How Much Is Medicare Gap Insurance — And What Does It Actually Cover?
The phrase "Medicare gap insurance" shows up in two very different conversations — and which one applies to you depends entirely on context. One refers to Medigap, the supplemental health coverage that fills holes in traditional Medicare. The other refers to auto insurance gap coverage, which comes up when a Medicare beneficiary is injured in a car accident and needs to understand how Medicare interacts with other payers.
These aren't the same product. This article explains both — what each one costs, what drives that cost, and why the answer to "how much is it?" is rarely straightforward.
Two Different Things Called "Medicare Gap Insurance"
Medigap (Medicare Supplement Insurance) is sold by private insurers to cover out-of-pocket costs that original Medicare doesn't pay — deductibles, copayments, and coinsurance. It is not auto insurance.
Auto insurance gap coverage, in the context of Medicare, refers to the coordination problem that arises when a Medicare beneficiary is injured in a crash. Medicare may pay for treatment, but it can also assert a lien on any settlement or judgment — meaning it expects to be reimbursed. Understanding that gap, and how coverage layers interact, matters for anyone on Medicare who's been in an accident.
Both have "gaps." Both cost money. Both vary widely by individual circumstances.
What Medigap Plans Typically Cost
Medigap premiums vary based on:
- The plan letter (Plans A through N, each covering a different combination of cost-sharing gaps)
- Your age — most insurers use attained-age rating, meaning premiums rise as you get older
- Where you live — state regulations heavily influence pricing and availability
- The insurer — two companies can sell the identical Plan G at very different prices
- Tobacco use — many insurers charge higher premiums for smokers
- Gender — some states allow gender-based pricing; others prohibit it
- When you enroll — during your open enrollment window, insurers generally cannot medically underwrite; outside that window, they often can
| Plan Type | What It Generally Covers | Typical Monthly Premium Range* |
|---|---|---|
| Plan A | Core benefits only | ~$70–$150/month |
| Plan G | Most costs except Part B deductible | ~$100–$300/month |
| Plan N | Most costs with some copays | ~$80–$220/month |
| Plan K / Plan L | Partial cost-sharing | ~$50–$150/month |
| High-deductible Plan G | Lower premium, higher out-of-pocket | ~$30–$80/month |
*These figures represent general market ranges and vary significantly by state, age, insurer, and individual factors. They are not quotes.
Plan G is currently the most popular comprehensive Medigap option for new enrollees, largely because Plan F — which covered the Part B deductible — was discontinued for people newly eligible after January 1, 2020.
What Drives the Price Difference Across States 🗺️
State regulation plays a significant role. Some states — Massachusetts, Minnesota, and Wisconsin — have their own standardized Medigap structures entirely separate from the federal lettered plan system. In these states, the plan names, benefits, and pricing rules differ from the rest of the country.
In other states, insurers have wide latitude to set premiums using one of three rating methods:
- Community-rated: Everyone in the area pays the same premium regardless of age
- Issue-age-rated: Premiums are based on the age when you first buy the policy
- Attained-age-rated: Premiums increase as you age — the most common method
The rating method your state allows, combined with the insurer's own actuarial calculations, produces the price you're quoted. Two people in different states with identical health profiles and the same plan letter can pay very different amounts.
When Medicare and Auto Insurance Overlap 🚗
If you're a Medicare beneficiary who was injured in a car accident, a different kind of "gap" becomes relevant.
Medicare is generally a secondary payer when another source — like auto insurance liability coverage, PIP (personal injury protection), MedPay, or an at-fault driver's policy — is available. Medicare may advance payment for treatment, but it retains the right to seek reimbursement through a process called subrogation or a Medicare conditional payment.
This creates a layering question: Which coverage pays first? What happens if auto insurance limits are low? What portion of a settlement might Medicare claim back?
The answers depend on:
- Whether your state is a no-fault or at-fault state
- What auto insurance coverage is in place — yours and the other driver's
- The severity of your injuries and the cost of treatment
- Whether Medicare made conditional payments during the claim period
- How the settlement is structured and what it specifically compensates
Failing to notify Medicare of a settlement can result in Medicare recovering its payments directly, sometimes from funds already distributed. This is a known complication in personal injury claims involving Medicare beneficiaries, and it affects how attorneys and adjusters handle these cases.
The Variables That Shape What You'll Actually Pay
For Medigap: Your premium comes down to your state's rules, your age, the plan you choose, and which insurer you select. The federal government standardizes what each plan covers — but not what it costs.
For auto-related Medicare gaps: There is no single "product" you buy. The gap is a coordination-of-benefits problem that emerges after an accident, shaped by your state's fault rules, the coverage available, and how Medicare's secondary payer rules apply to your specific situation.
In both cases, what someone in one state pays — or owes — tells you almost nothing about what applies to your own situation. The plan letter, the state, the insurer, the accident facts, and the coverage in force at the time all feed into the answer.
