Demystifying Medigap: How Medicare Supplement Plans Work

The 20% Gaping Hole in Medicare#

If you rely solely on federal Original Medicare (Part A and Part B), you are exposed to significant financial risk. While Medicare covers a substantial portion of your bills, it leaves behind a 20% coinsurance on medical treatments, doctor appointments, and physical therapies—with no cap or maximum limit.

If you suffer a severe illness requiring a $100,000 surgical procedure, you could face an out-of-pocket bill of $20,000.

To solve this, private insurers sell Medicare Supplement Insurance, commonly referred to as Medigap.

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How Medigap Plans Work#

Medigap policies are designed to sit right alongside your Original Medicare card. When you receive a medical service:

1. Your provider bills federal Medicare first.
2. Medicare pays its 80% share.
3. The remaining bill is sent automatically to your private Medigap carrier, which pays the remainder.

Because these plans are regulated by the federal government, they are fully standardized. This means Plan G sold by Company A has the exact same benefits as Plan G sold by Company B. The only difference is the premium price and the carrier's reputation for customer service.

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The Most Popular Medigap Plans#

Although there are 10 standardized plans (labeled A through N), the vast majority of enrollees choose one of three plans:

1. Plan G (The Current Gold Standard)#

Plan G covers every single out-of-pocket gap in Medicare Part A and B, except for the small annual Part B deductible (which is $257 in recent years). Once you pay that initial deductible, Plan G covers 100% of your medical bills for the rest of the year.

2. Plan N (The Cost-Effective Choice)#

Plan N offers a lower monthly premium in exchange for minor shared costs. You are responsible for the Part B deductible, copays up to $20 for office visits, copays up to $50 for emergency room visits, and potential "Part B Excess Charges" (charges from physicians who do not accept Medicare's fully assigned rates).

3. Plan F (The Legacy Plan)#

Plan F covers 100% of all costs, including the Part B deductible. However, federal law prohibits anyone who became eligible for Medicare after January 1, 2020, from purchasing Plan F. It remains available only to those who turned 65 prior to that date.

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The Golden Window: Medigap Open Enrollment#

This is the most critical rule of Medigap: You do not always have a guaranteed right to buy a policy.

The ideal time to sign up is during your Medigap Open Enrollment Period. This is a one-time, 6-month window that begins the first day of the month you are both 65 years old and enrolled in Medicare Part B.

During this window, insurance companies:

• Must sell you any Medigap policy they offer.
• Cannot charge you more due to pre-existing medical conditions (like high blood pressure, diabetes, or past cancer).
• Cannot subject you to health surveys or medical underwriting.

If you miss this window, you will have to answer extensive health questionnaires to switch or join a Medigap plan in the future, and insurers can reject your application outright.

Learn more about Medicare Supplement (Medigap) plans and why most enrollees pair them with a standalone Part D drug plan.