What is Medigap insurance?
Medigap, also known as Medicare Supplement Insurance, is a type of private health insurance designed to help cover some of the out-of-pocket costs that Original Medicare (Part A and Part B) doesn’t cover, such as deductibles, copayments, and coinsurance. Medigap policies are sold by private insurance companies and work alongside Original Medicare to help reduce your healthcare expenses. Here's an overview of how Medigap works, what it covers, and how it can benefit you:
1. How Does Medigap Work?
Medigap policies are designed to "fill the gaps" in Original Medicare coverage. While Medicare pays for a significant portion of healthcare services, it doesn’t cover all costs. Medigap helps with these extra costs.
You must be enrolled in both Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) to purchase a Medigap policy. Medigap does not work with Medicare Advantage (Part C) plans.
Medigap policies are individual plans, which means they only cover one person. If you and your spouse both want Medigap coverage, you’ll each need to buy separate policies.
2. What Does Medigap Cover?
Medigap policies typically help cover the following costs that Medicare doesn’t fully pay for:
Medicare Part A deductible: The out-of-pocket cost for each benefit period in Part A.
Medicare Part B coinsurance and copayments: After Medicare pays 80% of your approved medical services, Medigap can help cover your 20% coinsurance.
Skilled nursing facility care coinsurance: If you need extended care in a skilled nursing facility, Medigap can help cover the daily coinsurance.
Blood: Medigap policies cover the first 3 pints of blood each year, which Medicare doesn’t pay for.
Foreign travel emergency coverage: Some Medigap plans provide coverage for emergency care during international travel (up to plan limits).
3. Standardized Medigap Plans:
Medigap plans are standardized and labeled with letters (e.g., Plan A, Plan B, Plan C, Plan D, Plan F, Plan G, Plan K, Plan L, Plan M, and Plan N). Each plan provides a different level of coverage, but the benefits for each lettered plan are the same across all insurance companies. For example, Medigap Plan G offers the same benefits regardless of which insurance company sells it.
Plans F and C are no longer available to new Medicare beneficiaries who became eligible for Medicare after January 1, 2020, but those who were eligible before that date may still purchase them.
Here’s a brief look at some of the popular Medigap plans:
Plan A: Covers Medicare Part A coinsurance and hospital costs, Part B coinsurance, and more.
Plan G: One of the most comprehensive plans available to new enrollees, covering nearly all out-of-pocket costs except the Medicare Part B deductible.
Plan N: Similar to Plan G, but you may have copayments for some doctor visits and emergency room trips.
4. What Medigap Does Not Cover:
While Medigap helps with many out-of-pocket costs, it does not cover everything. Medigap does not cover:
Prescription drugs: Medigap policies sold after 2006 do not include prescription drug coverage. You’ll need to enroll in a Medicare Part D plan for prescription drug benefits.
Long-term care: Medigap does not cover long-term custodial care in a nursing home or at home.
Vision, dental, or hearing care: Routine care such as vision exams, dental care, or hearing aids is not covered by Medigap. For these services, you may need a separate insurance plan or a Medicare Advantage plan that offers additional benefits.
5. When to Enroll in Medigap:
The best time to enroll in a Medigap plan is during your Medigap Open Enrollment Period, which lasts for six months and begins the first month you’re 65 or older and enrolled in Medicare Part B.
During this period, insurance companies must sell you a Medigap policy regardless of your health condition, and they cannot charge you more based on your medical history. If you miss this window, you may still be able to buy a Medigap policy, but insurers can use medical underwriting to determine your eligibility and price.
6. Cost of Medigap Plans:
The cost of a Medigap policy depends on several factors, including your age, location, health condition, and the plan you choose. While benefits are standardized, premiums can vary between insurance companies.
Medigap premiums are in addition to your Medicare Part B premium. It’s important to compare premiums and coverage options from different insurance companies to find the best plan for your needs.
7. How to Choose the Right Medigap Plan:
When choosing a Medigap plan, consider the following:
Your healthcare needs: How often do you visit the doctor or need medical services? If you have frequent healthcare needs, a more comprehensive plan like Plan G may be beneficial.
Your budget: Medigap plans with higher premiums may offer more comprehensive coverage, but if you rarely need medical services, a plan with lower premiums like Plan N may be a better option.
Travel: If you frequently travel outside the U.S., consider a Medigap plan that covers foreign travel emergencies (e.g., Plans C, D, F, G, M, N).
8. Can You Use Medigap with Medicare Advantage?
No, you cannot use a Medigap policy with a Medicare Advantage plan. Medigap is designed to supplement Original Medicare, not Medicare Advantage. If you switch from Original Medicare to Medicare Advantage, you cannot keep your Medigap policy, and it’s important to carefully review your coverage options before making the switch.
Key Takeaways:
Medigap helps cover out-of-pocket costs like deductibles, coinsurance, and copayments not covered by Original Medicare.
You must have Medicare Part A and Part B to purchase a Medigap policy.
There are standardized plans (labeled A-N), each offering different levels of coverage.
Medigap does not cover prescription drugs, long-term care, or routine vision, dental, or hearing care.
For help choosing the right Medigap plan or understanding your coverage options, schedule an appointment with a Tsunami Advisor here: Schedule an Appointment.
