A Snapshot of Sources of Coverage Among Medicare Beneficiaries

Health care affordability has been a longstanding concern in the U.S., including among older adults, many of whom have relatively low incomes and modest assets to help pay medical bills. Medicare offers important financial protection by providing health insurance coverage to 67 million people in the U.S., including adults age 65 or older and younger adults with long-term disabilities. Coverage of Medicare benefits is provided through either traditional Medicare or Medicare Advantage private plans. Enrollment in Medicare Advantage plans has grown rapidly in recent years, partly because most Medicare Advantage plans charge no premium (other than the Part B premium) and offer extra benefits not available in traditional Medicare such as dental, vision, and hearing benefits. Most people with Medicare also have other coverage, such as Medicaid, Medigap, and employer coverage, which may pay some or all of their Medicare cost-sharing requirements and may also provide benefits that Medicare does not cover.

This brief analyzes the different types of coverage that people with Medicare have and the demographic characteristics of Medicare beneficiaries with different types of coverage, based on the Centers for Medicare & Medicaid Services Medicare Current Beneficiary Survey, 2022 Survey file data (MCBS) (the most recent year of data available, see Methods for details).

Key highlights:

• In 2022, Medicare enrollment was split equally between Medicare Advantage and traditional Medicare. Overall, more than 4 in 10 Medicare beneficiaries (44%), including beneficiaries in traditional Medicare and Medicare Advantage, had additional coverage from an employer or union sponsored plan (24%) or Medicaid (19%).
• Nearly 90% of people in traditional Medicare had some form of additional coverage, such as Medigap (42%), employer or union-sponsored retiree health benefits (31%), or Medicaid (16%), but 11% (three million Medicare beneficiaries) had no additional coverage.
• More than 40% of all Medicare Advantage enrollees also had some form of coverage from Medicaid (23%) or a union/employer sponsored retiree health plan (18%) in 2022.
• Beneficiaries in traditional Medicare with Medigap and employer-sponsored insurance had higher incomes, were in relatively good health, had more years of education, and were less likely to be under age 65 with disabilities than all traditional Medicare beneficiaries.
• As more beneficiaries have shifted to Medicare Advantage plans, the number of Medicare beneficiaries in traditional Medicare with no additional coverage has declined from 5.6 million in 2018 to 3.2 million in 2022. Traditional Medicare beneficiaries with no supplemental coverage were more likely to be under the age of 65 and have relatively lower incomes compared to traditional Medicare beneficiaries overall.
• Medicare Advantage enrollees were more likely to be 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 in 2022.
• Dual-eligible individuals accounted for a larger number and share of Medicare Advantage enrollees (7.0 million; 23%) than traditional Medicare beneficiaries (4.6 million; 16%) in 2022. Dual-eligible individuals in both traditional Medicare and Medicare Advantage were more likely to have lower incomes, self-report relatively poor health, identify as Black or Hispanic, and be under age 65 with disabilities than the overall Medicare population. 

Sources of Coverage

Among the 59.6 million people enrolled in both Medicare Part A and Part B in 2022, enrollment was split equally between Medicare Advantage and traditional Medicare (Figure 1). Most people in traditional Medicare had some form of additional coverage, such as Medicaid, retiree health benefits through an employer or Medigap, but three million Medicare beneficiaries (5%) had no additional coverage. While Medicare Advantage enrollment has surpassed 50% of total Medicare enrollment as of 2024, MCBS data beyond 2022 is not yet available.

Characteristics of Medicare Beneficiaries, By Source of Coverage

Traditional Medicare

Among the 29.7 million Medicare beneficiaries in traditional Medicare in 2022, most (89%) had some type of additional coverage, either through Medigap (42%), employer coverage (31%), Medicaid (16%), or another source (1%). But 1 in 10 (11%) of Medicare beneficiaries in traditional Medicare had no additional coverage (Figure 1, Appendix Table 1). A more detailed discussion of these types of coverage and the characteristics of people in each category is below.

Medigap

Medicare supplement insurance, also known as Medigap, covered 2 in 10 (21%) Medicare beneficiaries overall, or 42% of those in traditional Medicare (12.5 million beneficiaries) in 2022. Medigap policies, sold by private insurance companies, fully or partially cover Medicare Part A and Part B cost-sharing requirements, including deductibles, copayments, and coinsurance. Medigap limits the financial exposure of Medicare beneficiaries and provides protection against catastrophic medical expenses. For example, a previous KFF report found that a smaller share of traditional Medicare with additional sources of coverage, such as Medigap, reported cost-related problems than Medicare Advantage enrollees or traditional Medicare beneficiaries without additional coverage. However, Medigap premiums can be costly for beneficiaries living on modest incomes and can rise with age, among other factors, depending on the state in which they are regulated.

