Jane Dotson
Medicare Supplement Insurance, also known as Medigap, is extra insurance that helps cover out-of-pocket costs in Original Medicare. In 2022, 21% of Medicare beneficiaries overall (approximately 12.5 million people) were covered by Medigap, which is sold by private insurance companies. The number of traditional Medicare beneficiaries without supplemental coverage has declined in recent years, from 5.6 million in 2018 to 3.2 million in 2022, likely due to an increase in Medicare Advantage enrollment. Medicare Advantage now covers half of all Medicare beneficiaries, or 29.9 million people.
| Characteristics | Values |
|---|---|
| Percentage of Medicare beneficiaries with supplemental insurance (Medigap) in 2022 | 21% (42% of those in traditional Medicare) |
| Number of people with Medicare supplement insurance (Medigap) in 2022 | 12.5 million |
| Percentage of traditional Medicare beneficiaries under 65 with Medigap | 2% |
| Percentage of traditional Medicare beneficiaries over 65 with Medigap | 11% |
| Number of Medicare beneficiaries with employer or union-sponsored health insurance coverage in addition to Medicare Part A and B in 2022 | 14.5 million (24% of Medicare beneficiaries) |
| Number of traditional Medicare beneficiaries without supplemental coverage in 2018 | 5.6 million (10% of total Medicare population) |
| Number of traditional Medicare beneficiaries without supplemental coverage in 2022 | 3.2 million (5% of total Medicare population) |
| Number of Medicare Advantage enrollees in 2022 | 29.9 million (50% of Medicare beneficiaries) |
| Number of Medicare beneficiaries in 2016 | 60 million (51 million older adults and 9 million younger adults with disabilities) |
| Percentage of beneficiaries in traditional Medicare with supplemental insurance in 2016 | 81% |
| Percentage of beneficiaries in traditional Medicare with employer-sponsored insurance in 2016 | 30% |
| Percentage of beneficiaries in traditional Medicare with Medigap in 2016 | 29% |
| Percentage of beneficiaries in traditional Medicare with Medicaid in 2016 | 22% |
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What You'll Learn
Medicare Supplement Insurance (Medigap)
Medicare Supplement Insurance, also known as Medigap, is extra insurance purchased from a private health insurance company. It helps to cover out-of-pocket costs in Original Medicare (Parts A and B). Generally, to buy a Medigap policy, you must already have Original Medicare, which includes Part A (Hospital Insurance) and Part B (Medical Insurance).
Medigap policies can help to limit the financial exposure of Medicare beneficiaries by fully or partially covering cost-sharing requirements, such as deductibles, copayments, and coinsurance. This additional coverage can provide protection against catastrophic medical expenses. For example, in 2022, 42% of those with traditional Medicare (12.5 million beneficiaries) had Medigap coverage, and they were less likely to report cost-related problems compared to those without additional coverage.
The number of traditional Medicare beneficiaries without supplemental coverage has declined in recent years. Between 2018 and 2022, the number dropped from 5.6 million (10% of the total Medicare population) to 3.2 million (5% of the total Medicare population). This decline is likely due to the increasing popularity of Medicare Advantage, which covered half of all Medicare beneficiaries (29.9 million people) in 2022.
It is worth noting that beneficiaries with traditional Medicare and Medigap coverage tend to have higher incomes, better health, more education, and are less likely to be under 65 with disabilities compared to all traditional Medicare beneficiaries. Federal law provides a 6-month guarantee for adults 65 and older to purchase a Medigap policy when they first enroll in Medicare Part B. However, these protections do not extend to younger adults with long-term disabilities, and most states do not require insurers to issue Medigap policies to this demographic.
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Employer-sponsored insurance
Medicare beneficiaries can choose to receive their Medicare benefits (Part A and Part B) through the traditional Medicare programme or by enrolling in a Medicare Advantage plan, such as an HMO or PPO. In 2018, two-thirds of Medicare beneficiaries were enrolled in traditional Medicare, while one-third were enrolled in Medicare Advantage plans.
Many beneficiaries in traditional Medicare also rely on other sources of coverage to supplement their Medicare benefits. Supplemental insurance coverage typically covers some or all of Medicare Part A and Part B cost-sharing requirements and, in some instances, covers benefits that Medicare does not.
In 2016, eight in ten beneficiaries in traditional Medicare (81%) had some type of supplemental insurance, including employer-sponsored insurance (30%), Medigap (29%), and Medicaid (22%). This equates to nearly 10 million beneficiaries. However, by 2022, the number of beneficiaries with employer-sponsored insurance had fallen to 5.4 million (18%).
Medigap policies, sold by private insurance companies, fully or partially cover Part A and Part B cost-sharing requirements, including deductibles, copayments, and coinsurance. In 2022, Medigap covered 21% of Medicare beneficiaries overall, or 42% of those in traditional Medicare (12.5 million beneficiaries).
