Medicare Supplement Insurance (Medigap): Plans, Costs, and What It Covers for Seniors

When older adults and their families transition into retirement, one of the biggest financial surprises is discovering that Original Medicare does not cover 100% of healthcare costs. In fact, Original Medicare has no annual out-of-pocket maximum, leaving beneficiaries responsible for significant deductibles, copayments, and a 20% coinsurance on outpatient care.

Medicare Supplement Insurance, widely known as Medigap, is private health insurance specifically designed to fill these financial "gaps." However, for families navigating aging and senior living transitions, understanding what Medigap covers—and crucially, what it does not cover—is essential to avoid catastrophic out-of-pocket expenses.

1. How Medigap Works with Original Medicare

Medigap policies are sold by private insurance companies, but they are strictly standardized and regulated by federal and state laws. To purchase a Medigap policy, you must already be enrolled in both Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance).^[2]

Without supplemental coverage, an older adult faces substantial cost-sharing under CY 2026 Medicare rules:

• Part A Inpatient Hospital Deductible: $1,736 per benefit period before Medicare pays for hospital stays.
• Part A Skilled Nursing Facility (SNF) Coinsurance: $0 per day for days 1–20, but $217 per day for days 21–100 following a qualifying 3-day inpatient stay (potentially exceeding $17,000 in out-of-pocket copays for an extended rehab recovery).
• Part B Annual Deductible: $283 per year.
• Part B 20% Coinsurance: After meeting the deductible, patients owe 20% of the Medicare-approved amount for all doctor visits, outpatient surgeries, physical therapy, durable medical equipment (wheelchairs, hospital beds), and chemotherapy, with no ceiling.

A Medigap policy pays some or all of these out-of-pocket costs directly to the healthcare provider after Medicare pays its share.

2. Standardized Medigap Plans: Comparing Plan G and Plan N

In most states, Medigap policies are categorized by letters: A, B, C, D, F, G, K, L, M, and N. Every policy with the same letter offers identical basic benefits, regardless of which private insurer sells it (premiums and customer service, however, vary by company). Note that Massachusetts, Minnesota, and Wisconsin have their own state-specific standardization systems.

While legacy Plans C and F offered "first-dollar coverage" covering all deductibles, federal legislation phased them out for individuals who became eligible for Medicare on or after January 1, 2020. Today, the two most popular options are:

• Plan G: The comprehensive benchmark. Plan G covers 100% of the Part A hospital deductible ($1,736), 100% of the skilled nursing coinsurance ($217/day for days 21–100), 100% of Part B coinsurance (the 20%), and Part B excess charges. The only cost you pay out-of-pocket is the annual Part B deductible ($283 in 2026).
• Plan N: A budget-conscious alternative. Plan N offers lower monthly premiums than Plan G. In exchange, you pay the Part B deductible ($283) plus small copayments (up to $20 for some doctor visits and up to $50 for emergency room visits that do not result in an inpatient admission). Plan N does not cover Part B excess charges.

3. The Critical Warning: Medigap Does NOT Cover Custodial Senior Living

The single most dangerous misconception among families is assuming that a Medicare Supplement policy will pay for an assisted living community, memory care unit, or long-term nursing home stay.

To fund long-term senior care, families must explore alternative strategies:

• Long-Term Care Insurance (LTCI): Private policies specifically written to reimburse daily home care, assisted living, and nursing home costs after benefit triggers (e.g., loss of 2+ ADLs) are verified.
• State Medicaid Programs: Joint federal-state assistance that covers nursing home care and, in many states, assisted living services via Home- and Community-Based Services (HCBS) waivers for individuals who meet clinical and financial eligibility criteria.
• Veterans Aid & Attendance: Supplemental pension benefits of up to $2,431/month (2026 rate) for eligible wartime veterans and surviving spouses requiring daily personal care support.
• Private Pay: Using personal retirement savings, pensions, home equity, or family contributions.

4. Enrollment Timing and Guaranteed Issue Rights

Timing your Medigap enrollment is critical. Your Medigap Open Enrollment Period is a one-time, 6-month window that begins the first month you are 65 or older and enrolled in Medicare Part B.

During this 6-month window, you have guaranteed issue rights: private insurance companies cannot deny you any Medigap plan they sell, cannot place waiting periods on pre-existing conditions, and cannot charge higher premiums based on your medical history.

If you miss this window and attempt to purchase or switch a Medigap plan later, insurers in most states can subject you to medical underwriting. If you have chronic conditions (e.g., Parkinson's, heart disease, diabetes, or early-stage dementia), insurers can deny your application or charge significantly higher rates.

5. Where to Get Free, Unbiased Guidance

Choosing between Medigap plans, evaluating private insurer rates, or comparing Medigap against Medicare Advantage can be overwhelming. Fortunately, free assistance is available:

• State Health Insurance Assistance Program (SHIP): A federally funded network of certified, unbiased counselors in every state who provide free, confidential Medicare and Medigap counseling with no sales pitch (shiphelp.org).
• Medicare.gov: Use the official Medicare Plan Finder tool or call 1-800-MEDICARE (1-800-633-4227) to view standardized plan availability and rate estimates in your zip code.
• Local Area Agencies on Aging (AAA): Community organizations that connect seniors to local benefit enrollment specialists and caregiver support programs.