The Medigap Market
Pricing, Plans, and the Lock-In Problem
MCR-00.03 — Series 0: The Structural Baseline#
Medicare Policy Analysis | March 2026#
Medigap is the most consequential supplemental insurance market most Medicare policy analysts underanalyze. At roughly 14 million enrollees, it covers approximately a fifth of all Medicare beneficiaries and roughly two-fifths of those in Traditional Medicare. Its pricing rules vary materially by state. Its market is dominated by a single carrier at the national level. Its guaranteed issue architecture, the rules that determine whether a beneficiary can buy it at all, contains a structural asymmetry that effectively locks millions of Medicare Advantage enrollees out of the Traditional Medicare pathway once they have developed serious health conditions.
In a policy environment where MA benefit contraction is accelerating, plan exits are increasing, and the case for Original Medicare has strengthened relative to any prior enrollment cycle, the Medigap market is no longer background. It is where the practical consequences of beneficiary choice get resolved.
Market Scope and Enrollment Profile#
Medigap enrollment stood at approximately 12.5 million in 2022, representing 42 percent of Traditional Medicare beneficiaries, according to KFF analysis of NAIC data. The share of FFS Medicare enrollees with Medigap coverage grew from 35.4 percent in 2017 to 41.4 percent in 2022. Projections suggest enrollment will reach approximately 17.4 million by 2032 as the baby boom cohort continues to age into Medicare and, increasingly, as MA benefit contraction directs more beneficiaries and their advisors toward the Original Medicare stack.
That enrollment figure is not demographically representative of the Traditional Medicare population. Medigap enrollees are more likely to be White (94 percent vs. 86 percent of TM beneficiaries overall), more likely to have incomes of $40,000 or above (54 percent vs. 47 percent overall), and more likely to report excellent, very good, or good health (88 percent vs. 82 percent). The premium cost of Medigap, averaging $217 per month in 2023 across all plan types, makes it materially inaccessible for beneficiaries on fixed lower incomes. The demographic skew is structural: Medigap’s underwriting rules create access barriers that fall disproportionately on Black and Hispanic beneficiaries, who have lower incomes and higher prevalence of the pre-existing conditions that trigger medical underwriting outside the initial enrollment window.
The market supports a substantial number of carriers. Approximately 307 companies reported standardized Medigap policies in force as of 2022. Market concentration is severe. UnitedHealthcare enrolls over 30 percent of the U.S. Medigap market nationally, and substantially more in many individual states: over 59 percent in Connecticut, over 56 percent in Colorado, over 47 percent in Florida. The AARP branding relationship, under which UnitedHealthcare markets the dominant national Medigap product under the AARP Medicare Supplement name, is the single most consequential distribution arrangement in the Medigap market and has been for two decades. For many beneficiaries, the Medigap market presents as a choice among multiple identical benefit plans with the largest one carrying a well-known consumer brand.
Plan Architecture After MACRA#
The Medigap plan landscape was significantly restructured by the Medicare Access and CHIP Reauthorization Act of 2015, which took effect on January 1, 2020.
Before MACRA, the dominant Medigap plan was Plan F, the most comprehensive available, covering Part A and Part B deductibles, all Part A and B coinsurance, skilled nursing facility coinsurance, and foreign travel emergency coverage. It was the plan that created the first-dollar coverage structure that CMS and MedPAC argued reduced cost-consciousness and encouraged higher utilization. MACRA prohibited the sale of Plans C and F to beneficiaries who became newly eligible for Medicare on or after January 1, 2020. Existing Plan F holders keep their coverage and can continue renewing it.
As of 2023, Plan F still accounts for 36 percent of all Medigap policyholders, approximately 4.9 million people, because the large cohort that purchased it before 2020 ages and renews. Plan F is a declining pool. Its enrollees are aging, and it cannot add new members.
Plan G is now the most comprehensive option available to newly eligible beneficiaries. It covers all the same benefits as Plan F except the Part B deductible ($283 in 2026). Plan G accounted for 39 percent of all Medigap policyholders in 2023, approximately 5.3 million people, and posted an 8 percent enrollment increase in 2022, adding 343,000 enrollees, the fastest growth of any plan type. Plan G will overtake Plan F in absolute enrollment within the next several years as F continues its demographic runoff and G captures virtually all new enrollment at the comprehensive end of the market.
