Medicare Supplement Insurance: Five Things It Does That Almost Nobody Knows About
Original Medicare has no out-of-pocket maximum, 20% of an unbounded number is an unbounded number. That is the gap Medigap fills, and four of its features are genuinely unadvertised.
- Published
- Read
- 11 min
- None
- Out-of-pocket cap in Original Medicare
- 6 months
- The window that decides everything
- 365
- Extra hospital days Medigap adds
§On this page(8)
- 01The gap being filled, and why it has no floor
- 02One: the 365 extra hospital days
- 03Two: emergency care outside the United States
- 04Three: no network, anywhere in the country
- 05Four: the six-month window that decides everything
- 06Five: three pricing methods, one of which ages badly
- 07Choosing a plan letter and an insurer
- 08Frequently asked questions
Start with the fact that makes the whole product make sense, because it is rarely stated plainly: Original Medicare has no annual out-of-pocket maximum. Part B pays 80% of approved costs and you pay the other 20%, with no ceiling, no cap, and no year in which the arithmetic stops. Twenty per cent of a manageable year is manageable. Twenty per cent of a cancer year, a cardiac year, or a dialysis year is not.
Medicare Supplement insurance. Medigap, exists to close that. Most explanations stop there, at deductibles and coinsurance, but four of its features are genuinely obscure, and one of them is a six-month window that, once missed, can never be reopened. That last one is the most consequential thing in this article, so it is worth reading to the end of.
The gap being filled, and why it has no floor
| Cost | What Original Medicare does | Is there a cap? |
|---|---|---|
| Part A hospital deductible | You pay it per benefit period, not per year | No. A new period can start 60 days after discharge |
| Part A coinsurance, days 61–90 | Daily coinsurance charge | No |
| Part A lifetime reserve days | 60 days total, ever, at higher coinsurance | Then you pay everything |
| Part B annual deductible | You pay it once a year | Yes, it is a fixed annual figure |
| Part B coinsurance | You pay 20% of approved charges | No cap of any kind |
| Part B excess charges | Non-participating providers may bill up to 15% above approved | No |
| Skilled nursing coinsurance, days 21–100 | Daily coinsurance charge | No |
| Care outside the United States | Generally not covered at all | n/a |
Specific deductible and coinsurance dollar amounts change every year. Check the current figures at medicare.gov rather than trusting any published number, including in this article. The structure is what matters and the structure does not change: the two rows in bold are the reason Medigap exists.
One: the 365 extra hospital days
Medicare covers a hospital stay for up to 90 days per benefit period, then draws on a pool of 60 lifetime reserve days. Total, for your whole life, at higher coinsurance. When those 60 are gone, they are gone permanently, and Medicare pays nothing more for inpatient hospital care.
Every standardised Medigap plan adds 365 additional lifetime hospital days, paid in full after Medicare's benefits are exhausted. For anyone facing an extended or repeated inpatient course, this is the largest single protection in the policy, and it is essentially never in the marketing.
Two: emergency care outside the United States
Original Medicare generally does not cover care received abroad. Plans C, D, F, G, M and N include foreign travel emergency benefit. Typically 80% of billed charges after a separate deductible, subject to a lifetime maximum of $50,000, for emergency care in the first 60 days of a trip.
It is not travel insurance and should not be relied on as such. The 60-day limit, the lifetime cap and the emergency-only restriction all matter, but for a retiree who travels at all, it converts a category of total exposure into a mostly-covered one, at no additional premium beyond the plan itself.
Three: no network, anywhere in the country
This is the feature that most sharply distinguishes Medigap from Medicare Advantage, and it becomes valuable at exactly the moment health becomes complicated.
| Medigap + Original Medicare | Medicare Advantage | |
|---|---|---|
| Provider access | Any provider accepting Medicare, nationwide | Network, usually regional |
| Referrals and prior authorisation | Rarely required | Commonly required |
| Out-of-pocket maximum | Effectively none needed. The plan fills the gaps | Yes, capped annually by law |
| Monthly premium | Higher. Plan premium plus Part B plus Part D | Often $0 beyond Part B |
| Drug coverage | Separate Part D plan required | Usually bundled |
| Extras (dental, vision, gym) | Not included | Frequently included |
| Can you be underwritten later? | Yes, outside the open enrolment window | No. Annual election is guaranteed |
| Best suited to | Travellers, second-home owners, complex or specialist care | Predictable local care, tight monthly budget |
You cannot hold both. This is not a small choice made once a year, moving from Medicare Advantage back to Medigap generally requires passing medical underwriting, which is precisely what someone with a new diagnosis cannot do.
