What Is Medigap Insurance and How Does It Work?

The Basics: What Medigap Insurance Actually Is

Here’s the honest truth about Medicare that nobody tells you upfront: it doesn’t cover everything. Original Medicare — Parts A and B — leaves you with gaps. Deductibles, copayments, coinsurance. Those costs add up fast, especially if you end up in the hospital or need ongoing medical care. That’s exactly where Medigap comes in.

Medigap insurance is a type of supplemental health insurance sold by private companies. Its whole job is to pick up some or all of the costs that Original Medicare leaves behind. That’s why you’ll also hear it called Medicare Supplement Insurance. Same thing, different name.

You pay a monthly premium to the private insurance company. In return, they help cover things like your Medicare Part A deductible (which is $1,632 in 2024), your Part B coinsurance, and in some plans, even emergency care when you travel outside the United States. The specific coverage depends on which plan you choose.

One thing to understand right away: Medigap is not the same as Medicare Advantage. Medicare Advantage replaces Original Medicare. Medigap works alongside it. You keep your Original Medicare, and Medigap fills the holes.

How Medigap Actually Works When You Need Care

Let’s say you have a knee replacement. The total bill comes to $30,000. Medicare Part A covers a big chunk of it, but you’re still on the hook for the $1,632 inpatient deductible, plus coinsurance if your stay goes beyond 60 days. Without any extra coverage, you’re writing that check yourself.

With a Medigap plan, here’s what happens instead. You see your doctor or go to the hospital. Medicare pays its share first. Then your Medigap plan pays its share. Depending on the plan you have, you might owe nothing at all. Some people describe it as feeling like a safety net under a safety net.

Medigap plans are standardized by the federal government. That means a Plan G from one insurance company covers the exact same things as a Plan G from another company. The only difference is the monthly premium they charge. This actually makes it easier to shop around, because you’re comparing price, not trying to decode different benefits packages.

The most popular plans right now are Plan G and Plan N. Plan G covers almost everything Original Medicare doesn’t, except the Part B deductible (which is $240 in 2024). Plan N costs less per month but requires small copays of up to $20 for some doctor visits and $50 for emergency room visits. Plan F used to be the most comprehensive option, but it’s no longer available to people who became eligible for Medicare on or after January 1, 2020.

Who Can Get Medigap and When Should You Sign Up

You need to be enrolled in both Medicare Part A and Part B to buy a Medigap policy. That’s the baseline requirement. Beyond that, timing matters more than most people realize.

The best time to buy a Medigap plan is during your Medigap Open Enrollment Period. This window opens on the first day of the month you turn 65 and are enrolled in Part B. It lasts for six months. During this time, insurance companies cannot deny you coverage or charge you more because of health conditions you already have. That’s a big deal.

Miss that window, and things get more complicated. After it closes, insurance companies in most states can use something called medical underwriting. That means they can look at your health history and either refuse to sell you a policy or charge you a higher premium. If you have diabetes, heart disease, or other chronic conditions, this can make Medigap very expensive or even impossible to get outside of open enrollment.

There are some exceptions. Certain life events trigger a guaranteed issue right, which means you can buy a Medigap plan without underwriting. For example, if your Medicare Advantage plan leaves your area or goes bankrupt, you get a 63-day window to switch to a Medigap plan without being penalized for your health history.

Age also affects price. The younger you are when you enroll, the lower your premium typically is. Some insurance companies use something called attained-age pricing, meaning your premium goes up as you get older. Others use issue-age pricing, where your rate is locked in based on how old you were when you first bought the plan. It’s worth asking which pricing method a company uses before you commit.

Is Medigap Worth the Cost?

This is the question everyone asks. And the honest answer is: it depends on your situation.

If you’re someone who sees doctors regularly, takes multiple medications, or has a chronic health condition, Medigap can save you a lot of money. The predictability alone has value. Instead of wondering if an unexpected hospitalization will cost you $5,000 or $10,000 out of pocket, you pay a fixed monthly premium and know your costs are covered.

On the other hand, if you’re in excellent health and rarely need medical care, you might pay more in premiums over the years than you ever use. Some people prefer that trade-off for peace of mind. Others would rather hold onto that money and take their chances.

The average Medigap premium in the United States is around $150 to $200 per month, though it varies a lot by location, age, gender, and which plan you choose. A Plan N might cost $100 a month in some states. A Plan G in a high-cost area could run $250 or more. Shopping around using Medicare’s official comparison tools or working with an independent insurance broker can help you find the best rate.

Medigap does not cover prescription drugs. You’ll still need a separate Part D drug plan if you want prescription coverage. That’s a common point of confusion.

Frequently Asked Questions About Medigap Insurance

Can I use any doctor with a Medigap plan?

Yes, and this is one of Medigap’s biggest advantages. As long as a doctor accepts Medicare, they accept your Medigap plan too. You don’t need referrals, you don’t have a network to worry about, and you can see specialists anywhere in the country. This is very different from Medicare Advantage, which usually has a network of providers.

What does Medigap not cover?

Medigap plans do not cover prescription drugs, dental care, vision care, or hearing aids. Most plans also don’t cover long-term care, like nursing home stays. If you want coverage for those things, you’ll need separate policies. Plan G covers foreign travel emergency care up to plan limits after a deductible, but that’s about as far as the coverage extends beyond standard medical care.

Can I be dropped from my Medigap plan if I get sick?

No. As long as you pay your premiums on time, the insurance company cannot cancel your Medigap policy because you get sick or use a lot of benefits. This is guaranteed by federal law. Your premium might go up over time due to inflation or age-related increases, but your coverage can’t be taken away because of your health.