Plan N has emerged as the cost-sharing alternative for beneficiaries who want broad coverage but can accept modest point-of-service exposure. Plan N covers Part A and B coinsurance but requires copayments of up to $20 for office visits and up to $50 for emergency room visits that don’t result in an inpatient admission. It also leaves the beneficiary responsible for any excess charges from providers who do not accept Medicare assignment. Its premium is meaningfully lower than Plan G, making it the preferred option for healthier beneficiaries willing to manage predictable, small out-of-pocket costs in exchange for premium savings.
High-deductible Plan G (HD-G) offers the same benefit structure as Plan G but requires the beneficiary to pay $2,870 in deductibles, copayments, and coinsurance before coverage activates. In exchange, premiums are substantially lower, sometimes less than $50 per month at age 65. HD-G fits beneficiaries who are healthy, expect low utilization, and have the financial reserves to absorb the deductible in a bad year. It is poorly suited to beneficiaries with chronic conditions or recent high-utilization patterns.
Plans A, B, D, K, L, and M collectively account for a small share of total enrollment. Plan A covers the statutory minimum: Part A coinsurance and hospital costs, hospice coinsurance, and Part B coinsurance. Plans K and L cover reduced shares of cost-sharing with distinct annual out-of-pocket limits. Plans B, D, and M occupy middle positions in the benefit hierarchy that have not attracted significant enrollment in the current market.
Plans E, H, I, and J are no longer sold but remain in force for their existing holders.
Pricing Methodology: The Three-Rate Structure#
All Medigap plans are federally standardized by benefit content. A Plan G from UnitedHealthcare covers exactly the same services as a Plan G from Mutual of Omaha or Blue Cross in the same state. The differentiation between carriers is entirely in pricing, service quality, and rate-increase history.
Federal law permits three premium rating methodologies. State law determines which are available in a given market.
Attained-age rating is the most common methodology nationally and the default wherever states have not mandated otherwise. Premiums are based on the beneficiary’s current age and increase automatically as the beneficiary ages, typically by 2 to 4 percent annually in addition to any general medical inflation adjustments the insurer applies. A Plan G at $150 per month at age 65 may be $185 per month at age 72 and $220 per month at age 78. The actuarial logic is straightforward: older beneficiaries cost more, and attained-age pricing reflects that cost in real time. The consumer consequence is also straightforward: attained-age premiums appear attractively low at initial enrollment and become progressively less attractive, and progressively harder to escape through underwriting, as the beneficiary ages.
Issue-age rating sets the premium based on the beneficiary’s age at the time of purchase and does not increase it as the beneficiary ages. Premiums can rise due to general medical cost inflation, but age alone does not trigger an increase. A beneficiary who buys at 65 pays the 65-year-old rate for the life of the policy. Issue-age premiums start higher than attained-age premiums for the same age because the insurer is pricing in future aging risk upfront, but their long-term trajectory is more predictable. Four states permit issue-age rating but specifically prohibit attained-age rating: Arizona, Florida, Georgia, and Missouri.
Community rating charges all policyholders the same premium regardless of age. A 65-year-old and a 78-year-old enrolled in the same Plan G with the same insurer pay the same monthly amount. Premiums can rise due to medical cost trends but not due to individual aging. Nine states require community-rated premiums for Medigap policyholders aged 65 or older: Arkansas, Connecticut, Idaho, Massachusetts, Maine, Minnesota, New York, Vermont, and Washington.
A beneficiary in New York, where community rating is mandatory, faces a different premium trajectory than an otherwise identical beneficiary in Ohio, where attained-age pricing dominates. In New York, the 78-year-old with a Plan G pays roughly the same as the 65-year-old in the same zip code. In Ohio, the 78-year-old may be paying 40 to 60 percent more than at initial enrollment, and switching policies requires medical underwriting that may not be available at that health status and age.