Four: the six-month window that decides everything
If you take one thing from this article, take this. Your Medigap open enrolment period is the six months beginning the month you are 65 or older and enrolled in Medicare Part B. During those six months, any insurer selling Medigap in your state must sell you any plan it offers, at its standard rate, regardless of your health.
After those six months, in most states, insurers may ask health questions, charge more, impose waiting periods for pre-existing conditions, or decline you entirely. The window does not reopen, and no diagnosis you receive afterward makes it reopen.
- It is tied to Part B, not to your birthday. If you delay Part B because you have employer coverage, the window starts when Part B does.
- Guaranteed-issue rights exist outside it, but only in specific situations: losing employer group coverage, your Medicare Advantage plan leaving your area or ending, the insurer misleading you, or the 12-month trial right above.
- A few states are more generous. Some require guaranteed issue annually or around your birthday, and some extend it to under-65 Medicare beneficiaries with disabilities. Check your own state, the difference is enormous.
- Pre-existing condition waiting periods of up to six months are permitted in some circumstances even during open enrolment, if you had less than six months of prior creditable coverage.
Five: three pricing methods, one of which ages badly
Two identical Plan G policies can cost the same at 65 and differ by hundreds a month at 82, purely because of how each insurer sets its rates. This is the least understood decision in the product.
| Method | How it works | At 65 | At 80+ |
|---|---|---|---|
| Community-rated (no-age-rated) | Everyone pays the same regardless of age | Highest of the three | Usually the cheapest |
| Issue-age-rated | Priced by your age at purchase; never rises because you aged | Middle | Favourable. You keep your entry age |
| Attained-age-rated | Rises as you get older, every year, automatically | Cheapest, and heavily marketed | Frequently the most expensive by a wide margin |
| All three | All can still rise for inflation and claims experience | — | — |
Attained-age policies are the most commonly sold precisely because they quote lowest at 65. Ask which method a policy uses before comparing any two premiums, a quote comparison that ignores this is comparing the first year of a thirty-year purchase.
- Standardised letters mean coverage is genuinely identical between insurers, so shopping on price is rational rather than risky.
- No networks, no referrals and no prior authorisation, anywhere Medicare is accepted.
- The 365 extra hospital days and foreign travel emergency benefit are real catastrophic protections included at no extra charge.
- Once issued, the policy is guaranteed renewable for life as long as premiums are paid. Regardless of any diagnosis afterwards.
- The monthly cost is real and permanent: Medigap premium plus Part B plus a separate Part D plan.
- No drug coverage, no dental, no vision, no hearing. All separate purchases.
- Outside the six-month window and specific guaranteed-issue rights, you can be declined for health reasons.
- Plans C and F are closed to anyone newly eligible for Medicare from 1 January 2020 onward.
- Attained-age pricing means an attractive premium at 65 can become the most expensive option later, and switching later requires underwriting.
VerdictIf you value provider freedom, travel, or the ability to see specialists anywhere without authorisation, Medigap plus Part D is the structurally stronger choice and Plan G is the usual answer. The decision to make carefully is when, inside the six-month window, on a community-rated or issue-age-rated policy, from an insurer whose rate history you have actually looked at.
Choosing a plan letter and an insurer
The order that avoids the expensive mistakes
Establish when your six-month window opens and closes
It begins the month you are both 65 or older and enrolled in Part B. Write both dates down. Everything else in this process is timed against them, and nothing recovers a missed window.
