Medicare Supplement Insurance (Medigap): Plans and Benefits

Medicare Supplement Insurance — sold by private insurers and standardized under federal law — fills cost-sharing gaps left by Original Medicare, including deductibles, coinsurance, and copayments. This page covers how Medigap plans are structured, how the 10 standardized plan letters differ, what drives premium variation, and where the boundaries of Medigap coverage end. Understanding these mechanics is essential for beneficiaries navigating Medicare costs, premiums, deductibles, and copays alongside their coverage decisions.

• Definition and scope
• Core mechanics or structure
• Causal relationships or drivers
• Classification boundaries
• Tradeoffs and tensions
• Common misconceptions
• Checklist or steps
• Reference table or matrix

Definition and scope

Medigap is private health insurance sold to Medicare beneficiaries to cover out-of-pocket costs that Original Medicare (Parts A and B) does not pay. The federal government standardizes Medigap benefit packages under the Social Security Act and implementing regulations at 42 C.F.R. Part 403, Subpart D, which require each plan letter to carry identical core benefits regardless of which private insurer sells it (CMS Medicare Supplement Insurance page).

The scope of standardization is defined by the Centers for Medicare & Medicaid Services (CMS) and enforced through the National Association of Insurance Commissioners (NAIC) model regulation. As of 2024, 10 standardized plan letters are available to most beneficiaries: Plans A, B, C, D, F, G, K, L, M, and N. Plans C and F are closed to beneficiaries whose Medicare eligibility began on or after January 1, 2020, by operation of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (CMS MACRA resources).

Medigap policies are individual contracts — they do not extend to spouses automatically — and are available only to beneficiaries enrolled in Medicare Part A and Medicare Part B. Beneficiaries enrolled in Medicare Advantage (Part C) cannot use a Medigap policy while their Advantage plan is active.

Core mechanics or structure

Each Medigap plan pays a defined portion of Medicare-approved cost-sharing after Original Medicare processes a claim. The insurer does not negotiate rates or adjudicate claims independently — it pays residual cost-sharing amounts determined by Medicare's own fee schedule.

The benefit structure across plans is additive rather than substitutive. Plan A is the base-level plan, covering only the Part A coinsurance for hospital stays (up to 365 additional days after Medicare benefits are exhausted) and Part B coinsurance or copayments. Higher-letter plans layer additional benefits on top, such as the Part A deductible ($1,632 in 2024, per CMS Medicare costs), skilled nursing facility coinsurance, Part B excess charges, and foreign travel emergency coverage.

Two plans — K and L — operate on a cost-sharing model rather than full coverage. Plan K covers 50% of most covered cost-sharing items; Plan L covers 75%. Both plans impose an annual out-of-pocket limit ($7,060 for Plan K and $3,530 for Plan L in 2024, per medicare.gov), after which the plan pays 100% of covered cost-sharing for the remainder of the calendar year.

Plan N covers full Part A coinsurance but allows copayments of up to $20 for office visits and up to $50 for emergency room visits that do not result in inpatient admission. This copayment structure is the mechanism by which Plan N achieves a lower premium than Plan G while leaving a predictable exposure at the point of service.

Causal relationships or drivers

Premium variation across insurers selling the same plan letter stems from three legally permitted rating methodologies:

1. Community rating — all enrollees in the same geographic area pay the same premium regardless of age.
2. Issue-age rating — premium is based on the applicant's age at the time of purchase and does not increase with age alone.
3. Attained-age rating — premium rises as the enrollee ages, producing the lowest initial premium but the highest long-term cost trajectory.

State insurance regulators determine which rating methods insurers may use within each state's borders, creating significant geographic disparity in premium outcomes for identical plan letters.

The closure of Plans C and F to new Medicare-eligible beneficiaries after 2020 was a direct legislative response to the "first-dollar coverage" problem: both plans covered the Part B deductible in full, which CMS and the Medicare Payment Advisory Commission (MedPAC) identified as removing the price signal at the point of service and increasing Medicare program spending (MedPAC report to Congress). MACRA's closure of these plans was intended to reintroduce cost-sharing sensitivity for the growing beneficiary population.

High-deductible variants of Plans F and G are available in some states; these require the beneficiary to pay a deductible ($2,800 in 2024 per medicare.gov) before the plan pays any benefits, producing substantially lower monthly premiums in exchange for greater upside risk in high-utilization years.

Insurers' ability to apply medical underwriting outside the Open Enrollment Period is a key driver of market access. During the 6-month Medigap Open Enrollment Period — which begins the month a beneficiary is both 65 or older and enrolled in Part B — insurers cannot deny coverage or charge higher premiums based on health status. Outside this window, guaranteed issue rights apply only in specific federally defined circumstances, such as loss of employer coverage or plan bankruptcy (Medicare enrollment periods).

Classification boundaries

Medigap covers cost-sharing only within the framework of Medicare-approved services. It does not function as comprehensive health insurance and does not cover:

• Services Medicare does not cover at all, such as long-term custodial care, dental, vision, and hearing
• Prescription drugs — Medigap plans sold after January 1, 2006, are prohibited from including outpatient drug coverage under 42 C.F.R. § 403.217
• Medicare Advantage cost-sharing — Medigap is structurally incompatible with Advantage plan enrollment

Massachusetts, Minnesota, and Wisconsin operate outside the federal standardization framework, having established their own Medigap plan structures prior to federal standardization. Beneficiaries in those three states purchase plans governed by state-specific benefit designs.