The price variation across carriers for identical standardized plans is a persistent market anomaly. In 2023, the average monthly Plan G premium was $164 nationally, ranging from approximately $140 in D.C., Hawaii, and New Mexico to $236 in New York. Within a single state, the range between carriers for identical Plan G coverage can exceed $100 per month. Because beneficiaries during their initial enrollment period cannot be declined for coverage or charged higher premiums based on health, the optimal enrollment strategy is clear: compare aggressively at age 65 when all options are open, prioritize carrier rate-increase history alongside current premium level, and recognize that the cheapest initial premium may not be the cheapest over a ten-year horizon.
Guaranteed Issue Architecture: When You Can Buy and When You Can’t#
The Medigap guaranteed issue framework determines the realistic scope of beneficiary optionality between MA and Original Medicare across the life course.
Federal law provides a six-month Medigap open enrollment period beginning the month a beneficiary turns 65 and enrolls in Part B. During this window, insurers cannot deny coverage, cannot charge higher premiums based on health status, and cannot impose waiting periods for pre-existing conditions. This is the cleanest, most unrestricted access to the Medigap market a beneficiary will ever have.
After that six-month window closes, in 45 states and the District of Columbia, Medigap insurers may require medical underwriting for new applicants. They may deny coverage entirely based on health history. They may charge substantially higher premiums. They may impose waiting periods for pre-existing conditions. Federal law does not prevent this.
Guaranteed issue rights exist outside the initial window in specific, defined triggering circumstances. The most policy-relevant in the current environment are plan exits, trial rights, and employer coverage loss.
If a Medicare Advantage plan exits a market and the beneficiary is involuntarily disenrolled, the beneficiary has a guaranteed issue right to purchase certain Medigap plans. This is the mechanism that has become increasingly significant as MA exits accelerate in 2025 and 2026. Beneficiaries whose plans exit have a protected window to return to Original Medicare with Medigap access. The plans available under this GI right are limited, but Plans A, B, C, F, K, and L must be offered by any Medigap insurer doing business in that state.
A beneficiary who switched from Original Medicare with Medigap to MA within the first 12 months of MA enrollment retains the right to return to their previous Medigap plan, or a similar one if the previous insurer no longer offers it. This trial right is a one-time protection and covers only those who switched to MA within the past year, not the much larger population who have been enrolled for several years.
What federal law does not provide is a GI right for a beneficiary who has simply been enrolled in MA for multiple years and now wants to switch to Original Medicare. That beneficiary, regardless of health status, regardless of reason for wanting to leave MA, must apply for Medigap through medical underwriting in 45 states and DC. If they have developed cancer, heart disease, diabetes, COPD, or any of the conditions that generate high Medicare cost-sharing, they may be declined. If they are accepted, they may face substantially higher premiums.
The result is a systematic exit barrier. Beneficiaries who enrolled in MA at 65 when they were healthy and the supplemental benefits were generous, and who now at 72 or 75 want to leave MA because their benefits have been cut, their plan has exited, or they need subspecialty care not available in-network, face a Medigap market that may be functionally closed to them. The choice to switch to Original Medicare that policy discussions often treat as freely available is, for a material subset of beneficiaries, a choice that no longer exists.
The State Outlier Landscape#
Four states, Connecticut, Massachusetts, New York, and Minnesota starting in August 2026, require Medigap insurers to accept all applicants regardless of health status. In these markets, the MA lock-in problem does not exist. A beneficiary who enrolled in MA at 65 and wants to switch to Original Medicare with Medigap at 75 can do so.
Medigap enrollment as a share of TM beneficiaries is substantially higher in community-rated and guaranteed-issue states. States with high MA penetration tend to be attained-age states where the exit barrier is highest.
Maine has an alternative mechanism: each Medigap insurer must designate one month per year during which any applicant must be accepted into Plan A. This is weaker than continuous guaranteed issue but provides some periodic release valve for beneficiaries who want to exit MA.
The case for national expansion of continuous guaranteed issue rights is actuarially contested. Insurers argue that eliminating underwriting in all states would create adverse selection dynamics: healthy beneficiaries stay in MA while sick ones move to Original Medicare with Medigap, pushing up premiums in the Medigap pool and ultimately pricing out the beneficiaries the policy is intended to help. The evidence from New York and Connecticut, which have operated under continuous GI for decades, is more mixed than the adverse selection prediction suggests. Both states maintain active Medigap markets with meaningful enrollment, though premiums are higher than the national average.