Pick the plan letter before you look at any price
Plan G is the common choice for new enrollees. It covers everything the closed Plan F did except the Part B deductible. Plan N is cheaper with small copays for some visits and no cover for Part B excess charges. Plans K and L cost less and cap your out-of-pocket spending instead of eliminating it. Decide the letter first, because after that you are comparing identical products.
Ask every insurer which pricing method the policy uses
Community-rated, issue-age-rated or attained-age-rated. Then ask for the rate increase history for that plan in your state over the last five years. Both questions are reasonable, both are answerable, and together they tell you far more than the quoted premium.
Screen the insurers on complaints and financial strength
Because the coverage is standardised, insurer quality is the only real variable besides price. Check the NAIC complaint index for that company, filtered to your state, and its AM Best financial strength rating. This is a policy you intend to hold for thirty years.
Enrol in a Part D drug plan at the same time
Medigap covers no prescriptions. Part D has its own enrolment window and its own late penalty, which is permanent and compounds monthly. Do not treat it as a later decision.
Check whether your state has a birthday or annual guaranteed-issue rule
If it does, put a recurring annual reminder in your calendar to re-shop. Identical standardised coverage at a lower premium, with no underwriting, is the cleanest saving available in the whole Medicare system.
Before you sign a Medigap application
- Six-month open enrolment window dates confirmed in writing
- Plan letter chosen on coverage, before comparing any premiums
- Pricing method identified. Community, issue-age or attained-age
- Five-year rate increase history requested for that plan in your state
- Insurer's NAIC complaint index and AM Best rating checked
- Part D drug plan selected and enrolled in the same period
- State-specific guaranteed-issue or birthday rules checked
- Current-year Medicare deductible and coinsurance figures verified at medicare.gov
Everything about Medigap is standardised except the two things that decide what you pay over thirty years: which pricing method the insurer uses, and whether you bought inside your window.
Frequently asked questions
- What does Medicare Supplement insurance actually cover?
- It fills the cost-sharing gaps in Original Medicare. Part A hospital deductibles and coinsurance, Part B's 20% coinsurance, skilled nursing coinsurance, and depending on the plan letter, Part B excess charges and foreign travel emergencies. It also adds 365 extra lifetime hospital days after Medicare's inpatient benefits are exhausted. It does not cover prescriptions, dental, vision or hearing.
- Why does the six-month window matter so much?
- Because it is the only period in which insurers must sell you any Medigap plan they offer at their standard rate regardless of your health. It runs for six months from when you are both 65 or older and enrolled in Part B. After it closes, in most states insurers may ask health questions and decline you, and the window does not reopen, no matter what happens to your health afterwards.
- Is Medigap better than Medicare Advantage?
- They solve different problems. Medigap plus Part D costs more monthly but gives you any Medicare-accepting provider nationwide, with no referrals and no prior authorisation. Medicare Advantage often costs little beyond Part B and bundles extras, but operates a network and caps rather than eliminates your cost sharing. The asymmetry that matters: switching to Advantage is always allowed, while coming back to Medigap usually requires passing medical underwriting.
- Which Medigap plan letter should I choose?
- Plan G is the usual answer for people newly eligible, since Plans C and F are closed to anyone first eligible for Medicare from January 2020 onward. Plan G covers everything F did except the Part B deductible. Plan N is cheaper with small visit copays and no Part B excess charge cover; Plans K and L reduce the premium by capping rather than removing your cost sharing.
- Do Medigap premiums go up as I get older?
- It depends on the pricing method, which is the most overlooked question in the whole purchase. Attained-age policies rise every year with your age and are the cheapest at 65 and frequently the most expensive at 80. Issue-age policies are priced on your age at purchase and never rise because you aged. Community-rated policies charge everyone the same. All three can still rise for inflation and claims experience, ask which method applies, and ask for the five-year rate history.
- Do I still need a Part D plan if I have Medigap?
- Yes. Medigap covers no prescription drugs at all. Part D is a separate enrolment with its own deadline, and the late enrolment penalty is permanent and compounds for as long as you hold Part D. Enrol in both at the same time rather than treating drug coverage as something to sort out later.
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