Medigap is also distinct from Medicare SELECT, a variant in which coverage is conditioned on using a network of providers. Medicare SELECT policies typically carry lower premiums but impose network restrictions that standard Medigap plans do not.

Tradeoffs and tensions

The central tension in Medigap is between premium certainty and cost-sharing exposure. Plan G eliminates all significant cost-sharing except the Part B deductible ($240 in 2024 per CMS), providing high predictability at a higher monthly premium. Plan N and the high-deductible variants accept greater cost-sharing exposure in exchange for lower premiums — a rational tradeoff for beneficiaries with low expected utilization, but a risk for those with chronic conditions.

A structural tension exists around Part B excess charges. Medicare allows non-participating providers to charge up to 15% above the Medicare-approved amount. Only Plans F and G cover these excess charges. Beneficiaries on other plan letters are exposed to this differential if they receive care from non-participating providers, making provider network behavior a hidden variable in plan value calculations.

The attained-age premium trajectory creates a long-term affordability risk that is not apparent at enrollment. Beneficiaries who select attained-age policies at age 65 may face premium increases driven by both age and medical inflation simultaneously, potentially making coverage unaffordable by their mid-80s — precisely when utilization tends to be highest. The /index of Medicare coverage topics provides orientation to related decisions that interact with this trajectory.

The income-related adjustment to Part B premiums (IRMAA) interacts with Medigap in a way that some beneficiaries do not anticipate: Medigap does not offset IRMAA surcharges, because IRMAA is a premium adjustment on the Medicare side, not a cost-sharing item covered by the Medigap contract.

Common misconceptions

Misconception: All Medigap plans cover the same things.
Correction: The plan letter defines benefits. Plan A covers only Part A coinsurance and Part B coinsurance. Plan G adds the Part A deductible, skilled nursing facility coinsurance, Part B excess charges, and foreign travel emergency care. The letter is the determinative variable; the insurer's brand is not.

Misconception: Medigap coverage can be used with Medicare Advantage.
Correction: Federal law prohibits insurers from selling a Medigap policy to a beneficiary who is enrolled in a Medicare Advantage plan (42 U.S.C. § 1395ss(d)(3)(A)). These are mutually exclusive coverage types.

Misconception: Medigap covers prescription drugs.
Correction: No Medigap policy sold after December 31, 2005 may include outpatient prescription drug benefits. Drug coverage requires a stand-alone Part D plan or enrollment in a Medicare Advantage plan with drug coverage (MAPD).

Misconception: Applying for Medigap is always possible without health screening.
Correction: Guaranteed issue rights are time-limited and circumstance-specific. Outside the Open Enrollment Period and the enumerated guaranteed issue situations, insurers in most states may deny applications or rate up based on health history. The Medicare appeals process addresses wrongful denials but does not override legitimate underwriting decisions made outside guaranteed-issue windows.

Misconception: The lowest-premium plan is the least expensive option.
Correction: Net cost depends on actual healthcare utilization, premium rating method, and the plan's cost-sharing structure. An attained-age Plan N may cost less at age 65 than a community-rated Plan G but exceed it in lifetime cost by age 75 under moderate utilization assumptions.

Checklist or steps

Elements to verify before selecting a Medigap plan:

• [ ] Confirm enrollment in both Part A and Part B — Medigap requires both
• [ ] Identify the applicable Open Enrollment Period start date (month of Part B enrollment at age 65 or older) or any applicable guaranteed issue right
• [ ] Determine the state's permitted rating methods (community, issue-age, or attained-age) through the state insurance commissioner's office
• [ ] Compare the specific plan letter's benefit table against known healthcare utilization patterns — not against brand reputation
• [ ] Check whether the state is Massachusetts, Minnesota, or Wisconsin, which use non-standard plan designs
• [ ] Verify whether any anticipated providers are non-participating in Medicare (relevant for excess charge exposure on plans other than F and G)
• [ ] Confirm whether a separate Part D plan is needed, since Medigap does not cover outpatient drugs
• [ ] Obtain premium quotes from at least 3 insurers for the same plan letter in the same geographic rating area — all sell identical benefits for the letter, so premium is the differentiating variable
• [ ] Review the rating method of each quoted policy and model premium at age 75 and 80 using the insurer's disclosed rate increase history

Reference table or matrix

Medigap Standardized Plan Benefit Comparison (2024)

Plans C and F are omitted — closed to beneficiaries with Medicare eligibility beginning January 1, 2020, or later (MACRA). High-deductible G carries a $2,800 deductible (2024) before benefits activate. Source: CMS Choosing a Medigap Policy guide.

For beneficiaries who need help analyzing coverage options, Medicare low-income assistance programs may reduce or eliminate out-of-pocket costs through mechanisms outside Medigap, and Medicare rights and protections governs insurer obligations during enrollment and renewal.