KFF: A Snapshot of Sources of Coverage Among Medicare Beneficiaries (https://www.kff.org/medicare/issue-brief/a-snapshot-of-sources-of-coverage-among-medicare-beneficiaries/)

Table of Contents

Ultimate guide — Medical aid (Medicare Advantage) vs. Gap cover (Medigap) decision support for U.S. Medicare beneficiaries

This deep-dive unpacks KFF’s “A Snapshot of Sources of Coverage Among Medicare Beneficiaries,” explains what the findings mean for individual Medicare decision-making, and gives a practical, step-by-step framework for choosing between Medicare Advantage (often thought of as a medical-aid-style option in U.S. terms) and Medigap (gap cover / Medicare Supplement) — plus employer-sponsored and Medicaid interactions. Key KFF findings and implications are summarized and translated into actionable guidance for consumers, advisors, and brokers. (kff.org)

Executive summary — Why this matters

Medicare is not all-in-one. Original Medicare (Parts A and B) provides core coverage but leaves beneficiaries exposed to deductibles, coinsurance, and services (dental, vision, long‑term care) not covered. Many beneficiaries add coverage to reduce financial risk. (medicare.gov)
KFF’s headline stats (what to remember):
- More than half of beneficiaries (about 54% in 2025) are enrolled in Medicare Advantage. (kff.org)
- Among people in Original Medicare, 87% had some form of supplemental coverage in 2023; 3.5 million lacked any supplemental coverage and remain exposed to high out‑of‑pocket costs. (kff.org)
- About 12.2 million beneficiaries had Medigap policies in 2023 (≈43% of those in Original Medicare). (kff.org)
- 14.1 million beneficiaries had employer or union coverage in 2023 (either supplementing Original Medicare or via group Medicare Advantage). (kff.org)

These numbers illustrate the landscape: many beneficiaries choose additional coverage but a meaningful minority do not — creating important decisions about financial risk, access to providers, and long‑term affordability. (kff.org)

What KFF analyzed (data & scope)
What “sources of coverage” means (definitions)
At-a-glance comparison: Medicare Advantage vs. Medigap vs. Employer-sponsored vs. Medicaid
How to decide: the Medical-aid vs. Gap-cover decision framework
Costs, examples, and scenario modeling
Practical shopping checklist & enrollment timing
Common pitfalls and expert tips
FAQs
Action plan: 7 steps to choose confidently
References and further reading

What KFF analyzed (data & scope)

KFF’s issue brief examines national data (CMS enrollment files and the 2023 Medicare Current Beneficiary Survey) to classify Medicare beneficiaries by their primary and supplemental coverage sources and to profile demographics, health status, and income across those groups. The brief reports enrollment by plan type (Medicare Advantage vs. Original Medicare) and by supplemental coverage (Medigap, employer-sponsored retiree coverage, Medicaid, none). Key estimates cited here reflect KFF’s analysis as published. (kff.org)

Why this matters: differences in coverage mix are associated with differences in socioeconomic status, race/ethnicity, health status, and financial exposure. Those patterns should inform recommendations and individual decisions. (kff.org)

What “sources of coverage” means — definitions

Original Medicare: Medicare Part A (hospital) + Part B (medical) administered by CMS. Does not include an out‑of‑pocket cap.
Medicare Advantage (Part C): Private plans that deliver Medicare benefits and may include added benefits (dental, vision, hearing) and an annual out‑of‑pocket maximum. Commonly thought of as a managed-care or “medical aid” style alternative to Original Medicare. (kff.org)
Medigap (Medicare Supplement): Private supplemental insurance sold to people who have Original Medicare to cover some or all of Original Medicare’s cost-sharing (deductibles, coinsurance, copayments). Medigap policies are standardized and are only available to people in Original Medicare. (medicare.gov)
Employer/union retiree coverage: Group coverage that may supplement Original Medicare or be offered through employer-group Medicare Advantage arrangements.
Medicaid (dual eligible): Low-income beneficiaries who receive Medicaid in addition to Medicare; Medicaid often pays premiums and cost sharing and can provide services Medicare does not cover. KFF reports a high share of duals are enrolled in Medicare Advantage plans. (kff.org)

At-a-glance comparison: Medicare Advantage vs. Medigap vs. Employer vs. Medicaid

Below is a practical comparison to help frame the decision.