Under the current 45-state framework, Medigap access is inversely correlated with need: most available to the healthy and the young, least available to the sick and the old, precisely the beneficiaries for whom its financial protection is most material.
The MA Benefit Contraction Feedback Loop#
Supplemental benefits, dental, vision, over-the-counter allowances, transportation, fitness, drove MA enrollment growth for nearly a decade. Those benefits are now contracting: fewer plans offering them, lower allowances, narrower eligibility criteria. The benefits that induced many beneficiaries to choose MA over Original Medicare are no longer available at the levels that drove the enrollment decision. Simultaneously, MA prior authorization volume has remained high, plan exits are accelerating in low-benchmark markets, and the star rating quality of available plans in many rural and mid-tier markets has declined.
For a beneficiary enrolled in MA who now wants to reconsider that decision, the logical destination is Original Medicare plus Medigap. But the underwriting barrier means that most beneficiaries who enrolled in MA several years ago and have since developed significant health conditions cannot access Medigap at reasonable cost or at all in 45 states. The product that induced them to leave Original Medicare no longer delivers what it promised, but the path back to Original Medicare’s cost-sharing structure is blocked.
Approximately 54 percent of Medicare beneficiaries are currently in MA. If even 10 percent of those want to reconsider in light of benefit contraction and plan exits, that is more than three million beneficiaries navigating a decision with highly asymmetric information and a structural barrier most of them do not know exists. The SHIP network, approximately 5,000 counselors nationally serving 67 million beneficiaries, does not have the capacity to reach all of them.
Expanding guaranteed issue nationally requires legislation and a resolution of the adverse selection actuarial argument. Birthday rules, which allow beneficiaries to switch to any Medigap plan of equal or lesser coverage once a year within 60 days of their birthday without medical underwriting, are a partial solution available in approximately 12 states including California, Idaho, Illinois, Kentucky, Louisiana, Maryland, Missouri, Nevada, Oklahoma, Oregon, and Wisconsin. They address plan switching within Medigap but do not address the MA-to-Medigap transition for beneficiaries with pre-existing conditions.
What advocates and SHIP counselors can do in the interim is ensure that beneficiaries approaching the initial enrollment decision at age 65 understand the long-term implications of the MA choice in underwriting states: particularly the one-time nature of the risk-free Medigap enrollment window and what conditions at age 72 or 75 might make the exit decision they are not thinking about at 65 materially harder.
What a Beneficiary Counseling Framework Requires in 2026#
The standard beneficiary counseling framework for Medigap has historically been reactive: explaining Medigap after someone has already asked about it, rather than ensuring the decision architecture is understood prospectively.
An adequate framework covers, at minimum: the six-month open enrollment period and its one-time nature; the medical underwriting rules that apply after it closes in most states; the rating methodology in the beneficiary’s state and its implications for long-term premium trajectory; the carrier rate-increase history, which varies substantially across insurers offering identical standardized plans; the triggering events that create GI rights outside the initial window; and the MA plan exit signal, the fact that an MA plan exit creates a GI right that may be the last opportunity for a beneficiary with significant health conditions to access Medigap.
For MA plan strategists and executives, the Medigap market in 2026 is more directly relevant than at any prior point in the MA era. A beneficiary who cannot afford Medigap or cannot access it through underwriting will remain in MA regardless of plan quality or benefit contraction. The exit barrier is, from one perspective, a structural enrollment retention mechanism, not one that any compliant insurer would design intentionally, but one whose existence shapes the competitive dynamics of the market in ways that warrant clear-eyed acknowledgment.
Related Reading#
MCR-04_08 MA Market Consolidation: Exit, M&A, and New Entrants MCR-10_02 Racial and Ethnic Health Equity in Medicare: HCC Coding Gaps, Benefit Disparities, and What the Data Shows MCR-11_01 California: The Medicare Market That Sets National Precedent MCR-07_06 The Medicare You Were Promised vs. The Medicare You Are Getting