Compared to all traditional Medicare beneficiaries in 2022, beneficiaries with Medigap were more likely to be White, have higher annual incomes (above $20,000 per person), self-report excellent, very good, or good health, and have a bachelor’s degree or higher (Figure 2, Appendix Table 1).

In contrast, a smaller share of traditional Medicare beneficiaries under age 65 have a Medigap policy than traditional Medicare beneficiaries ages 65 and older (2% versus 11%). Federal law provides a 6-month guarantee issue protection for adults ages 65 and older when they first enroll in Medicare Part B if they want to purchase a supplemental Medigap policy, but these protections do not extend to adults under the age of 65, who qualify for Medicare due to having a long-term disability. Most states do not require insurers to issue Medigap policies to beneficiaries under age 65, and most do not extend guarantee issue protections to people over age 65 beyond the one-time Medigap open enrollment period.

Employer Coverage

In total, 14.5 million Medicare beneficiaries – a quarter (24%) of Medicare beneficiaries overall – also had some form of employer or union-sponsored health insurance coverage in 2022 in addition to Medicare Part A and Part B. Of this total, 9.1 million beneficiaries had employer coverage in addition to traditional Medicare (31% of beneficiaries in traditional Medicare), while 5.4 million beneficiaries were enrolled in Medicare Advantage employer group plans (see Medicare Advantage section below; estimates do not sum to total due to rounding). People with both Medicare Part A and Part B and employer- or union-sponsored coverage are likely to be retirees for whom Medicare is primary.

Compared to traditional Medicare beneficiaries overall in 2022, beneficiaries with employer or union-sponsored coverage in addition to traditional Medicare were more likely to have higher incomes ($40,000 or greater per person), a bachelor’s degree or higher, self-report excellent or good health, have no limitations in activities of daily living (ADLs), and were less likely to be under age 65 (Figure 2, Appendix Table 1).

Separately, in 2022, an estimated 5.6 million Medicare beneficiaries had Part A only, a group that primarily includes people who were active workers (either themselves or their spouses) and had primary coverage from an employer plan and Medicare as a secondary payer. People with Part A only cannot enroll in a Medicare Advantage plan, so people with coverage through Medicare Advantage employer group plans are likely to be retired.

Medicaid

Medicaid, the federal-state program that provides health and long-term services and supports coverage to low-income people, was a source of supplemental coverage for 11.6 million Medicare beneficiaries with low incomes and modest assets in 2022, or 19% of all Medicare beneficiaries. A larger number of Medicare beneficiaries with Medicaid (known as dual-eligible individuals) were enrolled in a Medicare Advantage plan (7.0 million) than in traditional Medicare (4.6 million people) (see Medicare Advantage section below) (Appendix Table 1). For these beneficiaries, Medicaid typically pays the Medicare Part B premium and may also pay a portion of Medicare deductibles and other cost-sharing requirements. Most dual-eligible individuals are also eligible for full Medicaid benefits, including long-term services and supports. Dual-eligible individuals who are not eligible for full Medicaid benefits receive partial benefits, including assistance with Medicare premiums and, in many but not all cases, Medicare cost-sharing requirements.

Compared to traditional Medicare beneficiaries overall in 2022, dual-eligible individuals were more likely to have low incomes and relatively low education levels, self-report fair or poor health, identify as Black or Hispanic, and be under the age of 65 (Figure 2, Appendix Table 1).

(Estimates of the number of dual-eligible beneficiaries in this analysis may differ from other KFF estimates due to different data sources and methods used; see methods below for details.)

No additional coverage

In 2022, more than 3 million Medicare beneficiaries overall (5%) – 11% of all beneficiaries in traditional Medicare – had no other insurance coverage. Traditional Medicare beneficiaries with no additional coverage are fully exposed to Medicare’s cost-sharing requirements, which would mean paying a $1,632 deductible for a hospital stay in 2024, daily copayments for extended hospital and skilled nursing facility stays, and a $240 deductible plus 20% coinsurance for physician visits and other outpatient services. (These costs are in addition to $174.70 per month (around $2,000 per year) for the standard Part B premium for all of 2024). Beneficiaries in traditional Medicare without additional coverage also face the risk of high annual out-of-pocket costs because there is no cap on out-of-pocket spending for Part A and B services in traditional Medicare, unlike in Medicare Advantage plans.