Feature / Concern	Medicare Advantage (MA)	Medigap (Medicare Supplement)	Employer/Union Retiree Coverage	Medicaid (Dual-eligibles)
How it works	Private plan replaces Original Medicare (Part A/B)	Supplements Original Medicare (A/B)	Varies; supplements Medicare or pays secondary	Medicaid coordinates with Medicare; often pays premiums & cost-sharing
Out-of-pocket cap	Yes — annual OOP maximum	No OOP cap in Medicare itself; Medigap reduces OOP	Depends on employer plan	Varies; often very low OOP for duals
Provider networks	Usually network-based (HMO/PPO); may restrict providers	Use any provider that accepts Medicare	Varies; often broad	Broader, includes long-term supports
Extra benefits (dental/vision)	Often included	Not typical (some Medigap add-ons limited)	May include rich benefits	Some states provide additional benefits
Prescription drug coverage	Often included via Part D or integrated	Medigap sold after 2005 does not include Part D	Often includes Rx	Often includes Rx coverage
Cost structure	Usually lower monthly premium; copays/coinsurance for services	Higher monthly premium; lower unexpected OOP risk	Employer subsidized; varies	Low/none for beneficiaries with very low income
Guaranteed issue window	Enrollment rules apply; special enrollments for moves	6‑month guaranteed issue when 65+ & enrolled in Part B	Often limited to eligible retirees	Eligibility rules by income/asset limits
Best for	People wanting bundled benefits + cap on OOP	People who value provider freedom and predictable OOP via premiums	People with strong employer retiree benefits	Low-income beneficiaries needing fuller coverage
Typical demographics (per KFF)	More likely Black or Hispanic; lower incomes	More likely White; higher incomes; better health	Higher incomes; retirees	Low income; poor health; more likely MA enrollment

Key takeaways:

Medicare Advantage appeals to beneficiaries wanting lower premiums and maximum protection from catastrophic costs, but typically with network restrictions.
Medigap appeals to those who want provider freedom and predictable cost-sharing protection in Original Medicare, but it can be expensive.
Employer and Medicaid interactions fundamentally change the economics of Medigap vs. MA choices; duals and those with retiree coverage often have different optimal choices. (kff.org)

How KFF’s findings change the decision lens

KFF’s snapshot shows:

Market shift toward Medicare Advantage (54% in 2025) — meaning more plans, more variation across markets, and continued importance of network/benefit tradeoffs. (kff.org)
High Medigap penetration among Original Medicare beneficiaries — Medigap remains a core strategy for people who want to stay in Original Medicare with predictable cost-sharing protection. (kff.org)
Significant share with employer coverage — for many, retiree benefits eliminate the need for Medigap or make MA less attractive. (kff.org)
A vulnerable group (3.5 million in Original Medicare with no supplemental coverage) — these beneficiaries are exposed to catastrophic financial risk and should be prioritized for counseling and outreach. (kff.org)

Implication: There is no one-size-fits-all recommendation. The right choice depends on health status, utilization patterns, income, access to provider networks, appetite for premium vs. claim risk, and whether employer or Medicaid protections apply.

The Medical-aid vs. Gap-cover decision framework (step-by-step)

Use this structured process to decide between Medicare Advantage (medical-aid-style) and Medigap (gap cover):

Clarify current coverage and constraints
- Are you currently in Original Medicare or Medicare Advantage?
- Do you have employer/retiree coverage or Medicaid? (This can make Medigap irrelevant or unnecessary.)
Inventory expected care and provider needs
- List specialists and hospitals you currently use. Do they accept MA plan networks? If your doctors are out-of-network for MA, that’s a strong indicator to consider Medigap + Original Medicare.
Estimate annual expected costs (premiums + expected OOP)
- Calculate: annual premiums (Medicare Part B + MA premium or Medigap premium) + expected copays/coinsurance + deductible + average prescriptions.
Evaluate catastrophic risk tolerance
- If you cannot afford a large one-time bill, MA’s out-of-pocket maximum provides protection. If you value unlimited provider choice and predictable cost-sharing coverage for common services, Medigap is attractive.
Review access and convenience features
- Are dental/vision/hearing benefits important? Many MA plans include them.
Check enrollment rules and guaranteed issue protections
- If you are within Medigap’s 6‑month guaranteed-issue period (first month with Part B if 65+), you can buy any Medigap plan without medical underwriting. Outside that window, it may be hard or expensive. (medicare.gov)
Model 2–3 provider/benefit scenarios
- Best-case: low utilization; compare total cost.
- Typical-case: 3–6 outpatient visits + one ER or hospitalization per year.
- Worst-case: serious hospitalization or surgery; test catastrophic exposure under both options.

