What Is the Best Medicare Supplement Insurance?

Medicare Supplement Insurance, commonly known as Medigap, is a private insurance policy designed to work with Original Medicare (Part A and Part B). These policies reduce out-of-pocket expenses like deductibles, copayments, and coinsurance, providing a more predictable financial outlook for healthcare expenditures.

Understanding Medicare Supplement Insurance

When an individual has Original Medicare and a Medigap policy, both pay their shares of covered healthcare costs. To purchase a Medigap policy, individuals must enroll in both Medicare Part A and Part B. They also pay a monthly premium to the Medigap insurance company plus their Medicare Part B premium.

Medigap policies cover Medicare Part A coinsurance and hospital costs, Part B coinsurance or copayments, and the first three pints of blood. Some plans also cover skilled nursing facility care coinsurance, Part A hospice care coinsurance or copayment, and emergency medical care when traveling outside the United States. Benefits for each standardized Medigap plan are consistent, regardless of the insurance company offering it.

Medigap policies do not include prescription drug coverage; a separate Medicare Part D plan is needed for this. They also exclude coverage for long-term care, vision care, dental care, hearing aids, eyeglasses, or private-duty nursing.

Medigap policies differ from Medicare Advantage (Part C) plans. Medicare Advantage plans are an alternative way to receive Medicare benefits, often bundling Part A, Part B, and Part D prescription drug coverage, plus other benefits like vision or dental. Medigap policies work alongside Original Medicare and cannot be used with a Medicare Advantage plan. While Medicare Advantage plans may offer lower monthly premiums, they often involve network restrictions and out-of-pocket maximums. Medigap provides greater flexibility in choosing healthcare providers who accept Medicare.

Standardized Medigap Plan Coverage

Medigap policies are standardized across most states, identified by letters A-N. Each plan offers specific benefits; for instance, a Plan G provides the same core coverage regardless of the private insurance company selling it. This standardization simplifies comparison, as the main difference between policies of the same letter from different insurers is often the cost.

Plan A is the most basic Medigap policy. It covers Medicare Part A coinsurance and hospital costs for up to an additional 365 days after Medicare benefits are exhausted, Medicare Part B coinsurance or copayment, the first three pints of blood, and Part A hospice care coinsurance or copayment. Plan B provides the same benefits as Plan A, plus coverage for the Medicare Part A deductible.

Plans C and F were historically the most comprehensive options. They covered basic benefits, plus the Medicare Part A deductible, skilled nursing facility care coinsurance, the Medicare Part B deductible, Part B excess charges, and foreign travel emergency care. Due to federal law, Medigap plans sold to individuals newly eligible for Medicare on or after January 1, 2020, cannot cover the Medicare Part B deductible. Therefore, Plans C and F are unavailable for new enrollees since that date. Those eligible for Medicare before January 1, 2020, can still purchase or keep Plans C and F if available in their state.

For those new to Medicare on or after January 1, 2020, Plan G is the most comprehensive option. It covers everything Plan F did, except the Medicare Part B deductible. This includes:
Medicare Part A coinsurance and hospital costs
Part B coinsurance or copayment
Part A deductible
Skilled nursing facility care coinsurance
Part A hospice care coinsurance or copayment
Part B excess charges
First three pints of blood
Foreign travel emergency care

Plan D offers similar benefits to Plan G but does not cover Part B excess charges.

Plan N covers:
Medicare Part A coinsurance and hospital costs
Part B coinsurance (with copayments of up to $20 for some office visits and up to $50 for emergency room visits not resulting in inpatient admission)
Part A deductible
Skilled nursing facility care coinsurance
Part A hospice care coinsurance or copayment
First three pints of blood
Foreign travel emergency care

It does not cover the Part B deductible or Part B excess charges.