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Income and demographics
In 2016, eight in ten beneficiaries in traditional Medicare (81%) had some type of supplemental insurance, including employer-sponsored insurance (30%), Medigap (29%), and Medicaid (22%). This accounts for 42% of those in traditional Medicare, or 12.5 million beneficiaries. However, nearly one in five beneficiaries in traditional Medicare (19%)—6.1 million beneficiaries—had no source of supplemental coverage in 2016, putting them at risk of incurring high medical expenses.
Medigap policies, sold by private insurance companies, cover Medicare Part A and Part B cost-sharing requirements, including deductibles, copayments, and coinsurance. In 2016, Medigap policyholders had higher incomes and education levels compared to all traditional Medicare beneficiaries, and were more likely to be white. Only a small share of policyholders (3%) were under 65 years old and qualified for Medicare due to a disability.
In contrast, beneficiaries with no supplemental coverage in 2016 had more modest incomes (between $20,000 and $40,000), were more likely to be over 85 years old, and were more likely to be male. They are fully exposed to Medicare’s cost-sharing requirements and lack the protection of an annual limit on out-of-pocket spending.
Between 2018 and 2022, the number of traditional Medicare beneficiaries without supplemental coverage declined from 5.6 million (17% of those in traditional Medicare) to 3.2 million (11% of those in traditional Medicare). This decline is likely due to an increase in Medicare Advantage enrollment, which has increased from 20 million in 2018 to 33 million in 2024. In 2022, Medicare Advantage covered half of all Medicare beneficiaries (50%), or 29.9 million people.
Overall, Medicare beneficiaries with Medigap and employer-sponsored insurance had higher incomes, were in better health, had more years of education, and were less likely to be under 65 with disabilities compared to all traditional Medicare beneficiaries.
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Medicare Advantage plans
In 2022, Medicare Advantage covered half of all Medicare beneficiaries, or approximately 29.9 million people. This number has increased to 33 million in 2024, now accounting for 54% of all eligible beneficiaries. Medicare Advantage enrollees in 2022 were more likely to identify as Black or Hispanic, self-report relatively poor health, have incomes below $20,000 per person, and have lower levels of education compared to traditional Medicare beneficiaries.
It is important to note that Medicare Advantage plans have specific rules regarding disenrolment. For instance, if an individual moves outside the plan's service area, loses Medicare or Medicaid eligibility, joins a drug plan (in certain cases), or if the plan's contract with Medicare ends, they may be disenrolled from the Medicare Advantage plan. In such cases, a grace period is provided during which individuals are eligible for a Special Enrollment Period to explore other options and ensure they maintain their desired level of coverage.
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Cost-sharing requirements
Medicare Part A and Part B have cost-sharing requirements, including deductibles, copayments, and coinsurance. Generally, you pay a monthly premium for Medicare coverage and part of the costs each time you use a covered service. There is no yearly limit on out-of-pocket expenses, meaning that without supplemental insurance, you could face significant financial exposure and risk of catastrophic medical expenses.
Medicare Supplement Insurance, also known as Medigap, is extra insurance you can buy from a private health insurance company to help pay your share of out-of-pocket costs in Original Medicare. Medigap policies can fully or partially cover Medicare Part A and Part B cost-sharing requirements, including deductibles, copayments, and coinsurance. By purchasing a Medigap policy, individuals can limit their financial exposure and protect themselves against catastrophic medical expenses.
In 2022, Medigap covered 21% of all Medicare beneficiaries (12.5 million people) and 42% of those in traditional Medicare. The share of traditional Medicare beneficiaries with Medigap coverage varies by age group. Among those under 65, 2% have a Medigap policy, compared to 11% for those 65 and older. Federal law provides a 6-month guarantee for adults aged 65 and over to purchase a Medigap policy when they first enroll in Medicare Part B. However, these protections do not extend to younger individuals who qualify for Medicare due to long-term disabilities, and most states do not require insurers to issue Medigap policies to this demographic.
Medicare Advantage is another form of supplemental coverage that provides protection against out-of-pocket costs. In 2022, half of all Medicare beneficiaries (29.9 million people) were enrolled in Medicare Advantage plans. Medicare Advantage enrollees were more likely to be from racial and ethnic minority groups, report poor health, have lower incomes, and attain lower levels of education compared to traditional Medicare beneficiaries.
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Frequently asked questions
As of 2022, 21% of Medicare beneficiaries had Medicare supplement insurance, also known as Medigap. This is about 12.5 million people.
In 2016, 60 million people relied on Medicare for their health insurance coverage.
You pay a monthly premium for Medicare coverage and part of the costs each time you use a covered service. There is no yearly limit on what you pay out-of-pocket unless you have supplemental coverage.
Medicare is health insurance coverage provided by the government. Supplemental insurance, or Medigap, is extra insurance that can be purchased from a private company to help pay your share of out-of-pocket costs in Original Medicare.