If you prefer a guided resource on comparing the two paths, see this comparative primer: Medigap vs. Medicare Advantage.

Example cost modeling (illustrative)

Assumptions — typical 65+ beneficiary in 2026 (illustrative only):

Medicare Part B monthly premium: variable (assume $170/mo for modeling)
Medicare Advantage plan premium: $0–$150/mo (median depends on county)
Medigap Plan G average premium: $150–$300/mo (varies by age/state)
Typical hospital deductible (Original Medicare Part A) and Part B deductible & coinsurance apply

Scenario table (rounded and illustrative):

Scenario	Option A: Medicare Advantage	Option B: Original Medicare + Medigap Plan G
Monthly premiums	Part B ($170) + MA premium ($50) = $220	Part B ($170) + Medigap ($220) = $390
Typical annual medical usage (clinic + prescriptions)	$500 OOP (copays + Rx)	$200 OOP (Medigap covers most Medicare cost-sharing; Rx via Part D)
Hospitalization (one major surgery)	OOP capped by MA plan limit (e.g., $3,400)	Medigap covers most Medicare cost-sharing — OOP smaller but depends on Medigap coverage (often $0–$500)
Annual worst-case exposure	Capped at MA OOP max (e.g., $6,700)	Largely covered by Medigap (very low residual)
Summary	Lower monthly premium; some network restrictions; predictable catastrophic cap	Higher monthly premium; broader provider access; lower cost-sharing for covered services

Notes:

Medigap Plan F is no longer available to newly eligible beneficiaries post-2020; Plan G is commonly recommended for those wanting near-full gap coverage. Confirm plan availability and terms by state. (medicare.gov)
Real costs must be calculated using local plan premiums and formulary details.

Real-world examples and decision profiles

Conservative retiree with many specialists and out-of-state travel:
- Likely lean toward Original Medicare + Medigap for provider freedom and travel coverage (some Medigap plans include foreign travel emergency).
Retiree on a tight monthly budget who rarely uses care:
- Medicare Advantage with $0–$50 premium can be attractive, especially if preferred providers are in-network.
Low-income beneficiary (dual eligible):
- Medicaid coordination often makes MA vs. Medigap less relevant; Medicaid may pay premiums and cost sharing — but review state Medicaid rules and whether duals are auto-enrolled into MA. KFF notes many dual-eligibles are in MA plans. (kff.org)
Employer-retiree with strong retiree benefits:
- Employer subsidy may make Original Medicare + employer coverage the best fit; shop for Medigap only if there’s a gap and you need portable coverage.

Practical shopping checklist & enrollment timing

Confirm current enrollment dates:
- Initial Enrollment Period, Annual Election Period (Oct 15–Dec 7), Medicare Advantage Open Enrollment (Jan 1–Mar 31), Special Enrollment Periods.
Medigap guaranteed-issue window:
- 6 months after Part B effective date if you’re 65+ — insurers cannot deny coverage or charge more based on health during that window. Missing it may mean medical underwriting. (medicare.gov)
Verify provider acceptance:
- Ask each provider if they accept the specific MA plan (HMO/PPO differences) or if they “accept assignment” under Original Medicare + Medigap.
Check formularies and Part D:
- Most MA plans include drug coverage (Part D); Medigap policies sold after 2005 do not include Part D — you’ll need a standalone Part D plan. (medicare.gov)
Review benefits beyond Medicare:
- Dental, vision, hearing, fitness, OTC allowances, telehealth — MA often bundles these.
Confirm out-of-pocket maximums (MA) and Medigap cost-sharing specifics.
Use agent/broker comparisons and run real claims scenarios (e.g., surgeon/hospital you expect to use) to estimate reimbursements and network status.

For a practical background on supplemental insurance types, visit: Supplemental Insurance Definition and Types.

Common pitfalls and expert tips

Pitfall: Choosing MA based solely on a low premium without verifying provider access — if your providers aren’t in-network you can face continuity-of-care issues.
Pitfall: Assuming Medigap is affordable everywhere — premiums vary substantially by state, issue age vs. attained age rating, and insurer.
Tip: If you expect high or unpredictable utilization (frequent hospitalizations), Medigap can often be the less costly option over time despite higher premiums because it protects from Medicare’s open-ended cost-sharing.
Tip: If you travel frequently or split time between states, check Medigap foreign-travel emergency benefits; MA network restrictions can be limiting.
Tip: For those under 65 with disabilities, Medigap availability is limited in many states — review state-specific rules and guaranteed-issue protections. (cms.gov)

For an independent comparison of market options, consider curated lists of supplemental insurers: Best Supplemental Health Insurance Companies.

