This is general information, not insurance, medical, legal or financial advice. Medicare rules, plan standards and prices change and vary by location. Use official Medicare resources and licensed, independent counselors to check current details.
The gap these policies address
Original Medicare, the government program for people generally aged 65 and over and some younger people with disabilities, covers a large share of medical costs but not all of them. After Medicare pays its portion, the person may still owe things like deductibles, coinsurance or copayments for covered services. Original Medicare also does not generally set a yearly cap on what you can owe for covered care.
A Medicare supplement policy, commonly called Medigap, is private insurance you buy to help cover some of those remaining costs. It “supplements” original Medicare, which is where the name comes from. The basic structure of the program itself is explained in the discussion of Medicare parts.
How it works in practice
The process generally follows a pattern.
- You get a service that original Medicare covers, and Medicare pays its share.
- The Medigap policy then pays some or all of the cost-sharing amounts that Medicare leaves to you, according to the specific plan.
- You pay a monthly premium to the private insurer for the policy, in addition to any premium you pay for Medicare itself.
Because the policy follows Medicare’s lead, it generally pays only for services Medicare approves. If Medicare does not cover something, a supplement typically does not either.
Standardized lettered plans
In most U.S. states, Medigap policies are standardized and labeled with letters, so that a plan with a given letter offers the same basic benefits no matter which company sells it. A small number of states use different standardization systems. Some letters are not sold to new buyers anymore, and the available list can change.
This standardization has a practical effect. When comparing two companies selling the same letter plan, the coverage is the same, so the main differences are premium, the company’s service, and how the insurer sets and raises prices over time. Plans with more letters of benefits, or generally more complete coverage, tend to carry higher premiums than plans covering fewer cost gaps.
Which costs a given letter plan covers is listed in official Medicare materials. Check the current chart instead of relying on a summary.
What a supplement generally does not cover
Medigap is narrower than many people assume. It typically does not include:
- Prescription drug coverage. That usually comes from a separate drug plan.
- Dental, vision or hearing care, including hearing aid coverage.
- Long-term care, such as extended stays in a custodial facility, or ongoing in-home care.
- Services that original Medicare itself does not cover.
Some plans may offer limited coverage for care while traveling abroad. If this matters to you, read the details.
Not compatible with Medicare Advantage
One important rule is that Medigap works with original Medicare. It is generally not designed to be used together with Medicare Advantage, where a private plan replaces original Medicare. In that case, the plan itself sets your cost sharing, usually with an out-of-pocket maximum, and a supplement would not normally be sold to you. This is a key point when deciding between the two paths. The trade-offs are covered in the discussion of Medicare Advantage.
In rough terms:
| Original Medicare plus a supplement | Medicare Advantage | |
|---|---|---|
| Who sets your cost sharing | Medicare, with the supplement filling gaps | The private plan |
| Extra monthly premium | A supplement premium, typically | May be low or none, varies |
| Provider choice | Generally any provider that accepts Medicare | Often limited to a network |
Those are generalities, not rules for every plan.
The timing of buying
Timing matters more for Medigap than for many products. Many states provide a limited window, often the six months after you first have Medicare Part B at age 65 or older, when insurers generally must sell you a policy regardless of your health. Outside that window, in many states, insurers can review your health history and may decline you or charge more. This is the difference between guaranteed coverage and underwritten coverage, discussed elsewhere on this site.
Some states have additional protections or different rules, and certain situations create separate rights to buy. Because the window can be hard to get back, it is worth learning your state’s rules before your Medicare starts.
How premiums are set
Insurers price Medigap in different ways, and the pricing method can change how premiums behave with age.
- Community-rated: everyone pays about the same regardless of age.
- Issue-age-rated: the premium depends on your age when you buy.
- Attained-age-rated: the premium rises as you get older.
A policy that starts cheap may become expensive over time, so a one-year comparison can mislead. Ask how and how often the company changes premiums, and see the discussion of why premiums change from year to year.
Questions to ask before buying
- Which letter plan, and what exactly does it cover?
- How is the premium set, and how has it changed in past years?
- When is my guaranteed purchase window, and have I used it?
- How does the monthly cost compare with the costs I might otherwise face?
- Do I also need a separate prescription drug plan?
Free state counseling programs for Medicare exist in the U.S. and are a reasonable place to get unbiased help. Be wary of anyone who pressures you to decide quickly.