinsurance and hospital costs, but that’s where the similarities end.

Plan A has the bare minimum coverage, and Plan G is the best plan for new Medicare enrollees at this time. Plans C and F were formerly the most comprehensive plans available, covering the Part B deductible in full. Still, federal law closed them to anyone who became newly eligible for Medicare on or after January 1, 2020. If you had a plan like that before that date, you can keep it.

Plans K and L operate differently. Instead of paying a fixed percentage of each charge, they pay a portion of most benefits (K is 50%, L is 75%) and limit your annual out-of-pocket spending. When you reach that limit, the plan will pay 100% of covered costs for the remainder of the year. Plans M and N fall in between, offering more coverage than K and L, but with some cost-sharing built in, like copays for certain office visits under Plan N.

Availability is state-dependent, and not all insurers sell Medigap plans. Massachusetts, Minnesota, and Wisconsin have their own standardized plan structures, not the letter system used elsewhere.

Who Can Purchase Medigap?

You generally need to be enrolled in both Medicare Part A and Medicare Part B to buy a Medigap policy. Coverage is sold to individuals, so each spouse must have their own policy, even if they purchase insurance together.

If you’re eligible for Medicare before you turn 65 because of a disability or other medical condition, you may have fewer options, because federal law doesn’t require insurers to sell Medigap to people under 65. It’s worth checking your state’s rules, as some states mandate it anyway.

One important limitation: Medigap generally can't be used with Medicare Advantage. In general, you cannot purchase a Medigap policy if you have a Medicare Advantage plan unless you are exercising a trial right to return to Original Medicare within the first 12 months of Medicare Advantage enrollment.

When Is the Best Time to Enroll in Medigap? 

Timing makes a big difference with Medigap. Your Medigap Open Enrollment Period is a one-time six-month period that begins the month you turn 65. You are enrolled in Part B. During this time, they are required to sell you any Medigap policy available in your state, no matter your health history, and they can't charge you more because you have a pre-existing condition.

This protection is known as a guaranteed-issue right. Medical underwriting is allowed in most states outside of your enrollment window, which means your insurer can review your health history and use that information to deny you coverage, delay your start date, or increase your premium.

Some situations create additional guaranteed-issue rights later, such as losing coverage through no fault of your own, or moving out of your plan’s service area. Some states even offer more flexibility, for example, an annual window of time around your birthday to switch plans with no medical underwriting. Without one of these protections, missing your first window can make Medigap more expensive or difficult to obtain.

How Much Does Medigap Cost? 

Medigap premiums vary widely, depending on your plan, where you live, your age, your gender, and the insurance company you choose. You could pay very different premiums for the same Plan G coverage, depending on the insurer you buy it from in your area, so it’s worth shopping around.

Insurers use one of three pricing methods, and knowing which one applies to your policy can help you predict future costs.

• Community-rated: Everyone pays the same premium regardless of age, although rates can still go up due to inflation.

• Issue-age-rated: Your premium is based on your age when you buy the policy. Buying at a younger age will generally get you a lower starting rate.

• Attained-age-rated: Premiums increase as you age, which may make these policies cheaper initially but more expensive over time.

Plans K and L usually have lower premiums with annual out-of-pocket caps, while more comprehensive plans, like G, have higher monthly costs but less unpredictability. One of the simplest ways to keep your long-term Medigap costs down is to get quotes from several insurers before you enroll.

Medigap vs. Medicare Advantage 

Medigap and Medicare Advantage both improve upon your coverage, but they do so in very different ways. Medigap helps pay some of the out-of-pocket costs of Original Medicare. Medicare Advantage is a full replacement for Original Medicare. It bundles Part A and Part B (and sometimes Part D) into a single plan from a private insurer.

Medicare Advantage plans often offer additional benefits such as dental, vision, or fitness benefits. They also limit your annual out-of-pocket costs. Original Medicare doesn’t do this on its own. But they generally use provider networks, so your options for doctors and hospitals might be more limited. Medigap, on the other hand, works with any provider in the country that accepts Medicare, with no networks to worry about.

If predictable costs and network flexibility are your top priorities, Medigap with Original Medicare and a separate Part D plan may be a better choice for you. If lower premiums and extras are more important, Medicare Advantage might be the better fit. It’s worth weighing up your healthcare needs, travel habits and budget before you decide, as you can’t have both at the same time.

Frequently Asked Questions

Is Medigap the same as Medicare? No. Medigap is a separate, private insurance policy that pays you extra besides Original Medicare. It doesn’t replace your Medicare coverage. It helps fill the gaps for things Medicare doesn’t pay for in full.

Is Medigap worth the cost? It depends on your health needs and your risk tolerance. If you want predictable costs and don’t want to deal with surprise medical bills, Medigap can be worth the monthly premium. If you’re healthy and don’t want to pay more than necessary each month, you may decide the extra premium isn’t worth it for you.

Can I have Medicare Advantage and Medigap? No, not really. Medigap is designed as a supplement to Original Medicare, and it is illegal for an insurer to sell you a Medigap policy if it knows you have Medicare Advantage, except in some trial-right situations.

Does Medigap cover prescription drugs? No. Medigap policies don’t cover prescription drugs. If you want your drugs covered, you'll need a separate plan for Medicare Part D.

Can Medigap plans be changed? Yes, but easier in some windows. You usually can change plans at any time. Still, if you do so outside of your initial enrollment period or a guaranteed-issue situation, the new insurer may require you to go through medical underwriting before approving your application.

Is Medigap Right for You?

Medigap doesn’t cover everything, but it can take a lot of the guesswork out of a hospital stay or ongoing treatment for many people. Knowing how it works with Original Medicare, what each plan actually includes, and when to enroll can help you avoid the extra costs and coverage gaps that come with waiting too long.

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