Regulatory notes & enrollment protections (what to watch)

Guaranteed issue rights: Medigap guaranteed-issue windows are limited and often tied to turning 65 or losing employer coverage. Missing these windows can lead to medical underwriting. (medicare.gov)
State variations: Massachusetts, Minnesota, and Wisconsin standardize Medigap differently — local rules matter. (cms.gov)
Dual-eligibles & MA: Many dual-eligibles are now enrolled in MA plans; state and plan rules may create special enrollment periods or auto‑assignment processes. (kff.org)

Frequently asked questions (FAQs)

Q: Can I have Medigap and Medicare Advantage at the same time?
A: No. Medigap is designed to supplement Original Medicare; you cannot use Medigap to pay Medicare Advantage cost-sharing. (medicare.gov)
Q: If I drop a Medicare Advantage plan, can I buy Medigap?
A: Possibly — but outside your guaranteed-issue period you may face medical underwriting. There are limited special enrollment rights in certain situations (e.g., loss of MA plan service area, employer retiree changes). Check state rules and federal guidance. (cms.gov)
Q: Is Medicare Advantage always cheaper?
A: Not always. Many MA plans have low premiums but cost-sharing on services. For high users or those needing out-of-network access, Medigap may be more cost-effective despite higher premiums.
Q: How common is it to have no supplemental coverage?
A: In 2023, KFF estimated about 3.5 million people in Original Medicare had no supplemental coverage (≈13% of Original Medicare beneficiaries), leaving them exposed to high out-of-pocket costs. (kff.org)

Action plan — 7 steps to choose confidently

Gather documentation: current Medicare card, current plan ID cards, list of providers & prescriptions.
Check your guaranteed-issue rights (are you within the 6‑month Medigap window?). (medicare.gov)
Call each provider to confirm network participation for any MA plans you’re considering.
Price two 12‑month scenarios: Total annual cost = premiums + expected OOP (typical usage) + worst-case exposure.
Evaluate non-financial factors: provider freedom, travel needs, extra benefits (dental/vision).
If considering Medigap, get quotes from multiple insurers (same lettered plan can vary in price). (cms.gov)
Make enrollment changes within the correct enrollment period and keep documentation of your decisions.

Expert insights (practical counsel for advisors)

Focus on scenarios, not averages. Individual utilization patterns determine which plan is better.
Document the client’s provider network tolerance (which providers they cannot give up). If they name a single critical out-of-network specialist under MA, that’s a red flag for recommending MA.
For financially constrained clients, prioritize short-term affordability (MA) but stress contingency planning for provider changes and appeals.
For wealthier clients who value provider choice and stability over monthly savings, Medigap often makes sense.
Keep an eye on state-level Medigap underwriting rules — for near-65 clients, timing purchases around guaranteed-issue windows can save or cost thousands.

KFF key findings (quick reference — pulled from the brief)

More than half of Medicare beneficiaries with Parts A and B were enrolled in Medicare Advantage (54% or 34.1 million in 2025). (kff.org)
Among those in Original Medicare, 87% had additional coverage in 2023; 3.5 million (13%) had no supplemental coverage. (kff.org)
12.2 million beneficiaries had Medigap policies (20% of all beneficiaries; 43% of those in Original Medicare). (kff.org)
14.1 million beneficiaries (23%) had employer or union coverage in 2023. (kff.org)

Closing guidance

KFF’s snapshot confirms the diversity of coverage strategies among U.S. Medicare beneficiaries and underscores that the optimal choice between Medicare Advantage (medical aid‑style) and Medigap (gap cover) is highly individualized. Use the decision framework above, run local quotes, verify network coverage for your providers, and treat guaranteed‑issue windows as high‑priority deadlines. If possible, consult a trusted independent broker or your State Health Insurance Assistance Program (SHIP) for personalized help.

References & further reading

KFF — A Snapshot of Sources of Coverage Among Medicare Beneficiaries. (KFF issue brief; data from CMS & MCBS). (kff.org)
Medicare.gov — What’s Medicare Supplement Insurance (Medigap) & how Medigap works. (medicare.gov)

Related cluster resources (internal links for deeper reading):

If you’d like, I can:

Build a personalized cost-comparison worksheet you can fill with your exact premiums, expected visits, and prescriptions; or
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