Plans K and L offer lower premiums in exchange for higher out-of-pocket costs. They cover a percentage of most benefits, including Medicare Part A coinsurance and hospital costs, Part B coinsurance or copayment, and skilled nursing facility care coinsurance. Plan K covers 50% of these costs, while Plan L covers 75%. Both plans have an annual out-of-pocket limit. Once this limit and the Part B deductible are met, the plan pays 100% of covered services for the remainder of the calendar year. For 2025, the out-of-pocket limit for Plan K is $7,220 and for Plan L is $3,610.

Plan M covers 100% of:
Medicare Part A coinsurance and hospital costs
Part B coinsurance or copayment
First three pints of blood
Part A hospice care coinsurance or copayment
Foreign travel emergency care

It covers 50% of the Medicare Part A deductible and does not cover the Part B deductible or Part B excess charges.

Key Considerations for Plan Selection

Choosing a Medigap policy involves considering individual healthcare needs, financial situation, and anticipated medical expenses. No single Medigap plan is universally “best,” as the ideal choice depends on personal circumstances.

Premium cost is a significant factor, varying considerably between different insurance companies for the same standardized plan. Insurers use different pricing methods, impacting how premiums change over time. The three main methods are community-rated, issue-age-rated, and attained-age-rated.

Community-rated policies charge everyone the same premium for a specific plan, regardless of age. While premiums may still increase due to inflation and rising healthcare costs, they do not increase simply because the policyholder gets older. This can be advantageous for older individuals, though younger enrollees might pay more than under other rating methods.

Issue-age-rated policies base the premium on the policyholder’s age when they first purchase the policy. The premium remains relatively stable and does not increase due to advancing age; however, it can still rise due to inflation or other factors, such as overall claims experience. This method can offer more predictable costs over time, as the initial premium is set at the age of enrollment.

Attained-age-rated policies, which are common, set premiums based on the policyholder’s current age. Premiums typically start lower when an individual is younger but increase as they get older. These policies can also see premium increases due to general inflation and rising healthcare costs, in addition to age-related adjustments. While initially more affordable, the cumulative cost over many years can be higher compared to other rating methods.

Beyond premium structure, assessing personal healthcare needs is important. Individuals who anticipate frequent doctor visits, hospital stays, or chronic conditions may benefit from plans with more comprehensive coverage, such as Plan G. Conversely, those with fewer anticipated medical needs might find a plan with a lower premium and higher out-of-pocket responsibility, like Plans K or L, more suitable. These plans have out-of-pocket limits that provide financial protection once reached.

Research the stability and customer service reputation of various insurers. While Medigap plans are standardized, service experience, claims processing efficiency, and premium increase history can differ between companies. Consulting resources like State Health Insurance Assistance Programs (SHIPs) can provide objective guidance and rate comparison tools.

Medigap Enrollment Process

The most advantageous time to purchase a Medigap policy is during the Medigap Open Enrollment Period. This one-time, six-month period begins the first month an individual is 65 or older and enrolled in Medicare Part B. During this period, insurance companies must sell any Medigap policy they offer, regardless of health status, and cannot deny coverage or charge higher premiums due to pre-existing conditions.

If an individual misses their Medigap Open Enrollment Period, they may still purchase a policy, but could be subject to medical underwriting. This means an insurer can review their health history, potentially deny coverage, or charge a higher premium based on health conditions. However, certain situations trigger “guaranteed issue rights,” allowing purchase of a Medigap policy without medical underwriting. These rights apply when an individual loses certain health coverage, such as employer-sponsored group health insurance, or if their Medicare Advantage plan leaves their service area. A trial right also applies if someone joins a Medicare Advantage plan when first eligible for Medicare Part A at age 65 and switches back to Original Medicare within 12 months.

Enrollment involves researching and comparing available Medigap plans from private insurance companies licensed in the state. Compare policies of the same letter from various insurers, as premiums can vary. Once a suitable plan is identified, contact the insurance company directly for a quote and to complete the application. Necessary information includes Medicare card details and any other current insurance coverage.

After applying, the Medigap policy generally becomes effective on the first of the month following the application. If there are delays in receiving the policy or proof of insurance, contact the insurance company; if issues persist, the State Insurance Department can assist.