Medigap insurance premiums—the plans that supplement traditional Medicare by covering deductibles and copayments—have surged dramatically in recent years, with some insurers raising rates by more than 40%. This has left millions of Medicare beneficiaries facing increased costs and limited affordable coverage options.
John Jaggi, an Illinois-based insurance broker with nearly five decades of experience, witnessed an unprecedented 45% premium increase last August for over 80 clients enrolled in the same Medicare supplemental plan from insurer Chubb. “In my 49 years of doing business, I’ve never seen a premium increase be effective immediately on everyone instead of on their policy anniversary,” Jaggi said. Though such a steep hike is rare, brokers report that annual double-digit percentage increases are increasingly common in the Medigap market.
Medigap policies are used by more than 12 million people, approximately 43% of Medicare beneficiaries enrolled in traditional fee-for-service Medicare. These policies are critical because traditional Medicare does not impose an annual out-of-pocket limit, exposing beneficiaries to potentially unlimited medical costs without supplemental coverage.
Steady rise in premium rates
According to recent state insurance filings analyzed by consulting firm Telos Actuarial, major insurers including Aetna, Blue Cross Blue Shield, Cigna, Humana, Mutual of Omaha, and UnitedHealthcare sought premium increases ranging from about 12% to over 26% for Medigap Plan G—the most popular supplemental plan—in early 2026.
Average monthly premiums for Plan G coverage were $164 in 2023, per Kaiser Family Foundation (KFF) data, with indications that this figure is continuing to rise. For example, in Alaska, Premera Blue Cross increased Plan G premiums nearly 12% this year, meaning a 65-year-old woman would now pay approximately $192 monthly, up from $172 last year. Premera attributed the increases to rising Medicare deductible and copayment amounts and greater use of medical services among its members.
Factors driving premium hikes
Industry experts cite several factors behind the escalating costs: rising medical and labor expenses, an aging beneficiary population using more healthcare services, state regulations affecting Medigap plans, and shifts in enrollment between traditional Medicare and Medicare Advantage plans.
“Five years ago, it was rare for a Medigap carrier to raise rates more than 10%,” said Chalen Jackson, vice president for government affairs at Integrity, a health insurance company. “Now, premium increases lower than 10% are unusual.”
For many beneficiaries, finding affordable Medigap coverage has become challenging. Jaggi noted that although he was able to identify alternative plans for his clients facing steep rate hikes, the process was difficult, and rates continue to climb across insurers.
Limited options and regulatory constraints
Beneficiaries initially have a six-month window after enrolling in traditional Medicare to buy Medigap plans without medical underwriting. After this period, switching plans often requires meeting stringent criteria or risking higher premiums due to health conditions.
At least 16 states use “birthday rules” that allow annual Medigap plan changes without medical underwriting, aiding some consumers with preexisting conditions. Additionally, Connecticut, Massachusetts, Maine, and New York require insurers to offer at least one Medigap plan without health screening during specific enrollment periods.
Many beneficiaries consider Medicare Advantage plans, which have out-of-pocket spending caps, as alternatives. However, these plans restrict access to specific networks of providers. Moreover, switching back to traditional Medicare and purchasing Medigap after Medicare Advantage enrollment faces strict limitations that can effectively trap enrollees in Advantage plans.
Approximately 2.6 million people lost Medicare Advantage coverage in 2026 due to insurer withdrawals, with around 440,000 turning to Medigap policies as a result, according to market research firm Deft Research. Such forced enrollments can increase insurers’ risk exposure, contributing to premium hikes across the board.
Some consumers might lower costs by choosing less comprehensive Medigap plans with annual deductibles near $3,000, though many hesitate to accept such high upfront expenses.
Why it matters
Rising Medigap premiums threaten the affordability and accessibility of supplemental coverage that protects millions of Medicare beneficiaries from unpredictable and potentially severe out-of-pocket health costs. Traditional Medicare lacks an out-of-pocket limit, making these supplemental plans essential for financial security. Policymakers and consumer advocates have proposed measures such as capping Medicare out-of-pocket expenses or subsidizing Medigap premiums, but legislative action remains uncertain.
Without interventions, ongoing premium increases may force more seniors to either pay substantially higher insurance costs, accept greater financial risk, or move into Medicare Advantage plans despite potential drawbacks in provider access.
Background
Medigap policies help cover copayments, coinsurance, and deductibles that traditional Medicare does not fully pay. Because traditional Medicare imposes no annual spending limit, beneficiaries without supplemental insurance can face large medical bills during serious or chronic illnesses.
Medicare Advantage plans, offered by private insurers, provide an alternative with capped out-of-pocket costs but generally contain provider network restrictions. Medigap plans have historically offered broader provider choice but are increasingly expensive and difficult to change due to underwriting and state policy rules.
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