Medicare Supplement Plans (Medigap): Coverage Gaps and Plan Comparisons

Medicare's Uncovered Costs Are Larger Than Most People Expect

Original Medicare — Parts A and B — covers roughly 80% of approved healthcare costs for beneficiaries. The other 20% falls directly on the patient, with no out-of-pocket maximum. A single major hospitalization can cost a Medicare beneficiary tens of thousands of dollars in deductibles and coinsurance. Medicare Supplement Insurance, federally standardized and commonly called Medigap, was created specifically to cover those gaps.

How Medigap Fits Into Medicare

Medicare works in layers:

• Medicare Part A — Hospital insurance (inpatient care, skilled nursing facility, hospice). Includes a $1,632 deductible per benefit period in 2024 and significant coinsurance after 60 days.
• Medicare Part B — Medical insurance (outpatient visits, preventive care, durable medical equipment). Includes a $240 deductible in 2024 and 20% coinsurance with no cap.
• Medigap policy — Pays some or all of the cost-sharing left after Medicare pays its share. Medigap policies do NOT cover prescription drugs (Part D), dental, vision, or hearing.

Medigap policies are sold by private insurance companies but are standardized by the federal government under the Omnibus Reconciliation Act of 1990. Every Plan G from any insurer covers exactly the same benefits — the only variable is the premium.

Standardized Medigap Plan Options (2024)

Plans C and F — which covered the Part B deductible — are no longer available to people who became Medicare-eligible on or after January 1, 2020. Existing beneficiaries enrolled before that date can keep Plans C or F.

Plan G vs. Plan N: The Most Popular Choice

As of 2023, Plan G is the most-enrolled Medigap plan for new Medicare beneficiaries, followed closely by Plan N. The key difference:

• Plan G — Covers nearly everything except the Part B deductible ($240 in 2024). Zero out-of-pocket beyond that deductible.
• Plan N — Covers the Part B deductible but requires copays up to $20 for office visits and up to $50 for emergency room visits (waived if admitted). Also does not cover Part B excess charges — amounts providers charge above Medicare's approved rate.

Plan N premiums are typically $30–$70 per month lower than Plan G premiums. The break-even depends on individual healthcare utilization.

Medigap Enrollment Timing

The Medigap Open Enrollment Period (OEP) begins the first day of the month in which a person is both age 65 and enrolled in Medicare Part B. During this six-month window, insurers cannot deny coverage or charge higher premiums based on health status. Outside the OEP, insurers in most states can apply medical underwriting — meaning they can reject applicants or charge substantially more based on pre-existing conditions.

Medigap Premium Pricing Methods

Insurers use one of three methods to set premiums:

• Community-rated — Same premium for all enrollees regardless of age. Premiums rise only with inflation. Often higher at younger enrollment ages.
• Issue-age-rated — Premium based on age at enrollment; does not increase as the beneficiary gets older. Favorable for those who enroll young.
• Attained-age-rated — Premium increases annually as the beneficiary ages. Initially the lowest but becomes the most expensive over time.

Medigap vs. Medicare Advantage

Medicare Advantage (Part C) is a private plan alternative to original Medicare — not a supplement to it. Beneficiaries enrolled in Medicare Advantage cannot purchase Medigap. Medicare Advantage plans often have lower premiums but use provider networks and require referrals; Medigap works with original Medicare and generally has no network restrictions anywhere in the United States that accepts Medicare.

This article is for informational purposes only and does not constitute financial advice.