Medicare is a federal government health insurance program that subsidizes health care costs for adults aged 65+ and some younger people with certain medical conditions. However, Original Medicare (Parts A and B) doesn't pay for everything, which can leave a gap between what it pays and the person's final bill. Let's consider how you can protect yourself from this possibility, what you're likely to pay and how to enroll in a plan.

Medigap pays for the difference between what Original Medicare will pay and the senior's total medical expenses. As of 2023, around 22.5% of the 65.1 million Americans with Original Medicare have Medigap plans, which are sold by private insurance companies regulated by the Centers for Medicare and Medicaid Services (CMS). Plans are standardized throughout the country, except for Massachusetts, Minnesota and Wisconsin, which have their own guidelines.

There are 10 Medigap plans, each named after the letters A, B, C, D, F, G, K, L, M and N. Insurance companies don't need to offer them all but must offer Plan A if they offer any Medical Supplement Insurance policy and Plan C or F if they offer any plan. Some states offer Plans F and G as high-deductible plans where the policyholder pays Medicare-covered costs (up to $2,700 as of 2023) before the policy will pay.

Medicare Advantage (also known as Part C) is an alternative to Original Medicare offered by private insurance companies that generally covers Parts A and B and Part D (prescription drugs). The plan may also pay for dental, vision, and hearing services. 

Medicare Supplement Insurance pays the difference if the Original Medicare beneficiary's plan can't meet their medical expenses. Unlike Medicare Advantage (where the choice of care providers is limited), Medigap allows the policyholder to choose from any medical practitioner who accepts Original Medicare. 

The 10 Medicare Supplement Insurance plans enable policyholders to make smaller payments to their medical providers. The type of plan determines the benefits offered and CMS standardization guidelines ensure plans offer the same benefits in most states. Therefore, it makes sense to focus on price when comparing plans. Plans C, F, E, H, I and J are no longer available to new Medicare enrollees (although you can retain one of these plans if you already have it). You can still buy Plan C or F if you were eligible for Medicare before January 1, 2020.

The average cost of a Medigap plan in 2023 is $155 per month. Insurance companies price plans in three different ways:

• Issue-Age Rating: The person's age when they buy the plan determines the premium.
• Community Rating: The company charges the same monthly premium per policy, regardless of the individual's circumstances.
• Attained-Age Rating: The monthly premium increases every year with the policyholder's age (E.g. A premium starting at $150 for a 65-year-old might incrementally rise to $175 by the time they're 75).

The following list covers the standard eligibility criteria.

• Aged 65 or older
• Enrolled in Original Medicare (Parts A and B)
• U.S. citizen or legal resident for at least five years
• Resident in the state where the Medigap plan applies

Generally, Medigap can cover some or all out-of-pocket expenses associated with a senior's Original Medicare plan. There are multiple Medigap policies, so it isn't possible to provide a definitive nationwide list. However, all plans cover the following:

• Medicare Part A: Hospital fees and coinsurance
• Medicare Part A: Hospice copayment or coinsurance costs
• Medicare Part B: Copayment or coinsurance costs
• Costs for blood transfusions (up to three pints) per year

The following list includes some costs that certain plans may cover.

• Medicare Part A deductible
• Medicare Part B deductible
• Medicare Part B excess charges
• Costs in a skilled nursing facility (100% for the first 20 days, then between 50% and 100% for the final 80 days — depending on the policy)
• Emergency medical costs while traveling in a foreign country

* Some states offer Plans F and G as high-deductible plans.

** Medigap will pay expenses for the remaining calendar year once you've reached your annual out-of-pocket limit and Part B deductible.

*** Pays Part B coinsurance (except a copayment not exceeding $20 for some office visits and up to $50 for emergency room visits that don't result in a hospital admission).

There are some services that Medicare Supplement Insurance won't typically cover. They include:

• Long-term care, such as assisted living and memory care
• Dental and vision services
• Eyeglasses
• Hearing aids
• Prescription drugs
• Private-duty nursing (such as a Registered Nurse providing care in the senior's home)

The ideal time for you to enroll in a Medigap policy is during your six-month Medigap Open Enrollment Period. This begins when you're aged 65+ and have enrolled in Medicare Part B. Depending on your state, you may be able to enroll in Medicare SELECT — a Medigap policy that restricts seniors to specific hospitals (and sometimes doctors). The following is a brief overview of the two enrollment periods.

During the Open Enrollment Period

• Prices are usually better
• There's more choice
• Can buy any policy
• Seniors with existing health issues can buy any policy for the same costs as their healthier peers

Outside the Open Enrollment Period

• The insurance company doesn't have to sell you the policy you want unless you have Guaranteed Issue Rights
• If you have a pre-existing health condition, the insurance company might refuse to cover your out-of-pocket expenses related to the problem

The fastest and simplest way to enroll is to visit Medicare.gov and enter your zip code to be directed to the plans available in your area.