Beneficiaries in traditional Medicare without any form of additional coverage were more likely to have low and modest incomes (between $10,000 and $40,000 per person) compared to all traditional Medicare beneficiaries in 2022, and include a relatively large share of people on Medicare with disabilities who are under the age of 65 (Figure 2, Appendix Table 1). Medicare beneficiaries with annual incomes between $10,000 and $40,000 per person have limited ability to afford Medigap premiums and are unlikely to qualify for Medicaid because their income and assets are not low enough to meet eligibility guidelines. Further, because they are more likely to self-report fair or poor health than beneficiaries with incomes of $40,000 or more, they may be more likely to have higher out-of-pocket expenses, further exacerbated by the lack of an out-of-pocket limit in traditional Medicare.

The number and share of traditional Medicare beneficiaries without any form of supplemental coverage has steadily declined in recent years. Between 2018 and 2022, the number of traditional Medicare beneficiaries without supplemental coverage declined from 5.6 million beneficiaries (10% of the total Medicare population, or 17% of those in traditional Medicare) to 3.2 million (5% of the total Medicare population, or 11% of those in traditional Medicare). This decline likely reflects the increase in Medicare Advantage enrollment over time, which has increased from 20 million in 2018 to 33 million in 2024.

Medicare Advantage

In 2022, Medicare Advantage covered half of all Medicare beneficiaries (50%), or 29.9 million people with Medicare. (Medicare Advantage enrollment in 2024 now totals 33 million, or 54% of all eligible beneficiaries.)

Of the total number of Medicare Advantage enrollees in 2022, most (59%) were enrolled in plans available to all Medicare beneficiaries, but 5.4 million (18%) were enrolled in employer- or union-sponsored group plans. Under these arrangements, employers or unions contract with an insurer and Medicare pays the insurer a fixed amount per enrollee to provide benefits covered by Medicare. A growing share of large employers with retiree health obligations are offering these benefits through Medicare Advantage plans.

Another 7.0 million Medicare Advantage enrollees in 2022 (23%) also had Medicaid coverage, and were enrolled in either a Special Needs Plan (SNP) or a Medicare Advantage plan generally available to all Medicare beneficiaries. SNPs restrict enrollment to specific types of beneficiaries with significant or relatively specialized care needs, including beneficiaries dually eligible for Medicare and Medicaid (D-SNPs), people with severe chronic or disabling conditions (C-SNPs), and beneficiaries requiring a nursing home or institutional level of care (I-SNPs).

Compared to traditional Medicare beneficiaries in 2022, Medicare Advantage enrollees were more likely to be Black or Hispanic, have incomes below $20,000 per person, live in urban areas, and have lower levels of education (Figure 3, Appendix Table 1). In addition, dual-eligible individuals account for a larger share of Medicare Advantage enrollees (23%) than traditional Medicare beneficiaries (16%).

Methods

This analysis is based on the Centers for Medicare & Medicaid Services Medicare Current Beneficiary Survey (MCBS) 2022 Survey file data (the most recent year available), a nationally representative survey of Medicare beneficiaries. Sources of coverage are determined based on the source of coverage held for the most months of Medicare enrollment in 2022. The analysis includes 59.6 million people with Medicare in 2022 (weighted), including beneficiaries living in the community and in facilities, excluding beneficiaries who were enrolled in Part A only or Part B only for most of their Medicare enrollment in 2022 (weighted n=5.0 million) and beneficiaries who had Medicare as a secondary payer (weighted n=1.6 million). The analysis also focuses only on coverage for Part A and Part B benefits, not Part D. This analysis of the MCBS accounted for the complex sampling design of the survey. The number of beneficiaries enrolled in both Medicare and Medicaid (or dual-eligible individuals) (11.6 million) in this brief does not align with other KFF estimates due to differences in data sources and methods used. The KFF estimates published elsewhere are based on a 100% sample of data from the Chronic Condition Warehouse (CCW) and include dual-eligible individuals with at least one month of enrollment in Medicare Part A or Part B. The analysis in this brief is based on the MCBS because this data source provides a wider array of demographic and health status indicators than CCW. This analysis excludes beneficiaries in Part A or Part B only and assigns beneficiaries to the type of coverage held for the most months of the year. All reported differences in the text are statistically significant; results from all statistical tests are reported with p<0.05 considered statistically significant. Because estimates reported in the text and figures are rounded to the nearest whole number, some estimates may not sum to overall totals due to rounding.